Economic and Paper Market Trends

Paper Division Executive Committee ISRI 2013 Fall Committee and Board Meetings

San Francisco, CAOctober 22, 2013

www.ISRI.org

Macro Indicators:Gross Domestic Product

Fastest Growing Sectors in Q2 2013:Gross Private Domestic Investment (+9.2%)Exports (+8%)

Sharpest Contraction:Nondefense Government Spending (-3.1%)

Macro Indicators: Unemployment

Macro Indicators: Inflation

Prices: Recovered Paper Index

Global RP Supply Steady through 2011

Source: Bureau of International Recycling

But US RP Export Sales Dip in 2012...

Jan-Jul 2013 Exports by Volume (short tons)

Grade 2012 YTD 2013 YTD % CHG

CORRUGATED 6,038,457 5,689,233 -6%

HIGH GRADE DE-INKING 433,830 413,984 -5%

PULP SUBSTITUTES 1,022,729 869,524 -15%

NEWSPRINT 1,424,040 1,378,797 -3%

MIXED PAPER 2,635,544 2,598,294 -1%

OTHER 1,335,192 1,335,144 0%

TOTAL 12,889,791 12,284,976 -5%

Source: U.S. Census Bureau/U.S. International Trade Commission

China Remains the Key Overseas Market

CHINESE RECOVERED PAPER IMPORTS (TONNES)

OCC ONP Mixed paper Total RCP

August 2013 1,434,606 600,479 392,110 2,495,592

July 2013 1,245,345 597,794 466,295 2,384,435

% change 15.2% 0.4% -15.9% 4.7%

August 2012 1,564,052 526,988 482,389 2,645,702

% change -8.3% 13.9% -18.7% -5.7%

Year-to-date 2013 11,034,133 4,542,888 3,609,667 19,803,822

Year-to-date 2012 11,348,482 4,592,875 3,526,295 20,018,876

% change -2.8% -1.1% 2.4% -1.1%

Source: RISI/China Customs.

Outlook

Uncertainty remains the recurring theme with unsettled questions on:

• Domestic mill inventories

• U.S. Budget, debt ceiling, regulatory challenges

• Timing of Fed tapering and impact on Dollar

• Transportation and Energy Costs

• Last but not least, China imports