Arandell Corporation

Blake Hutchison, Director of Purchasing

Over the past three business days, we have seen the North American paper mills announce price increases.  The following is a list of mills, the affected grades, and when the increase takes effect:

 Appleton Coated:

• $1.50/CWT
• Effected grades:
  • Utopia 3
  • Utopia Book Family Grades
  • Utopia Film Coat
  • All private label grades
• All basis weights and finishes
• Effective with shipments April 1^st, 2010 or later.

 West Linn:

• $1.50/CWT
• Effected Grades:
  • Sonoma
  • Capistrano
  • Natureweb
  • Natureweb Plus
• All basis weights and finishes
• Effective with all new or existing orders shipped on or after April 1^st 2010.

 Verso:

• $1.50/CWT
• Effected Grades:
  • Influence
  • Velocity
  • Liberty
  • Advocate
  • Clarity
• All basis weights and finishes
• Effective with all orders entered immediately (3/15) and all order shipping on or after April 1^st 2010.

 Evergreen:

• $1.50/CWT
• Effected Grades:
  • TruSpec 4
  • TruSpec 4.5
  • TruSpec 5
• All basis weights and finishes
• Effective with orders entered immediately (3/16) and all orders shipping on or after April 1^st, 2010.

 AbitibiBowater:

• $1.50/CWT
• Effected Grades:
  • AbiBowGloss
  • AbiBowBright 76
  • AbiBowBright 80
  • AbiBowMax 84
  • AbiBow SCA
  • AbiBow SCB
  • AbiBow SNC
• All basis weights and finishes
• Effective for all new orders placed immediately and for all shipments effective May 1^st, 2010.

 NewPage

• $1.50/cwt
• Effected grades:
  • Arborweb
  • Orion
  • Vision
  • Escanaba
  • Dependoweb
  • Capri
  • Consoweb
• All basis weights and finishes
• Effective with new orders entered on or after March 15^th, 2010.

Why the increase?

In discussing these increases with the various mills, the most common answer has been their production COSTS. Indeed, those have been on a slow, but steady rise over the past six months, especially with the price of their primary input, pulp. The mills were able to absorb these rising costs as long as they were still making money from the Black Liquor tax credit, but now that it is gone (as of 12/31/09) they are hurting.

Another reason being given is the strength they are seeing in their order logs. Since November 2009, there has been an uptick in orders, and year over year paper shipment numbers have seen double digit increases since December 2009. The mills have curtailed so much production in the past 24 months that they believe they have been able to bring their supply level in line with demand. 

Will there be more?

My estimate is that the $1.50/cwt increase is only half of what the mills really want. I believe they initially wanted $3.00/cwt, but have since realized that perhaps two $1.50/cwt quarterly increases would be a more effective way to incrementally get what they desire. I very much expect to see another $1.50/cwt increase, effective July 1, 2010.

Related posts:

1. New Round of Paper Price Increases Announced and Lead Times Creeping Out
2. More Domestic Paper Price Increases Announced
3. Axing Myths About Controlling Paper Costs
4. Paper Market Predictions for 2010
5. Things are getting tight!