The impact of the European war upon the pulp and paper industry was pronounced in 1940. It governed to a large extent business and industrial conditions. The effect was centered in the curtailment of shipments of wood pulp from Northern European supplying countries and forced expansion in the domestic and Canadian industries to unprecedented levels.
In normal years the United States purchases upwards of one and one-half million tons of chemical wood pulp from Europe. The various imports have been especially important in the American market because they comprise approximately two-thirds of the wood pulp purchased by non-integrated paper mills.
Shortly after the war began, cargo and insurance rates upon European shipments increased. These greater costs were added to the purchase price in the United States. As submarine warfare developed, the risks of shipping increased and the costs rose rapidly, resulting in increases in wood pulp delivery ranging from 50 to 100 per cent. Obviously these conditions were reflected in the selling price of wood pulp produced by domestic and Canadian manufacturers.
The rise in prices stimulated production in the United States and Canada. Even submarginal mills, some of which had not been operated for several years, were put into operation. As a result, about one-half of the normal imports were made up by greater North American production.
In anticipation of shipping difficulties, American purchasers accumulated extraordinarily heavy stocks during the last quarter of 1939 and the first quarter of 1940. Some 350,000 tons of pulp were drawn from these stocks to supplement North American production during the year.
In July of 1940, representatives of the pulp industry met with officials of the National Defense Commission to consider the problem of wood pulp supplies and price levels. It was concluded at this meeting that the existing prices would bring out sufficient production to avoid shortages. This conclusion, which carried the additional understanding that further increases in wood pulp prices were not justified except when production costs actually increased, had the effect of quieting the market and the danger of a highly speculative situation was avoided.
Although the output of paper in 1940 established a new record, the demand was not sufficiently active to result in increases in paper prices to levels justified by the cost of wood pulp to purchasing mills. The converting sections of the industry, therefore, operated at increasingly less satisfactory profit levels during the year as supplies of low-priced wood pulp were exhausted. The integrated mills, on the other hand, had generally satisfactory records.
Because of the diversified use of paper in the United States, and its close association with practically all forms of production and distribution, any substantial upward movement in general business activity is reflected in paper consumption. During this period of increasing civilian and military production, paper consumption is bound to reach unprecedented levels. It is generally considered that insofar as paper production itself is concerned, the productive capacity of the industry is ample. In 1941, as in 1940, the industry's ability to meet fully and satisfactorily at reasonable prices all paper requirements will depend upon the adequacy of wood pulp supplies.
In 1940, there was no substantial increase in new productive equipment. Better operating conditions, however, encouraged improvement in existing mills and the capacity increases that accrued during the year were largely due to improvements.
The curtailment of European shipments of wood pulp and paper, which stimulated greater production in the United States, resulted in the establishment of a new record for pulp wood consumption at around 14 million cords. Estimates of consumption in 1941 ranged up to 17 million cords. The increase is significant for it brings the use of domestically produced wood to a higher proportionate level than it has reached in several decades.
Since 1910, dependence upon the use of pulp wood from foreign countries shipped to the United States in various forms has increased. During much of this period the United States has depended upon imports in one form or another for about half of the pulp wood required in its paper consumption. Estimates indicate that in 1941 as much as three quarters of our pulp wood requirements will come from domestic sources. To the extent that this can be continued after the termination of the war, the farmer and the wood land owners of the United States will profit in the sale of wood for pulp manufacture, much of which can be used for no other purpose.
The European war prevented the usual shipments of paper from the European producing countries into the world export markets. Much of this business flowed to American producers. The American exports of paper in 1940 were approximately tripled. See also CHEMISTRY.
No comments:
Post a Comment