Domtar shuts down two U.S. paper machines

Montreal, Canada - Domtar Corp. has announced it is permanently shutting down two paper machines at U.S. mills, affecting about 100 workers, but industry watchers expected the company will convert the machines to containerboard production.

The closure at the pulp and paper mill in Ashdown, Ark., will took effect immediately while the move at the paper mill in Port Huron, Mich., would be completed by mid-November.

Domtar blamed the shut-downs on a declining demand and increased imports of copy paper for reduction of annual uncoated freesheet paper capacity by about 204,000 tons.

The Ashdown mill will continue to operate one paper machine with an annual uncoated freesheet paper production capacity of 200,000 short tons and employ approximately 725 people. In addition, the mill operates one of the world’s largest fluff pulp machines, with the flexibility to produce softwood pulp depending on market conditions. As a result of the closure of the paper machine, the mill will produce an incremental 70,000 ADMT of softwood and fluff pulp, which will ramp up over the next 12 months.

The Port Huron mill will continue to produce a wide variety of technical and specialty papers for a broad range of customers, utilizing three machines with a total annual production capacity of 95,000 short tons. Following the closure, the mill will employ approximately 212 people. Analyst Paul Quinn of RBC Capital Markets says the closures represent about three per cent of North American uncoated freesheet supply and “should result in modestly tighter operating conditions in 2020.”

“With 73,000 tons of market-related downtime during the second quarter, the permanent closures are not surprising. We expect that Domtar will eventually announce a conversion into containerboard given the weakness in uncoated freesheet markets,” he wrote in a report.

Domtar, www.domtar.com

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