November 20, 2013
A Note from Jay Scammell - Graphic Dimensions President & CEO:
You may or may not have heard about the recent news about the closure of the International Paper's Courtland Alabama paper mill. The mill (IP's Largest Paper Mill) will shut down in stages with a full closure expected to be complete by the end of the first quarter of 2014. The closure of this mill will have a significant impact on the operating rates and future price of uncoated free sheet (UFS) or bond paper. The Courtland, AL mill currently produces approximately 8% of the UFS manufactured in North America. Once closed, North American mills will be operating in the 96%-100% capacity range.
Any additional closures or unscheduled temporary shut downs may have an immediate impact on supply. When any industry operates at such high capacity rates it inevitably results in tighter supply and increased sell prices.

We should all anticipate the affect this closure will have on our industry. UFS mills have been closing at an alarming rate over the past 10 years. This closure, combined with previously announced 2014 closures by GP and Boise, will reduce capacity by almost 1 UFS million tons in Q3 2013 and 2014. Although usage continues to decline at a rate of 3%-4%/year, these massive closures outweigh usage decline. Therefore, we anticipate continuing escalating prices on bond grades over the next year.