Japanese Earthquake and Tsunami Could be Opportunity for North American Mills
March 14, 2011
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* Analysis by: GLG Expert Contributor
Summary
The devastating earth quake and tsunami in Japan impacted four of Nippon Paper's mills, Mitsubishi's Hachinohe mill, Oji Paper's Nikko mill and Hokuetsu Kishi Paper's Hitachinaka mill. The overall result is idling of annual capacity of 2.8 million tonnes coated and uncoated printing and writing paper, 552 K tonnes newsprint, 400 K tonnes kraft linerboard, 390K tonnes carton board, 94 K tonnes packaging paper and 59 K tonnes of SBS. This may be an opportunity for North American mills.
Analysis
The earthquake and tsunami that struck northern Japan wreaked havoc with major Japanese paper producers. Integrated mills in northern Japan import wood chips from North America, South Africa and Australia through the port of Sendai, which was devastated. Mitsubishi Paper Mills' Hachinohe mill was hit hard by the tsunami and is down. This mill makes 585,000 tonnes/year bleached hardwood and softwood kraft pulp, 849,000 tonnes/year printing and writing paper and 59,000 tonnes/year solid bleached board. Two of Nippon Paper's mills, Ishinomaki and Iwanuma, are off line. The Ishinomaki mill made 643,000 tonnes/year of wood pulp, 370,000 tonnes/year of deinked pulp and 1.1 million tonnes/year graphic and specialty paper. The Iwanuma mill made 420,000 tonnes/year of thermochemcial pulp, 514,000 tonnes/year of deinked pulp, 522,000 tonnes/year of newsprint, and 120,000 tonnes/year of uncoated mechanical and woodfree paper. The Nakoso mill,which produces 44,000 tonnes/year of carbonless paper, is also down. The Nippon Daishowa Paperboard mill at Akita is also down; it produces 170,00 tonnes/year of coated woodfree paper and 400,000 tonnes/year of kraft linerboard. Nippon Paper's Fuji mill is also down but suffered less damage and is expected to restart soon. The Fuji mill makes 380,000tonnes/year of wood pulp, 230,000tons/year recycled pulp, 30,000 tonnes/year of printing and writing paper and 94,000 tonnes/year of packaging paper. Oji Paper's Nikko mill is down; it normally makes 244,000 tonnes/year of carton and containerboard grades. Hokuetsu Kishi Paper's 100,000 tonnes/year cartonboard mill in Hitachinaka is down. Hokuetsu Kishu paper's Niigata mill went down on the day of the earthquake due to a water pipe break, but it restarted two days later producing 720,000 tonnes/year of groundwood pulp, 1.26 millon tonnes/year of graphic paper and 45,000 tonnes/year of boxboard. The devastation in Japan could be an opportunity for some North American producers including AbitibiBowater (NYSE: ABH)and Catalyst Paper to export newsprint and coated mechanical paper. There could also be an opportunity for export of containerboard and other paper and board grades until the mils in Japan come back on line. There may be downside for some suppliers of kaolin clay. Japanese mills import a lot of their coating clay from American suppliers including BASF (Engelhard), IMERYS, Thiele Kaolin and Kamin.
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
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