BEDFORD, MA — The pulp and paper industry in the U.S. will see modest recovery in the second half of 2002 through 2003, says Resource Information Systems President Rod Young. Industrial production wi…
BEDFORD, MA — The pulp and paper industry in the U.S. will see modest recovery in the second half of 2002 through 2003, says Resource Information Systems President Rod Young. Industrial production will begin to revive this spring, spurred by consumer spending and inventory rebuilding.
But even as the general economy recovers, the industry’s growth will still be limited by the strong dollar, says Young. Trade situation is not expected to improve for U.S. producers because dollar will remain too strong and overseas capacity expansion will remain too high. “The large U.S. market will remain too attractive.”
Paper and board demand will stabilize in the first half of 2002, before turning upward again in the second half, he says. However, demand is predicted to remain well below the 1999 peak, even in 2003, because of competition from electronics for graphic papers, along with concerns about the postal system. Competition from plastics for packaging paper and board, and imports of non-durable products will hamper the growth of the industry.
Paper and board capacity is also expected to bottom this spring — five million tons below the 2000 peak — before starting to expand again.
Wood pulp consumption has dropped sharply since mid-2000, but it will rebound through 2003 partially due to stabilizing furnish share as recovered paper prices rise. But with a larger share being devoted to domestic market and specialties, market wood pulp output is set to shrink. Competitive pressure from overseas suppliers will force this retreat.
This also results in recovered paper becoming more expensive relative to virgin paper.
Because of all this, producers are encouraged to keep a sharp eye on their expansion plans. The U.S. suppliers will be forced increasingly into their domestic market, since overseas markets continue to be weak. Thus, investments must focus on increasing efficiency instead.
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