Coated markets improve, technology marches on.

Coated paper and paperboard markets continued to recover during the past year. Coated groundwood paper demand increased 7.4% in 2004 while coated free sheet demand went up 7.1%. These gains are substantially above the long-term trend of coated paper demand increasing about 2.5% per annum. Magazine and pages increased 3.8% in 2004, and there was a 7.6% increase in catalog circulation. Demand by book, periodical and other publishers increased by 7.5%. Tight markets kept consumer inventories down, preventing an inventory overhang that would dampen demand this year. Nevertheless, most forecasters are remaining conservative and forecasting 2.0-2.5% demand increases in 2005. There is concern about a slowdown at the end of this year and on into 2006.

Price increases for coated groundwood papers have been announced and achieved, but there is resistance, particularly from catalog publishers. Some catalog publishers have attempted to switch to cheaper alternative grades of paper such as SC and have also made reductions in page counts and page sizes. Since most catalogs are printed via heatset offset, the attempt to substitute SC for coated groundwood paper has not been trouble-free. This has created an opportunity for the recently developed metered-size-press-coated grades, which are less expensive to manufacture than blade-coated LWC. These new grades provide excellent performance in heatset offset printing.

Coated groundwood paper supply is likely to remain tight for a good part of this year. U.S. coated groundwood mills operated at 96% of capacity in 2004. The strike at UPM's Miramichi mill has kept supply tight. The weaker U.S. dollar makes importing European LWC considerably more expensive, which has also contributed to tight supply. Some forecasters say the Euro will reach US$ 1.40--which would make importing European-produced papers very expensive. Lead times for paper delivery from Europe are also relatively long. There is very little coated groundwood available from mills in Asia and Latin America, where exchange rate changes have not been as dramatic.

[FIGURE 1 OMITTED]

Coated free sheet supply is not as tight as coated groundwood. As noted above, coated free sheet demand jumped 7.1% in 2004. U.S. coated free sheet mills operated at 92% of capacity in 2004 and entered 2005 with good order backlogs. In spite of the weakened U.S. dollar, coated free sheet imports from Canada and Europe continued to increase throughout 2004. Coated freesheet imports from Asia also continued to increase.

Coated paperboard demand was relatively weak at the start of 2004, but the second half of the year saw significant improvement. By the end of 2004, coated bleached board mills were operating at capacity with a 3.9-week order backlog. Coated recycled board mills entered 2005 operating at 98.5% of capacity with a 2.7-week backlog. The picture for the rest of 2005 doesn't look as rosy for U.S. coated board producers. Although demand is predicted to remain relatively steady, there is likely to be increased competition from imports over the next two years along with a decrease in exports. Chinese capacity increased 1.3 million tons in 2004 and will increase by another 2.8 million tons in 2005-2006. A lot of the tonnage that was being imported into China will be displaced as the new Chinese machines come on stream. The U.S. market will likely be very attractive to Asian producers of high quality boxboard grades in countries such as Korea and Indonesia that had been exporting to China.

BLURRING DISTINCTION

The line between coated and uncoated papers continues to blur. The classic "No. 1 to No. 5 Coated" definitions don't fit many of the recently developed grades. Metered size press coating in combination with on-machine hot soft or supercalendering has facilitated development of new grades. Metered size presses can coat a weak base sheet, facilitating reduction in bleached kraft pulp in the base stock. New FCO (film coated offset) grades developed over the past decade were generally targeted at conventional No. 5 LWC brightness.

Most of these grades were made at acid pH, limiting the use of calcium carbonate pigment. Development of acid tolerant PCC and GCC has allowed use of more calcium carbonate pigment in the coating. This has produced metered size press coated papers with brightness levels normally used for uncoated free sheet and No. 3 coated paper. Some of these new, low cost but bright grades are being marketed as alternatives to uncoated free sheet. The line between coated and uncoated is likely to blur even more.

