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Strategic & Financial Arguments(TM)
for the pulp and paper industry worldwide

October 2018

Participating as industry experts in pulp and paper financing and M & A deals around the world  for over two decades, we continue to see the same mistakes made over and over.  This newsletter is designed to help you avoid costly mistakes we have seen others make.  We will be giving you one or two points each month to help improve your performance.
 
China's Approach to Recycled Imports--Followup Confirmation

By Jim Thompson

Last month we talked vaguely about the Chinese recycled fiber dilemma and the actions that seemed to be on the horizon. 
 
Now we can report for certain on these. Global Win Wickliffe was already one month old news last month.  Nine Dragons had started to make a move earlier in the year, but now we can report with more certainty on their intentions with the US arm, ND Paper.  ND Paper is about to make some major investments in their newly acquired mills in Wisconsin and Maine.  ND Paper has also entered into an agreement to buy the recycled pulp mill in West Virginia.  It is also on their plate to add the mill at Old Town, Maine to their portfolio.
 
These actions are to address the new Chinese laws on the importation of recycled fiber containing contaminants. Simply, it looks as though they are going to produce air dried recycled brown fiber in the US as a feedstock for their mills in China.
 
This will bring a new calculus to the recycled fiber market.  US recycled containerboard producers have been enjoying low input costs ever since China cut off the fiber supply.  Now, the Chinese will apparently ramp up their purchases here and produce a brown market pulp to send to their mills in China.
 
This will ramp up the demand for recycled fiber here in baled form.  It just won't be going to West Coast ports.  It will be pulled from the Midwest and Eastern US for processing in Fairmont, WV; Biron, WI; and Old Town and Rumford, ME.  This will be quite a change in the logistics demands for these fiber sources--fiber will become deared in the eastern part of the US and go begging for buyers on the West Coast.  Speaking of sources, will they be buying OCC, mixed waste, or something else?  Remains to be seen. 
 
Have a comment?  Email me at jthompson@taii.com.

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If you have a casual question or a major deal, call me on my personal cell phone - 404-822-3412 or email me at jthompson@taii.com. We are here to help.

 

Sincerely,

 


Jim Thompson, CEO
Talo Analytic International, Inc.
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JRT Banker's Engineer