Cut size uncoated freesheet remains the most profitable segment in graphic paper, and economic growth, rising pulp prices, and global trade conditions are pushing cut size prices toward recovery. Prices for cut size uncoated freesheet should continue to rise in 2018 and beyond, and Asian and European prices are already closing the $120 - $220/metric ton gap with U.S. prices that opened up in 2015, according to the latest Global Outlook for Cut Size Uncoated Freesheet Paper Markets, published this week by RISI, Boston, Mass., USA.

"Tariffs have become an issue throughout the world, as the fallout from U.S. tariffs on cut size has shifted global trade flows. Other key countries have imposed or are investigating restrictions on cut size imports as well, including Australia, Turkey, Brazil, Mexico, and India," said John Maine, RISI VP of economic analysis for graphic paper, and co-author of the new study, along with RISI Senior Economist Derek Mahlburg.

"In addition, economic growth and heavy competition for pulp supplies have revived cost inflation, pushing up prices despite demand declines," said Maine. "We expect the fight for market share in both growing and mature cut size markets to remain intense."

As the region that has added the most capacity in recent years, Asia's exports will continue to affect every other cut size market. Led by Indonesia, Thailand, and China, Asia will be responsible for 43% of all global cut size production by 2027, according to the Outlook. Capacity growth will continue to make oversupply an issue for the Asian industry, as new machines in Asia and the Middle East have the potential to further disrupt world markets and force even more capacity adjustments.

"Exports from low-cost Asian mills put pressure on domestic cut size freesheet production in every major market, though tariffs, currency fluctuations, and other regional factors complicate the picture," Maine explained. "For example, many mills in Indonesia and Brazil have lower costs than the U.S. South, even for deliveries within the U.S.—but a weaker dollar and tariffs of more than 22% erase this advantage. Pulp costs have also caused major shifts in global and regional competitiveness over the past two years." 

Now in its sixth edition, RISI's Global for Cut Size Uncoated Freesheet Paper Markets was developed to support analysis of the complex interactions that define the cut size category, which represents more than 32% of the world's total uncoated freesheet market. Its 10-year forecasts for prices, demand, production, capacity, and trade are supported by research and data of unmatched scope, covering 133 countries and all 250 machines that produce cut size globally.

For more information, visit RISI online.