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Full steam ahead.

It appears there is clear sailing for the next several months for paper stock markets. Demand for most grades remains strong, with mixed paper markets continuing to pop.

Domestically, finished paper pricing power appears to remain subdued. With an oversupply of production capacity, paper companies continue to announce plans to cut capacity through shutdowns of either machines or mills.

Among the companies that have announced significant reductions in paperboard production are Caraustar Industries, Austell, Ga.; Smurfit-Stone Container Corp., Chicago; Shorewood Packaging Corp., New York; and Domtar Inc., Montreal. The moves should ultimately help bring supply and demand into balance.

Abitibi-Consolidated Inc., Montreal, one of the world's largest newsprint producers, also announced that it would be closing two of its paper mills until markets improve. The company also permanently closed two previously idled mills.

Despite the less-than-rosy short-term outlook for paper companies, many paper stock dealers are enjoying the continued robust export market, which has allowed prices for many post-consumer grades (such as old corrugated containers, old news and mixed paper) to stay at fairly high levels.

While prices have dipped modestly for some grades recently (partly because some offshore buying eased up in anticipation of Chinese New Year), most paper stock dealers feel that the strength in the export market should keep prices at a fairly healthy level for this year.

While the overall mood is upbeat, some issues could be problematic. Higher transportation costs, especially for ocean vessels, have put a crimp in some markets.

(Additional news on paper recycling markets, including breaking news and pricing, is available on-line at www.Recycling Today.com.)
U.S. Producer Price Index/Mixed Paper

Dec02 483.7
Jan03 468.3
Feb 468.2
Mar 530.3
Apr 608.9
May 605.4
June 605.6
July 554.5
Aug 527.0
Sept 557.0
Oct 598.0
Nov 584.8
Dec 622.2

Source: U.S. Bureau of Labor Statistics
(Index based on 1982 avg. price as 100)

Note: Table made from bar graph.
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Title Annotation:Paper
Publication:Recycling Today
Geographic Code:1USA
Date:Feb 1, 2004
Words:332
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