Soft Tissue
The CEO of Clearwater is talking about challenges in the tissue industry these days.
We have seen this before. Around 1980 - 83, tissue was overbuilt and the pricing softened.
This may have happened again, but I am not sure. Yes, there has been a lot of tissue capacity built in the United States in recent years. There has also been a lot of hoarding in the last 20 months or so. In our own household, I think tissue purchases have gone down as we work off our inventory. Not that this makes us representative of the entire United States, but if similar behavior is widespread, it could explain part of the issue.
Since World War II, tissue consumption has held steady in the United States at 35 pounds per capita per year. I doubt that this figure has changed much. So, add up the production capacity and one can see how much overhang there is.
Of course a slow pace of population growth could get the tissue producers out ahead of the demand, but if all are disciplined, it should be short lived.
Just remember, this always holds true:
Paper is made of cellulose.
If that cellulose is used for its physical properties (tissue, diapers, packaging), the business is going great.
If that cellulose is used to convey ideas (newsprint, fine paper, etc.), the business is on life support.
