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Plotting a course in the global coated paper market.

Article Excerpt
Continued globalization is accelerating businesses toward a single world market, and the coated paper industry is a perfect example of the trend. Compared to 15 years ago, the global supply and demand profile for our industry has changed significantly. Understanding the changes, and, more importantly, the effect of the changes on the market for coated paper, is one key to sustaining profitable growth for companies competing in global paper markets.

It is equally critical for Dow and other companies that are part of the coated paper supply chain to understand the market dynamics. To that end, Dow has developed a model to assist in determining the global import and export situation for the next several years. By using the model, we have been able to develop one view of potential changes in the market that may affect coated paper producers here in North America, as well as in Europe and Asia.

At the same time, we have tracked changes in the performance properties for coated papers and correlated any significant change in properties by region. Paper producers can use this data to help shape their products to compete effectively in targeted markets.

TRACKING CHANGE-1990-2005

To build the forecasting model, we analyzed data from the past 15 years of industry production and imports/exports. The following is a brief summary of the information we tracked. Figure 1 and Figure 2 present a historical profile of production capacity and demand by region, comparing 1990 to 2005.

[FIGURE 1 OMITTED]

[FIGURE 2 OMITTED]

Coated Freesheet (CFS): The global capacity picture shifted dramatically by 2005, with significant growth in Europe and Asia. Demand showed the same dramatic changes, with Asia growing to be the largest consuming market by 2005. With Asia having more than half of the world's population and currently a very low per capita consumption of coated paper (4 lbs/person vs. 40 lbs/person in the United States and Western Europe), demand in this region is expected to continue to grow at a much faster rate than the balance of the globe.

Coated Groundwood (CGW): In terms of capacity by region, the global picture has remained basically unchanged, with Europe and North America remaining the dominant suppliers, though capacity growth in Europe has outpaced North America. Demand growth has lagged behind capacity...

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