Hardwood%20Usage

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Hardwood Usage in the NW Pulp and Paper
Industry Western Hardwoods Association Seminar,
October 7, 2003
By Tim Gammell, Forest Resources Assn 10/03
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So, lets dive in ...
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ROUGH Overview US Pulp and Paper Industry
Production
In the US, nearly 60 pulpmills have ceased using
wood fiber since 1989
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FRA Regions - based on timber types, operating
conditions
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US Domestic Pulpwood receipts by region, 2002
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US Roundwood vs Chips (whole log and residual)
by region, 2002
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NW Pulp Paper Industry 23 mills, 11million
BDTs consumed yearly, producing 9.7 million
tons of product
(BC Alberta 30 mills producing 11.5
million tons of product yearly)
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Between 1989 and 2001, number of NW Pulp and
Paper mills dropped from 35 to 23
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? Kimberly Clark - Everett
Daishowa America ?
? Ponderay Newsprint
Port Townsend Paper ?
? Inland Empire--Spokane
Simpson Paper ?
Weyco - Cosmo ?
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A wide variety of pulping methods and products .
. .
Kraft pulp -- bleached (2,000 pounds in --
800-850 pounds out)

• Boise - St. Helens Specialty Grades,
  Market Pulp, Tissue
• Potlatch -- Lewiston Coated packaging,
  market pulp, Tissue/toweling
  

Kraft pulp -- unbleached (2,000 pounds in --
900-1,000 pounds out)

• Georgia-Pacific -- Toledo Linerboard
• Weyco -- Springfield Linerboard
• Weyco -- Albany Linerboard, kraft paper
• Longview Fibre -- Longview Linerboard, kraft
  paper
• Smurfit-Stone -- Missoula Linerboard

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Groundwood/mechanical pulp (2,000 pounds in --
1,750-1,800 pounds out)

• Ponderay News -- Usk Newsprint
• Inland Paper -- Spokane Newsprint
• SP Newsprint - Newburg Newsprint
• Daishowa America - Port Angeles Telephone
  Directory
• Blue Heron Paper - Oregon City Newsprint,
  Specialty, Bag paper

Semi-chemical pulp -- unbleached (2,000 pounds
in -- 1,500-1,600 pounds out)

• Georgia-Pacific -- Toledo Corrugating medium
• Longview Fibre -- Longview Corrugating medium

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Other mills - finished products
Georgia Pacific - Camas, WA Tissue,
Specialties Simpson - Tacoma, WA Linerboard,
Market Pulp, Unbleached Specialties Pope
Talbot - Halsey, OR Market Pulp Kimberly Clark,
Everett, WA Tissue Port Townsend Paper - PT,
WA Linerboard, Market Pulp Corrugated
Medium Boise -- Wallula White
papers, corrugating medium, market
pulp Weyco - Cosmopolis, WA Market Pulp Weyco -
Longview, WA Bleachboard (milk carton, etc),
market pulp, fine paper ... Stockton Pacific
- Samoa, CA Market Pulp
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And Some Major Non-Pulp Fiber Users
Medium density fiberboard (Plum Creek)
Particleboard (Roseburg) Hardboard (Sierra Pine)

BC Alberta mills, by the way, are primarily
(70) producing market pulp - reflecting focus on
export business and distance to markets. A
major contrast to relatively diversified Western
US mills product lines.
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Iraqs Sunni triangle
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Western US Chip-consuming rectangle
Over 6 of every 10 tons - hardwood fiber - is
consumed here
Nearly 4 of every 10 tons - all fiber -
consumed here
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Hardwood Usage

• 10-11 of total NW consumption - average of the
  last three years
• In 2002, hardwood consumed by NW pulpmills was
  1.1 million Bone Dry tons out of total 10.8
  million BDT

Ten of 23 mills use hardwood. Of those, two use
hybrid poplar plantation fiber exclusively, one
is into a variety 5 of remaining 7 are in chip
consuming rectangle
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Projected from YTD figures
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Projected from YTD figures
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Hardwood Usage - Why? Simply ...

• Hardwood usage linked primarily to finished
  product.
• Shorter, smaller diameter fibers fill in
  imperfections of paper product made from longer
  larger softwood fibers, providing smoother
  surfaces for printing, adherence.
• hardwood fiber helps absorption, pliability

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Observations

• 1 Fixed costs of paper production high
• - to get a perspective on capital investment for
  a sustainable healthy mill 28 days production
  to cover costs, profit (if any) is what is made
  on the last day or two of the month.

February is a loser month
2 Cost per ton is ultimately key for company
decisions, internally and internationally, to
make money and re-invest.
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Mill B - cost of 425 per ton
PROFIT
PROFIT
LOSS
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Mill F - cost of 480 per ton
PROFIT
LOSS
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Terms of Activity Refocus, reposition, rebuild,
replace, expand, sell, trade,
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3 There is a life cycle of mills - and a
corresponding management outlook for each phase

commodity, ample investing, core business
focus, lagging investment, shutdown or
buyout, niches - openness to trying new
sources, tenacity ...
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Out West ...
4 Supply of residual chips drives basic
existence of pulp mills overall - to clean up
after solid woods production
5 Hardwood adds value to diversified products
- a plus for overall mill stability.
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6 Available fiber important to begin with ...,
an abundance however doesnt trump a decision to
close a facility - that is based on other
components in the all important cost per ton
(wood costs, energy, capitol investment, labor,
product markets, personality of CEO/management,
shareholder expectations)
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Summary
1 Overall, making a living in paper these days
is tough ...
2 Pulp mills like cheap residuals first.
Because hardwood supply has traditionally come
from whole log chipping, relative cost is a
disincentive ...
Questions?