The Paper Markets – 2009

Joanne Schweikert – Field Sales

Sonoco Recycling

Sonoco Recycling

Sonoco is a Paper and Packaging Company (not a gas station)

Founded in 1899 – NYSE Symbol “SON” 4 Billion in Sales last year Recycle 3.5 million tons per year 30 Paper Mills Worldwide Richmond Paper Mill located at 1850 Commerce

Road Virginia Recycling Plants located in Madison Heights

and Fishersville

What Happened?

Last February OCC was $115 per ton, now cardboard is $25 per ton, what happened?

A sudden drop in demand from China caused the markets to plummet

Chinese mills had stocked up on paper anticipating a spike in business after the Olympics

The boom did not materialize, the global economy froze and Chinese mills were overstocked

What Happened?

Following the purchasing “freeze” in China was the month of December that set a record for mill downtime

Key phrase heard was “lack of generation” due to dismal Christmas retail season. This could lead to shortages of OCC and allow mills to use up excess inventory

At this time most mills are up and running with plenty of supply

February Update

OCC rose $5.00 to Southeast Yellow Sheet High Side of $25.00 per ton

Export prices are rising….why? China’s mills are struggling…why is export up?

Two reasons: Shipping rates are lower and OCC prices are a bargain

China is buying and warehousing, betting on a third quarter recovery

Sonoco’s market prediction (guess) is for $50 OCC Mid Year and $70 by Year End

Historic Southeast Yellow Sheet Prices

  Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Ave.

1995 120 150 200 200 200 170 140 120 70 50 30 30 $ 123.33

1996 60 60 50 40 40 45 45 45 60 60 60 60 $ 52.08

1997 60 70 70 65 60 70 90 120 100 80 80 70 $ 77.92

1998 75 75 75 65 55 55 55 55 45 35 30 30 $ 54.17

1999 35 50 50 50 45 65 95 90 90 85 85 85 $ 68.75

2000 85 95 105 115 115 105 90 55 45 45 45 45 $ 78.75

2001 45 40 40 40 40 40 40 40 40 40 40 40 $ 40.42

2002 40 40 35 45 60 90 130 100 75 65 60 50 $ 65.83

2003 50 50 65 75 75 75 65 65 65 65 65 65 $ 65.00

2004 65 80 90 90 90 90 90 85 85 85 85 85 $ 85.00

2005 85 85 75 75 80 80 90 90 90 75 60 60 $ 78.75

2006 55 50 55 65 75 85 100 90 85 75 65 65 $ 72.08

2007 70 95 145 120 105 105 125 135 135 135 125 115 $ 117.50

2008 115 115 125 125 120 110 110 110 110 95 45 25 $ 100.42

2009 20 25                     $ 22.50

Conclusion