Paper packaging firms reducing operations

Hood Packaging, a major supplier of multiwall shipping sacks based in Hamilton, Ontario, is closing its plant in Valdosta, Ga. A company executive tells the Columbus, Ga., Ledger-Enquirer “there is no chance the plant will reopen even if the economy improves.” The multiwall sack industry has been hard hit by the recession and downturn in the construction industry. Sack shipments (units) through April were down 17.5% from a year ago, according to Paper Shipping Sack Manufacturers Association statistics.

Meanwhile, another Georgia firm, Austell-based packaging products maker Caraustar Industries is restructuring under Chapter 11 bankruptcy protection and plans to emerge as a private firm with Wayzata Investment Partners as controlling shareholder. The firm makes recycled paperboard and converted paperboard products, including tubes, cores, composite containers, folding cartons and gypsum wallboard facing paper.

These latest paper supply cutbacks come as the American Forest & Paper Assn. reports a January-April paper and paperboard production decline of 17.4% when compared with the first four months of 2008. As reported by the RISI wood products news service, output plummeted by over 16% in April compared with the year-ago month. In addition to the April decline, year-over-year output dropped by 17.6% in March, 18.6% in February, and 18.1% in January. Total U.S. paper output was down 19.0% year-to-date through April, and paperboard output was down 16.2% year-to-date. The demand drop in basic paper and board grades began last fall, RISI reports, and outlook remains clouded.

Continuing to struggle in the midst of major drop-off in demand caused by the global economic downturn, US - and almost 1.2 million tons - output, according to figures from the (AF&PA).

Through the first four months of 2009, leading to a freefall in pricing for the raw materials market pulp and recovered paper in the USA. Prices for both grades have since recovered slightly, but the impact has been felt amongst other grades in the industry.

In April, output of major US grades unbleached kraft linerboard, uncoated mechanical, and coated papers dropped by between 18-32% compared with April 2008 output. Even harder hit, in terms of a reduction in output, was newsprint, which was off 38%, according to an AF&PA report.

Uncoated freesheet (UFS) production, which had been hard hit, was off 11% in April. Year-to-date, UFS output is off 14.5%.

In terms of year-over-year percentage declines, paper grades fared worse than paperboard grades for the second consecutive month.

In total, April output declined by 1.2 million tons, totaling almost 6.2 million tons of paper and board, compared with 7.4 million tons in April 2008. Year-to-date output is off 17.4% or 5.2 million tons compared with January thru April 2008.

Source: Purchasing.com