Paper and paperboard capacity grows, but industry must address
key competitive issues
By W. Henson Moore, The American Forest & Paper
American Forest & Paper Association’s
recently completed 45th Annual Survey of Paper, Paperboard and
Pulp Capacity shows that U.S. paper and paperboard capacity has
stabilized after three consecutive years of decline. The report
also indicates the industry’s capacity to make paper and
paperboard will remain nearly flat 2007 — well below the
2.2 percent annual capacity growth the industry experienced in
While this is better news than
the industry has received in recent years, the findings underscore
the need for America’s forest products industry to continue
aggressively addressing the key factors affecting its competitiveness.
America’s forest products industry has several important
competitive advantages over many overseas competitors, including
an abundant fiber supply, highly skilled workers, world class
mills, and the world’s largest domestic market. Restoring
the industry’s competitiveness involves continuing the ongoing
work to address some of the key policy issues affecting the industry.
That means leveling the playing field with overseas competitors
by insisting that everyone meet the same high environmental standards
U.S. companies operate under. It means achieving a fair tax code
in line with competitor nations, eliminating tariffs, and ending
market-distorting practices such as government subsidies and currency
manipulation. Following is a breakdown of the capacity survey’s
findings for each product line our industry manufactures. For
more information about the capacity survey or about the key issues
affecting America’s forest products industry, please contact
AF&PA at 202-463-2700.
U.S. printing & writing paper capacity (net of cotton
fiber papers and bleached bristols) peaked in 2000 at 27.6 million
tons. By 2003, it had fallen to 25.5 million tons, a decline of
nearly 8% within a 3 year period. Capacity did resume growing
in 2004 – but by less than 1%. It is scheduled to rise by
about 2% in 2005 and then increase fractionally during the 2 remaining
years of the survey. By 2007, capacity will still be below the
level it was a decade earlier.
Free sheet capacity is expected
to grow again over the 2005-2007 forecast period, but much more
slowly – under 2.5% for coated free sheet and under 0.5%
for uncoated free sheet. Coated mechanical is projected to remain
basically unchanged over the survey period, while uncoated mechanical
is expected to grow by nearly 6% this year, and then grow fractionally
Newsprint capacity declined in
2004 – from over 6.9 million tons in 2003 to some 6.6 million
tons last year, or by almost 5%. Capacity is projected to decline
another 500,000 tons to about 6.1 million tons in 2005. No appreciable
changes in capacity are scheduled for 2006 and 2007.
Tissue paper capacity is expected
to increase 3.3% in 2005. For the 3 year projection period (2005-07),
tissue paper capacity growth is expected to average 1.3%. Unbleached
kraft paper capacity will hold nearly steady during the next 3
years, declining 0.2% in 2005 and showing no changes in 2006 and
2007. Bleached kraft paper capacity declined 11.8% in 2004, but
is slated to decline 17.3% in 2005 and then hold stable during
2006 and 2007.
Linerboard capacity declined 0.2% in 2004 to 25.5 million
tons. Linerboard capacity is slated to edge up an average annual
rate of 0.3%. Corrugating medium capacity increased 1.5% in 2004
to 11.1 million tons. Capacity is slated to increase 0.6% in 2005
and then hold essentially stable after that. Recycled paperboard
capacity (excluding containerboard and gypsum wallboard facings)
declined 2.5% in 2004 to 5.9 million tons. Capacity to produce
recycled paperboard is slated to decline an additional 2.3% in
2005. Recycled paperboard capacity is projected to level off in
2006 and 2007.
Unbleached Kraft folding boxboard
capacity contracted 1.6% in 2004, to a level of 2.4 million tons.
If these plans come to fruition, capacity to produce this grade
will be up 0.7% in 2007 relative to 2003.
Bleached paperboard capacity
(excluding bleached linerboard) rose 1.9% in 2004 to a level of
6.0 million tons. Bleached folding boxboard capacity declined
0.9% (29,000 tons) in 2004, while milk carton and food service
board capacity rose 3.8% (95,000 tons).
Bleached folding boxboard capacity
will decline 2.6% in 2005 and then remain essentially unchanged
during the subsequent two years. Capacity to produce milk carton
and food service board is projected to expand at an average annual
rate of 0.2% a year during the projection period.
Total market pulp capacity is expected to grow by 86,000
tons through 2007. Bleached softwood sulfate market pulp capacity
is expected to approach 6.4 million tons by the year 2007. Bleached
hardwood sulfate is expected to decline by 17,000 tons by 2007
to reach 2.8 million tons. Total chemical paper grade market pulp
capacity is expected to reach 9.7 million tons by 2007.