How will extended elevated pulp prices affect the North American graphic paper market?

CHARLOTTESVILLE, VA, April 2, 2010 (RISI) - The level of integration for European and Asian graphic paper mills is generally much lower than for North American producers, which will cause the mostly non-integrated off-shore suppliers to experience far greater negative effects from the increased pulp prices. This will be a boon to the North American industry, which will find itself with a cost advantage, and the reduced import competition will push up paper prices.

Integrated producers in North America will benefit even more, as cost pressure on the few non-integrated mills will drive paper prices further upward. Although North American fully integrated mills will almost unequivocally benefit from the global surge in pulp prices, the level of integration differs across grades, and the size and shape of the impact will vary depending on the specifics of each market.

Newsprint producers are likely to see a very minimal effect from increased market pulp prices because of the meager amount of kraft pulp necessary to make newsprint. Some Southern mills use a low percentage of kraft pulp, but very few Northern and Canadian mills use any market pulp.