Paper360 - November/December 2017 - 44

the bottom line | GRAPHIC PAPER

Managing the Decline of
Graphic Paper Demand
DEREK MAHLBURG

North American graphic paper
demand has declined by an average of 4.9
percent, or 1.2 million tons, annually, over
the past five years, which has forced producers to make major adjustments to capacity
through machine closures and conversions
to other grades. Demand is continuing to
sink steeply in 2017, and summer brought a
new series of capacity reduction announcements. The persistent decline of demand
will continue to force downward capacity adjustments, and the shrinking size of
graphic paper demand and supply may make
it increasingly difficult for this adjustment
to be a smooth process.
SAME PACE, FEWER TONS
Although we expect demand to retreat further, the size of the annual loss in tonnage
terms should eventually moderate, even if the
44

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pace of demand decline does not decelerate
at all. As the size of each market shrinks over
the course of 10 years, the size of annual paper
demand losses will also decrease.
Here is an example: For coated mechanical,
an annual loss of 6.7 percent in 2018 would
be equivalent to 182,000 tons of lost demand;
but the amount of lost tonnage from a 6.7
percent decline would be only 97,000 tons
in 2027. This shift is most dramatic for the
grades that eroded most rapidly in 2012-2016,
with the size of tonnage losses narrowing
by about half for mechanical graphic paper
grades, compared to 20-25 percent for coated
and uncoated freesheet.
Unless the pace of the declines accelerates
dramatically, fewer tons of demand will be
lost each year, a welcome development for
producers weary of dealing with losses of 1.0
million tons or more each year.

NOVEMBER/DECEMBER 2017

However, while demand declines will be
getting smaller, individual capacity closures will become more and more significant. Although there are often partial shifts
between grades or to specialty products,
supply reductions must eventually result
in the permanent closure or conversion of
paper machines.
A shrinking supply base means that, holding machine size constant, each additional
capacity reduction accounts for an increasing share of existing capacity. Except for
uncoated woodfree, the average capacity of
North American graphic paper machines
is around 200,000 tons, while a number of
smaller, older or more specialized machines
put the average capacity for uncoated
freesheet machines at only 135,000 tons.
This is part of why even the 11th uncoated
freesheet machine closure accounts for less
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Table of Contents for the Digital Edition of Paper360 - November/December 2017

Setpoint
Over the Wire
Rebuilds and Conversions
Proud to be a Papermaker
The New Cascades
Operational Data Helps Mills Meet Challenges
Papermaking Best Practices with Vacuum-Dewatering Systems: Part 2
TAPPI Library is an Industry Resource
Managing the Decline of Graphic Paper Demand
TAPPI Journal Summaries
2017 PPI Awards Finalists
TAPPI News
ASPI News
Index of Advertisers
Paper360 - November/December 2017 - Intro
Paper360 - November/December 2017 - cover1
Paper360 - November/December 2017 - cover2
Paper360 - November/December 2017 - 3
Paper360 - November/December 2017 - 4
Paper360 - November/December 2017 - 5
Paper360 - November/December 2017 - Setpoint
Paper360 - November/December 2017 - 7
Paper360 - November/December 2017 - Over the Wire
Paper360 - November/December 2017 - 9
Paper360 - November/December 2017 - 10
Paper360 - November/December 2017 - 11
Paper360 - November/December 2017 - Rebuilds and Conversions
Paper360 - November/December 2017 - 13
Paper360 - November/December 2017 - 14
Paper360 - November/December 2017 - 15
Paper360 - November/December 2017 - 16
Paper360 - November/December 2017 - 17
Paper360 - November/December 2017 - 18
Paper360 - November/December 2017 - 19
Paper360 - November/December 2017 - 20
Paper360 - November/December 2017 - 21
Paper360 - November/December 2017 - 22
Paper360 - November/December 2017 - 23
Paper360 - November/December 2017 - Proud to be a Papermaker
Paper360 - November/December 2017 - 25
Paper360 - November/December 2017 - 26
Paper360 - November/December 2017 - 27
Paper360 - November/December 2017 - 28
Paper360 - November/December 2017 - 29
Paper360 - November/December 2017 - The New Cascades
Paper360 - November/December 2017 - 31
Paper360 - November/December 2017 - 32
Paper360 - November/December 2017 - 33
Paper360 - November/December 2017 - Operational Data Helps Mills Meet Challenges
Paper360 - November/December 2017 - 35
Paper360 - November/December 2017 - 36
Paper360 - November/December 2017 - 37
Paper360 - November/December 2017 - Papermaking Best Practices with Vacuum-Dewatering Systems: Part 2
Paper360 - November/December 2017 - 39
Paper360 - November/December 2017 - Managing the Decline of Graphic Paper Demand
Paper360 - November/December 2017 - 41
Paper360 - November/December 2017 - TAPPI Journal Summaries
Paper360 - November/December 2017 - 43
Paper360 - November/December 2017 - 44
Paper360 - November/December 2017 - 45
Paper360 - November/December 2017 - 2017 PPI Awards Finalists
Paper360 - November/December 2017 - 47
Paper360 - November/December 2017 - TAPPI News
Paper360 - November/December 2017 - ASPI News
Paper360 - November/December 2017 - Index of Advertisers
Paper360 - November/December 2017 - cover3
Paper360 - November/December 2017 - cover4
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