U.S. Tissue Tracker: Solid Parent Roll Production, but Lacklustre Consumer Shipments

U.S. parent roll production continued to demonstrate strength in June 2017, although weak growth in converted product shipments does warrant some caution.

Converted product shipments 1.2% higher y/y (+1.8% in 2017) – Total At-Home (consumer) shipments of converted tissue products increased 0.6% y/y and 1.4% in 2017. This relative weakness was attributable to zero growth in napkins and facial tissue, combined with minor gains in bathroom tissue (+0.9% y/y) and toweling (+0.6% y/y). Total Away-from-Home (AfH) shipments of converted tissue products continue to demonstrate resilience, growing 2.2% y/y (+2.7% in 2017). For AfH, bathroom tissue volumes grew 2.5% y/y, towels rose 1.7% y/y, and napkin volumes were up 3.4% y/y.

Parent roll production rose 2.8% y/y (+2.2% in 2017) – Parent roll production was 767,000 tons in June, up 2.8% y/y (-1.3% m/m). Domestic parent roll consumption was 783,000 tons, 1.5% higher y/y (+1.6% in 2017) but 1.9% lower than an upwardly revised May figure.

Operating rates higher than the 10-yr. June average – Operating rates rose m/m to 97.8% (from 95.9% in May and 97.4% last year). This compares favorably with the 10-yr. June average of 96.9%. Mill capacity was up 2.3% y/y and -3.2% m/m.

Net U.S. tissue imports up 11.9% y/y (although represent only ~6% of consumption) – Net U.S. tissue imports increased 11.9% y/y (+6.6% YTD) in May (latest customs data). U.S. exports of converted tissue products were down 1.9% y/y, while volumes exported to Canada rose 2.5% y/y.

Parent roll prices higher m/m for all grades – High-quality virgin parent rolls prices strengthened in June to $1,404/ton, up 0.4% from May (+3.6% y/y). Recycled parent roll prices were flat m/m, with the high-quality grade at $1,145/ton, but remain 2.1% higher y/y.

Seven tissue PMs in the pipeline (four TAD and three NTT) in 2018/19 – Georgia-Pacific is scheduled to start a $400 million new TAD tissue PM in Palatka, Fla., in 2019. As previously noted, Irving Consumer Products is expecting delivery of a new TAD tissue making machine from Valmet in 2018 (RISI estimates capacity to be about 70,000 short tpy. First Quality Tissue also has two new TAD machines coming online as a part of its expansion initiatives. One machine will be constructed in Anderson, S.C., and is expected to begin production in the second half of 2018, while the other will be in Lock Haven, Pa., and is projected to start in the first half of 2019. These two machines will add ~145,000 tons of production capacity. Additionally, Clearwater plans to build a new Valmet NTT tissue machine at the company's existing facility in Shelby, N.C., with an expected annual capacity of 70,000 tons spread across high-quality private-label premium and ultra-premium tissue products (expected to come online in the first quarter of 2019). In terms of startups, Resolute Forest Products continues to ramp-up production of its new tissue machine in Calhoun, Tenn., expected to reach maximum capacity mid-2018.