WestRock announces the acquisition of SP Fibers.  Pratt starts up their new mill in Valparaiso, Indiana. WestRock announces the indefinite idling of a medium machine in Connecticut and a linerboard machine in Florida.

Corrugated Supplies announces a new mill in Milwaukee.

What the heck is going on?

Here is my take on the medium/linerboard market today as I shared them with a senior analyst in our industry...

What you will see happening is new, highly efficient capacity being built near the markets and old, inefficient capacity distant from the markets being shut down.  It is a combination of both technology and logistics.  The question right now, in my mind, for instance, is what is the right capacity to have around Chicago?  Mill nets (selling price minus transportation) is what matters.  Inside the fence, it is efficiency of production.  On the fiber side, it is economy of receipt of raw materials.  

The other matter playing into this is the reduction in caliper of the board because of the rise in performance of the board.  New mills can make high performance liner at 2/3rds to 1/2 the basis weight of the old mills that were built to make 42 lb.  This is what the market wants, and although I have not looked at cut-up MSF, I would be surprised if it is not rising.  

Take an old virgin fiber mill based on making 42 lb and try to convert it to even 35 lb and you throw the fiber line and the energy plant completely out of balance.  Today, there is a lot of 26 lb liner being made.  This means a largely virgin fiber mill needs only 61% of the fiber it needed when it made 42 lb to produce the same MSF.  This is a tremendous upset in the balance of the mill fiber streams and energy requirements.   Rebuilding the machines to make the same tonnage as before means making them run much faster (beyond their original balance speeds) and will lengthen the machine in both the wet end and dryers. This really means a new machine--in many cases in a new building.  Does anyone want to build a new machine at a site where everything else is fifty to sixty years old?  Where the labor practices and perhaps union contracts demand twice as many personnel as a new mill sitting next to the market and fibered with recycled paper?

You will see mill sites within companies competing to stay in business based on these criteria.  I would not be surprised to see old virgin fiber mills way out in the woods, so to speak, shut down.  Over the last twenty years the markets have changed their economics so they no longer make sense.