IP's Fluff Pulp: expanding just to keep pace

Implications: The global fluff pulp market now measures 4.5 million mt with the US enjoying a dominant position.  Can we maintain that position or even expand it?  Industry observers believe our position is very secure and that we are in the best position to expand.  What's behind this optimism? Fluff Pulp has the highest selling price and yet it is one of the most uncomplicated of the various market pulp grades.  There is even talk of reducing the already low ISO brightness another point or two.  Might not this give competitors in Sweden and Argentina an opening to take premium business away? International Paper has recognized the strategic importance of Fluff Pulp for enhancing their profit picture.  How much more could they expand if they really wanted to?

Analysis: International Paper has just announced the transformation of their 260,000 tons/year Bastrop, LA Uncoated FreeSheet mill over to all softwood - sheeted bales of papergrade SBSK and Fluff Pulp for the disposables market.  The mill will also continue to produce some heavy weight bristols on their paper machine. 
 Last year they began to changeover their much larger Pensacola, FL mill from partly Fluff Pulp and Uncoated Freesheet on the paper machine to 100% lightweight unbleached linerboard (for smaller corrugated cartons - the kind used by FedEx, UPS, Amazon.com etc.)   The UFS grades were moved to Riegelwood, NC along with the Fluff Pulp tonnage.  In this case the loser appears to be the SBS that was formerly made on the board machine.  
This represents a major reshuffling of grades with the apparent objective being to focus more on UFS (where they already enjoy a 25% market share), Fluff Pulp (where they are #3 to Weyerhaeuser and GP) and the lightweight linerboard market (where, when completed, will put Pensacola in a leadership position in making lightweight linerboard (below 23#) from virgin southern Pine.
IP has obviously recognized the benefits of increasing their Fluff Pulp sales.  First, the global market is increasing by 6-7%/year with the end uses being baby diapers, adult briefs, incontinent pads, feminine hygiene and air laid non-wovens.  In each case a growing middle class in developing countries can be counted on to begin using most of these products as their standard of living improves.  It has been reported that a new disposables producer starts up every week of the year in both the Middle East and Latin America.  In most cases these new producers are looking to the  US - not only the dominant Fluff Pulp producers but as having the highest global profile.  This high profile stems from the possible fact that our producers are also major players in  a variety of pulp grades - dissolving, mercerized, high Alpha for chemicals,  papergrade, softwood, hardwood etc.  These producers in order of tonnage are Weyerhaeuser, GP, IP, Rayonier, Buckeye and Bowaters.  In time Smurfit-Stone at Panama City, FL may also begin to produce Fluff Pulp.
GP has already expanded its Brunswick, GA mill, is actively changing over Leaf River, MS from papergrade softwood to Fluff Pulp and is now conducting trials at Palatka, FL to produce Fluff Pulp.
IP, when the Bastrop transformation is complete will have the capability of producing Fluff Pulp in Georgetown, SC (where they produce SuperSoft Fluff), Riegelwood, NC, Bastrop, LA and in Arkansas.
Why is Fluff Pulp so attractive to producers?   The answer is multi-faceted.  First, the market is global and expanding aggressively. Secondly, the $880/admt list price makes this the highest priced of the commodity market pulps ("commodity" = made 24/7 as a one-size-fits-all product with no particular customer or end use in mind).  And, third, it's one of more uncomplicated pulp grades.  Instead of papergrade's 89-90 ISO brightness Fluff Pulp has been "dumbed down" to 84 ISO brightness.  This significantly decreases the amount of Chlorine Dioxide needed for the bleaching process.   To many industry observers these three amount to a unbeatable combination.  As far as quality is concerned, only two things really matter - uniform moisture content (around 6%) and a level reel profile (minimal caliper variation).
Weyerhaeuser has apparently seen the same light as has GP and IP in that they have divested themselves of UFS (to Domtar) and are now talking about selling off their containerboard division and possibly even their lumber division.  They evidently are determined to be heavily focused on Fluff Pulp as the grade with the greatest chance for above-average profitability.
Lastly, if being in the FLuff Pulp business has so many benefits, do US producers have to fear competition from lower cost producers in Brazil, Chile, Indonesia or China?   While these other countries may have lower labor and wood costs, they do not have Slash Pine.   This is a highly unusual Pine species that favors the sandy soils and warmer climates of the Southeastern US (FL, GA, Alabama, Mississippi).  Slash Pine fibers have an unusually thick fiber wall which makes  it ideal for disposables.   These thick walled fibers produce exceptional bulk (void volume), pad integrity and especially TWA (Total Water Absorbency).    These attributes make Slash Pine the ideal fiber for all the various disposable products.  For a number of reasons we seriously doubt that these other lower cost countries will ever be able to develop even hybrids of Slash Pine that would challenge the US's leadership position.  Even if these other countries were successful in developing a fiber similar to our Slash Pine they would have to dedicate sufficient acreage to Slash Pine plantations and then would have to wait at least 20 years until the mature trees could be harvested.