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? Chinas mills are strugglingwhy 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 Sonocos market prediction (guess) is for $50 OCC Mid Year and $70 by Year End

Historic Southeast Yellow Sheet Prices

Jan 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 120 60 60 75 35 85 45 40 50 65 85 55 70 115 20 Feb 150 60 70 75 50 95 40 40 50 80 85 50 95 115 25 Mar 200 50 70 75 50 105 40 35 65 90 75 55 145 125 Apr 200 40 65 65 50 115 40 45 75 90 75 65 120 125 May 200 40 60 55 45 115 40 60 75 90 80 75 105 120 Jun 170 45 70 55 65 105 40 90 75 90 80 85 105 110 Jul 140 45 90 55 95 90 40 130 65 90 90 100 125 110 Aug 120 45 120 55 90 55 40 100 65 85 90 90 135 110 Sep 70 60 100 45 90 45 40 75 65 85 90 85 135 110 Oct 50 60 80 35 85 45 40 65 65 85 75 75 135 95 Nov 30 60 80 30 85 45 40 60 65 85 60 65 125 45 Dec 30 60 70 30 85 45 40 50 65 85 60 65 115 25 Ave. $ 123.33 $ $ $ $ $ $ $ $ $ $ $ 52.08 77.92 54.17 68.75 78.75 40.42 65.83 65.00 85.00 78.75 72.08

$ 117.50 $ 100.42 $ 22.50

Conclusion