USA Tissue Tracker: Shipments Steadily Growing

U.S. converted product shipments and parent roll production in October 2016 increased y/y while operating rates dropped m/m to 93.5%, in line with the 10-yr. average for October, according tissue stats released this past week by RISI, Boston, Mass, USA. 

Converted product shipments 2.6% higher y/y (+2.0% 10 month YTD). Total At-Home (consumer) shipments of converted tissue products increased 1.9% y/y and 1.6% 10 month YTD. This strength was attributable to higher volumes in toilet paper (up 1.7% y/y), towel (+2.5% y/y), and facial (+3.0% y/y). Total Away-from-Home (AfH) shipments of converted tissue products also showed strength, rising 4.1% y/y (+2.8% YTD). For AfH, toilet paper volumes grew 4.8% y/y, towels increased 3.7% y/y, and napkin volumes climbed 2.4% y/y.

Parent roll production up 5.7% y/y (+2.0% 10 month YTD). Parent roll production was 745,000 tons in October, up 5.7% y/y (flat m/m). Domestic parent roll consumption was 770,000 tons, up 6.4% y/y (+3.2% YTD) and flat m/m.

Operating rates in line with the 10-year October average. Operating rates edged lower m/m to 93.5% from 96.6% in September (91.1% last year). This is largely in line with the 10-year October average of 93.3%. Mill capacity was up 3.0% y/y (+3.4% m/m).

Net U.S. tissue imports jumped 54.8% y/y (though represent only ~5% of consumption). Net U.S. tissue imports increased 54.8% y/y (+45.3% YTD) in September (latest customs data). U.S. exports of converted tissue products were up 2.6% y/y in September, while Canadian volumes increased 3.3% y/y.

Parent roll prices lower m/m for virgin and recycled grades. High-quality virgin parent rolls showed slight weakness in October at $1,377/ton, down 0.6% from September (+2.4% y/y). Recycled parent roll prices declined slightly, with the high-quality grade at $1,126/ton, down 0.8% m/m (+1.0% y/y).

New price increases. In converting tissue products, AfH producers announced new price increases. Increases range from 3% to 8% and will take effect between Nov 1, 2016, and Jan 1, 2017, depending on the company. According to RISI, the ranges include 3% to 5% (Solaris Paper), 8% (K-C), 5% (SCA), and 6% (Cascades).

Three new TAD tissue PMs announced and some year-end closures. Irving Consumer Products announced the purchase of a new TAD tissue making machine from Valmet with an expected delivery in 2018 (RISI estimates capacity to be about 70,000 tons/yr.). First Quality Tissue also announced two new TAD machines as a part of their expansion initiatives. One machine will be constructed in Anderson, S.C., and is expected to begin production in the second half of 2018, while the other will be in Lock Haven, Pa. and is projected to start in the first half of 2019. These two machines will add ~145,000 tons of production capacity. These announcements were partially offset by Clearwater Paper’s announced closure of its Oklahoma City converting facility and two tissue machines in Neenah, Wis., which removes 32,000 tons of production capacity beginning Dec. 31, 2016.

RBC Dominion Securities Inc. Paul C. Quinn (analyst), (604) 257-7048.