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Themes for 2024 and beyond

Pricing Levels of the past really are History

Future is for stable to rising prices through 2028
Europe is likely to be more volatile than North America
Forecast is for a 4% rebound in demand over 2023 which was the lowest demand year on record for all grades with a decline of 28%

Capacity in North America is ½ of what it was in 2018 – and still being reduced
Capacity cuts forecast in Europe will reduce capacity by 75% by 2028
Global paper market impacting imports and exports

Red Sea Crisis – shifting EU exports to NA
Market pulp pricing – rising in 2024
Port of Ballimore closing will restrict imports until port reopens
Transportation strikes in Finland – short term mill closures

North America

Europe

2018 to 2023

2023 to 2028

-75%

Graphic Paper Capacity

Disclaimer! – the graphic paper industry is undergoing historical changes, any forecast can only be educated guesses

-50%

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Uncoated Freesheet

Domtar the complete shutdown of a 200-k ton per year paper machine at Ashdown AK.

Operating rates for 2024 due should reach at 89 to 90% for freesheet

Potential for allocations of some products/mills after 3^rd quarter

Potential for an additional PM shut in 2024/25

90%

5% to 7% price increase announced

Prices

RISI Fastmarkets

RISI Data 2024

Importers April, Burgo, Navigator, Suzano and Sappi Europe have all announced price increases

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Coated Freesheet

Coated demand dropped by 38% in 2023.

Additional capacity will need to be removed beyond Sappi to correct OP rates

Coated prices are expected to drop some in 2024 after holding basically steady in 2023 even with low demand. Still not traditional pricing to OP levels and demand

Pricing will not to return to pre pandemic levels due to higher input cost

90%

Prices

RISI Data 2024

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Coated Mechanical

Demand is down primarily due to magazines and catalogs closing and reducing circulation and distribution.
Only 4 PM’s Left
Expectation of a major closure in 2024/25- mill closure = exit
Any exit will move OP to +95%

Prices No PM Exit

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European Graphic Paper Demand

European Coated Wood Free Demand

Thousands Metric Tonnes, Percent

Source: RISI European Graphic Paper 5 Year Forecast updated Feb 20, 2024

Demand for graphic printing paper continues to decline throughout the period after seeing some forecasted recovery in 2024*

*Note: 2024 early demand is weak

2024

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European Operating Rates Graphic Paper

European Graphic Paper Production and Capacity Changes, Operating Rates

Thousands Metric Tonnes, Percent

Source: RISI European Graphic Paper 5 Year Forecast updated Feb 20, 2024

Operating Rates are forecast to remain below 90% through 2028

Rising pulp pricing will increase production cost for many mills

Europe has been operating in an overcapacity state since 2018 and until 2023 few capacity reductions took place

Capacity reductions are accelerating through 2026

2024

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Major changes for an adapting industry

Producers are carefully managing capacity to demand

Short term paper machine shutdowns

Some products will be made only or limited availably based on mill schedules – more special = more difficult

Paper system, mills & distributors are being more careful with inventory positions

Paper cost – higher price is the new baseline

Stable to rising prices will be the norm through 2028

Input cost and profitability

Higher cost for paper results in less demand for paper

Negative cycle

Some grades are reaching the last mills standing

Coated Mechanical in NA 4 mills in operation

Mills are realizing that inkjet is growing at the expense of offset

Increasing focus on inkjet

Higher value pages at lower volumes

Inkjet