News
Rail Strike Averted
President Biden signed a bill Friday to end months of uncertainty and anxiety about a potential U.S. rail strike. The new law put into effect a contract between labor unions and the freight rail industry, although four of those unions had voted against the contract’s ratification. A rail shutdown could have dealt a devastating blow to a fragile paper supply chain. At the same time, railroads continue to face disruptions tied to having a shortage of workers. Year to date, freight railroads have issued around 1,500 embargoes, restricting the amount of cargo that can be transported. These embargoes are the direct result of a shortage of train and engine workers, signalmen, and track workers. Railroad understaffing will continue to be a concern going into 2023.
Price Increases Set for Uncoated Freesheet (UFS)
Two UFS producers, Evergreen Pactiv and BPM, announced inflation-driven January price increases of $70-80 per ton. Still, RISI expects imports and lower demand to stabilize prices in early 2023. By the second half of 2023, they expect uncoated freesheet operating rates to dip below 90%, forcing producers to contemplate a new round of capacity reductions by the end of 2024.
Imports Surge
Coated paper imports surged to account for more than 40% of North American coated supply in the third quarter, jumping above the 30% share that emerged as the post-pandemic demand recovery proved too large for the remaining North American capacity base to supply. The resolution of the UPM strike is another driver of this increase, with imports from Finland and the UK have risen 50%, or 25,000 tons per month, above their pre- strike level.
Coated imports remained subdued in tonnage terms for most of 2021-22 due to numerous logistics and cost obstacles. Still, many of these headwinds began to dissipate by mid-2022, resulting in a third-quarter import inundation that quickly set an all-time record in terms of market share and brought offshore import tonnage to levels not seen since 2008. Coated freesheet imports from Asia are also up sharply. Most of the gains have come from South Korea, but even Chinese producers, who face prohibitively high duties on exports of coated sheets to the U.S., are now beginning to ship about 4,000 tons per month of coated freesheet to the U.S. market. (RISI)