USA Tissue Tracker: Operating Rates Remain Constrained in January

According to RISI, Boston, Mass., USA, U.S. Tissue Stats for January 2017, converted product shipments and parent roll production increased y/y while operating rates remained relatively flat m/m at 90.2%, below the 10-year average for January.

Converted product shipments 1.6% higher y/y. Total at-home (consumer) shipments of converted tissue products increased 1.7% y/y. This strength was attributable to higher volumes in bathroom tissue (up 1.8% y/y) and towel (+1.8% y/y), and facial (+2.9% y/y). Total away-from-home (AfH) shipments of converted tissue products also showed strength, increasing 1.3% y/y. For AfH, bathroom tissue, volumes grew 2.5% y/y, towels rose 1.0% y/y, and napkin volumes were flat y/y.

Parent roll production rose 1.8% y/y. Parent roll production was 725,000 tons in January, up 1.8% y/y (+1.1% m/m). Domestic parent roll consumption was 742,000 tons, 1.9% higher y/y and up 1.6% m/m.

Operating rates lower than the 10-year January average. Operating rates were relatively flat m/m at 90.2% (from 90.2% in December and 91.8% last year). This compares unfavorably with the 10-year January average of 92.9%. Mill capacity was up 3.6% y/y (+0.9% m/m).

Net U.S. tissue imports surged 33.4% y/y (though represent only ~5% of consumption). Net U.S. tissue imports increased 33.4% y/y (+39.2% in 2016) in December (latest customs data). U.S. exports of converted tissue products were down 5.7% y/y in December, while Canadian volumes declined 8.2% y/y.

Parent roll prices were largely unchanged m/m for virgin, while recycled grades were up. High-quality virgin parent rolls remained flat m/m in January at $1,367/ton (+1.0% y/y). Recycled parent roll prices improved slightly, with the high-quality grade at $1,123/ton, up 0.4% m/m (flat y/y).

Four tissue machine were announced (three TAD and one NTT) 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 ST/yr.). First Quality Tissue also announced two new TAD machines 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, Pa., and is projected to start in the first half of 2019. These two machines will add ~145,000 tons of production capacity.

Most recently, Clearwater announced 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). 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 removed 32,000 tons of production capacity beginning Dec. 31, 2016.