PROCESS AND EQUIPMENT TRENDS

Low impact coating--especially curtain coating--is a hot topic in coating equipment. The 2005 TAPPI Coating Conference program will include several sessions dedicated to this technology. Curtain coating technology is not really new. Curtain coaters have been used for decades to wax corrugated containers, and producers of photographic films and paper have practiced multilayer curtain coating for many years. Commercial installations of curtain coaters in the paper industry to date have been for specialty grades including carbonless and thermal imaging papers.

Much of the current research and engineering of curtain coaters is focused on multilayer curtain coating, which offers lower capital costs and greater flexibility in coating formulation and operation. Multilayer curtain coating can minimize issues such as heel formation and air entrainment.

Metered size press coating continues to advance. New roll covering materials have improved life between grinds and coated paper quality. Roll cover manufacturers offer covers that combine abrasion resistance, toughness and resiliency to minimize wad impact damage--plus improved release, to minimize sheet splitting and wrinkles.

There has been considerable progress in coated web handling and drying in the past several years. The newest designs of infra-air dryers include a combination of gas-fired infrared and high velocity air flotation dryers (see Figure 1). The hot circulating air from the infrared units is used as make up air for the float dryer, reusing the heat and reducing total gas consumption. New sensors for absolute humidity can be used to further increase efficiency by controlling energy input and mass transport as variables. This improves drying efficiency and minimizes binder migration and mottle.

Another important advance in web handling and drying is the sheet cooler. This device uses Coanda-effect air flotation bars similar to those used in float dryers. The sheet floats on high velocity ambient air, resulting in significant cooling within a short machine-direction space. This type of sheet cooler is less expensive to install, operate and maintain than cooling cylinders. There is no need for a chiller, cooling water piping and maintenance of rotary joints and drives. Sheet cooler installations can provide both cost savings and quality improvements. They are especially useful on coated board machines to cool the dried precoated sheet before top coating. Results from several installations include elimination of mottle and reduction in binder levels. Sheet coolers can also be useful to reduce the temperature of board going onto the reel for both graphic and barrier coated grades.

COATING MATERIALS

Pigment suppliers continue to focus development on engineered kaolin clay, GCC and PCC pigments as well as nano pigments with particle size significantly smaller than conventional pigments. Most nano particle development work is in the research stage, but commercial applications should begin soon.

Pigment suppliers have also done considerable work on improving the effectiveness of applications of existing pigments. There has been a lot of focus on multilayer coating. Replacement of a single coating layer with multiple layers of coating can improve light scattering and gloss. The proper choices of pigments in coating layers can also improve print gloss without sacrificing opacity.

Research shows that coating pigments can be made from organic materials--including starch. There will be a report on preparation and initial results of starch based coating pigments at this year's Coating Conference.

Latex supplier are researching high strength coating binders and latices that provide good runnability at speeds greater than 2000 meters per minute. Several papers at this year's Coating Conference will report on development of new and improved latices.

WHAT YOU WILL LEARN:

* The ongoing recovery in the coated paper and paperboard markets.

* The blurring line between coated and uncoated paper markets.

* Coating process and equipment trends.

ADDITIONAL RESOURCES:

* 2005 TAPPI Coating Conference and Exhibit, April 17-20, Sheraton Centre Hotel, Toronto, Ontario Canada. For more information, go to www.tappi.org.

* "Is curtain coating ready for prime time?," Charles P. Klass, Solutions!, December 2004. To access this article, type in the following Product Code in the search field on www.tappi.org: O4DECSO30.

* "Coated paper and board: grades in transition," Solutions!, May 2004. Product Code: 04MAYSO36.

* "TAPPI Coating Conference raises the curtain on coating," Solutions!, September 2004. Product Code: 04SEPSO42.

ABOUT THE AUTHOR

Charles P. (Chuck) Klass heads a consulting firm, Klass Associates Inc., Redington Beach, Florida, USA. He is also Adjunct Professor of Paper Engineering, Chemical Engineering & Imaging at Western Michigan University. He is a TAPPI Fellow and a member of the Solutions! Editorial Board. Contact him by email at [e-mail]

[ILLUSTRATION OMITTED]