USA Tissue Tracker: April Showers Bring May Flowers (and More Tissues)

 

RISI, Boston, Mass., USA, has released its U.S. Tissue stats for May. Converted product shipments and parent roll production remain higher y/y and growth rates rebounded following a weak April, which should ease concerns of a broader slowdown in tissue markets.

Converted product shipments 2.0% higher y/y (+1.9% in 2017). Total At-Home (consumer) shipments of converted tissue products increased 1.6% y/y and 1.5% in 2017. This strength was attributable to higher volumes in bathroom tissue (+1.6% y/y), toweling (+1.7% y/y), and napkins (+2.8% y/y), while partially offset by weakness in facial tissue (flat y/y). Total Away-from-Home (AfH) shipments of converted tissue products also showed strength, increasing 2.9% y/y (+2.8% in 2017). For AfH, bathroom tissue volumes grew 2.5% y/y, towels rose 2.8% y/y, and napkin volumes were up 2.2% y/y.

Parent roll production rose 3.3% y/y (+2.0% in 2017). Parent roll production was 777,000 tons in May, up 3.3% y/y (+7.6% m/m). Domestic parent roll consumption was 791,000 tons, 2.1% higher y/y (+1.4% in 2017), and up 7.8% m/m.

Operating rates higher than the 10-year May average. Operating rates rose m/m to 95.9% (from 92.2% in April and 95.1% last year). This compares favorably with the 10-year May average of 95.2%. Mill capacity was up 2.4% y/y and 3.4% m/m.

Net U.S. tissue imports down 1.5% y/y (though represent only ~5% of consumption). Net U.S. tissue imports decreased 1.5% y/y (+1.4% YTD) in April (latest customs data). U.S. exports of converted tissue products were up 2.7% y/y, while Canadian volumes continue to rise, up 10.0% y/y.

Parent roll prices higher m/m for all grades. High-quality virgin parent rolls prices strengthened in May to $1,398/ton, up 0.6% from April (+2.8% y/y). Recycled parent roll prices also increased, with the high-quality grade at $1,145/ton, up 0.4% m/m (+1.8% y/y).

Seven tissue PMs in the pipeline (four TAD and three NTT) in 2018/19. This month, Georgia-Pacific announced that its Palatka, Fla. mill will be the site of its $400 million TAD tissue PM, which will start in 2019. As previously noted, Irving Consumer Products is expecting delivery of a new TAD tissue making machine from Valmet in 2018 (RISI estimates capacity to be about 70,000 ST/year). First Quality Tissue also has two new TAD machines coming online as a part of its 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, Pennsylvania and is projected to start in the first half of 2019. These two machines will add ~145,000 tons of production capacity. Additionally, Clearwater plans to build a new Valmet NTT tissue machine at the company's existing facility in Shelby, N.C., with an expected annual capacity of 70,000 tons spread across high-quality private-label premium and ultra-premium tissue products (expected to come online in the first quarter of 2019). In terms of startups, Resolute Forest Products announced the startup of its new tissue machine in Calhoun, Tenn., which will continue to ramp-up production before reaching maximum capacity in mid-2018.

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