Through the first quarter of the year, the U.S. tissue market is showing rather mixed signals, as the fall of the Iconic Tissue Paper Mill and the Increase Tariff Cost on goods coming from China and the entrance of new players is changing the paper marketplace.
While some tissue producers reported higher volumes, slightly improved product pricing, or brighter prospects in the year last year 2018, most manufacturers blamed persistently competitive markets for the quarter's somewhat disappointing profits.
First-quarter demand was a bit of a mixed bag.
Year-over-year U.S. tissue demand is looking strong for January and February. Historically, March demand is normally slightly less, 1Q19 tissue consumption is expected to turned out to be comparable to 1Q18. The story changes somewhat if we separate the away-from-home market from retail consumer tissue paper.
While retail tissue paper seems to have been relatively equal thus far this year, AfH demand during the last quarter was exceptionally strong.
All things being equal, the extra orders for AfH tissue paper helped secure the last price hike, now being implemented by the mills.
What is not yet known is the extent to which the building of buyer inventory will impact the first-quarter demand.
AfH customers may pad their stocks of paper in advance of rising prices.
Whatever the case, the increase in AfH paper supply prices is slowly gaining acceptance.
By June, average pricing will have climbed nearly 3-5 percent over February 2018, and prices should continue to climb as contract prices are renewed at the higher levels.
On the other hand, tissue manufacturers could face stiff resistance to further implementation of the general price increase if buyers are able to cut orders and instead rely on the substantial amount of paper purchased for inventory during the first quarter.
One should also note that although international trade in tissue plays but a small role in the market, U.S. tissue imports have been running high while exports generally have been flat.
The threat of competitively priced imports could prevent the spring price increase from being fully successful.
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