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At the end of last year, we provided an update on the envelope paper market. We now have additional information for you as we head into the second half of 2019.

Changes in the Envelope Paper Market

Reduced Uncoated Freesheet Capacity

The supply of Uncoated Freesheet (UFS) has been shrinking for some time now, particularly since late 2017. From late 2017 through April 2019, 1.2 million tons of UFS capacity have been removed from the market1. This has resulted from the repurposing of machines to alternative products and the closure of mills which includes Georgia-Pacific’s recent April 2019 closure of their Port Hudson mill which removed 630,000 tons of UFS from the market.

And there are more closures and conversions to come:

This, plus a substantial reduction of cut-sheet papers, leaves a tremendous shortfall in the overall UFS supply chain.

Reduced Coated Paper Capacity

The supply of coated paper also continues to shrink. In May, Verso announced the closure of the mill in Luke, Maryland that produced 450,000 tons of coated paper.

Reduced Global Paper Capacity

Globally, paper markets are tightening. Asia Pulp & Paper (APP), one of the largest pulp and paper companies in the world, announced plans to shut down 850,000 tons of UFS at their Kerawang and Mojokerto Indonesian mills during 2019.

Minimal Impact on Uncoated Freesheet Capacity from Trade

Some of the North American demand for UFS has been tempered by the increased imports from foreign markets. Global imports into the United States were up 30% in the first quarter of 2019, which is significant considering UFS imports have historically trended lower. However, U.S. exports decreased by 31% for the same time period2, so overall UFS imports were 1% less than UFS exports3, resulting in minimal net impact on the overall U.S. UFS capacity.

The Calm Before the Storm?

In the short term, there’s a modest softness of paper availability. This was anticipated. However, this is likely the calm before the storm: UFS supply is expected to tighten significantly in late summer and through the fall. Availability of UFS will be tight through the balance of 2019 and 2020.

The New Norm?

As we continue to navigate these changes in the envelope paper market, Tension’s message to our customers is the same:

  1. Plan Ahead – Tighter paper markets could be the new norm, and a firm paper market is forecasted to be here by late summer. Plan ahead now to avoid the unknown.
  2. Expect the Unexpected – Lead times will continue to require close management. If you know of an upcoming order or project, let us know about it as soon as possible.
  3. Let Tension Be Your Advocate – Our goal has not changed: Let us help you manage your paper needs. Tension has a strong position in the marketplace; let us leverage our relationships with the paper mills on your behalf.

Together, let’s work toward the common goal of meeting customer needs. Contact us today to discuss how we can help you meet your upcoming envelope paper needs.


1 – RISI

2 – RISI Paper Trader, April 2019

3 – American Forest & Paper Association, April 2019