US pulp and paper producers will experience some tightening as exports wane.
Most of the growth in demand for pulp and paper products will come from the non-Western world. Demand in both North America and Europe will be flat to lower, while Africa, Asia Pacific, Latin America and the Middle East will all see upticks. Overall, the strongest growth categories will be for market pulp, packaging, tissue and towels and specialties.
The US dollar will remain strong compared to other currencies, however, and as a result, US producers will struggle to compete in global markets because exports from the US will be 20 percent more expensive than end products from other countries.
Expect domestic long fiber (conifer) supply to remain tight, keeping prices elevated.
Demand for pine fiber will increase; growth in OSB production (a result of the slow recovery in housing), pulp and paper production (a result of global demand) and industrial wood pellet production (a result of new capacity coming online) will exert pressure on the demand side. On the supply side, the reduction in sawtimber harvests due to the slow housing recovery has reduced the amount of pulpwood available to the market. A combination of these demand and supply pressures will keep prices elevated throughout 2016.