UFS
#Absolutely, yes.
Very much so.
I mean, particularly, some of the Asians.
No question.
Absolutely.
So, as you know, we've done and continue to do the work with Jacobs.
So that's why we've gone slightly radio-silent at the minute, because that work is ongoing.
So what we have to be I think comfortable of is probably 3 key things ---+ well, 4 key things: one is can we be really cost-competitive, can we get our costs to a point where we're competitive in any sort of containerboard market.
So that's point the first.
Point the second, can we do that at a reasonable CapEx level without blowing our brains out on the kind of capital we want to spend.
Point the third is can we make a sensible market entry that is not too fraught with risk.
So we have an open mind on joint venturing.
We have an open mind on customer sign-up for our ---+ so all that is ---+ we're working on furiously.
I think the fourth thing is also, well, what do we do with the uncoated freesheet position we have.
Right now, volumes are fairly good, but we do have a tail, as our margins show, that we could probably do something more aggressive about.
So the implications of that [shut] to our uncoated freesheet market.
So those are the things I think that have to line up, <UNK>, for us to be comfortable that this is something we really ought to be doing.
Right.
So the answer to that is all of the above on the customer side.
And I think certainly over time, but it's a multiyear process.
We have, as you know, a number of mills that can be competitive in this environment, both from a wood supply ---+ obviously, wood basket is a key issue and conversion opportunity is a key issue.
So you put all that together, there is a runway.
I don't want to go through the detail, if you don't mind at this point, but there is a runway where we can be a multi-mill supplier of containerboard.
No question.
Say again.
People going.
.
Actually, no.
I mean, I think what we see is growth.
So we see people continuing to buy machinery to get that top line growth.
It's very different by individual product, <UNK>.
So for example, pull-ups, adult diapers is a booming business right now, the sort of the older-fashioned product that you have to sort of assemble for yourself to some extent, as the patient, that product in Europe is softening, but pull-ups are booming.
So I don't see what you suggest.
Obviously, there's been rationalization in terms of ownership of some of these assets, I mean Ontex and ourselves being the 2 obvious cases, but I haven't see people pulling out.
Right.
Obviously, I'm sort of backing in here to giving you guidance, Chip, if I'm not careful, and that's not my intent.
But, I mean, we're ---+ all I can tell you is what we're planning, and we're planning that, that maintenance is offset by that pricing.
That's a great question.
So it's always an option.
I mean, I think, again, to remind ourselves, if you look at fluff pulp, you have only 3 players globally who have more than 1 mill.
We're one of them; we know the other 2, obviously, at GP and I<UNK>
So if anyone has the optionality to open a third fluff mill that's globally competitive, we believe it's us.
And certainly, we have a wood basket that is competitive [so it is].
So that's always on our mind, Chip.
That's taking share from another private label producer, but if I'm being truthful, the retailer is putting out very ambitious plans to grow private label share dramatically within their own stores versus brand.
So I mean, I think what you're going to see and I think this actually vindicates our sort of partner-brand strategy that we have is they're really now going to run this category as a major brand within their store portfolio.
And it will be fascinating to see how that transpires, actually.
We've seen a little bit of it, yes, in the marketplace.
Some of the major brands have done that.
Some of the major brands on tissue have taken out some count.
I mean, it's all in the public domain; I'm not sort of telling tales out of school.
So ---+ and it's one way to maintain a price point and still maintain margin, and I think you're going to see a lot of that.
I think one thing to remember in the U.<UNK> sometimes is the way some of these pulp contracts operate.
Some of the major players have a pretty large lag, actually, between announced price and price increase, it's a matter of months.
And as that really starts to hit, I think you may well see more of that from some of the major brands.
In Personal Care.
In Personal Care.
It depends.
So where you're in a kind of national health system and you're bidding for regional business from various national health organizations, yes.
You have that opportunity to get the price as you make the next bid, and those bids sometime last 1 year, 2 years, 3 years.
So when the price is fixed, it's fixed but you have a bid opportunity.
Obviously, where we have our own brand, we have opportunities, but it probably takes a while to get the whole portfolio.
And I mean, as you can see in our margins, I'm being truthful, it takes a while to get that portfolio to move based on raw material increase.
And I think you're seeing that from everybody in the space who's reporting.
That's still the objective.
Yes.
Well, I mean the trouble is, in a way, we'll know when we know.
My view is if I look at the number of prices that Europeans have got in the last few months, I look at some of the Asian pricing, I think, <UNK>, they're going to stay in their domestic market if they can.
Will import ---+ is there a risk of imports in the second half of the year.
I don't think it's a biblical risk, but there's no doubt in some of these markets, it's a little bit ---+ it will be a little bit more attractive than it was, but I don't think we're going to see imports at anything like the level they used to be at.
And there are still some pretty steamy duties on some of this stuff, so ---+ and they're going to last a number of years.
I think it's about 4 25 to 4 50 is a reasonable number for quarterly sales on pulp, and if I look at that, rough numbers sort of 15 hardwood maybe.
I'm wrong.
4% hardwood, 58% softwood and 38% fluff, <UNK>.
I think you'd be a better judge of that than me.
The answer is, in my mind, no.
I still think there's an opportunity there.
I still think we can find our way into the market.
I feel vindicated that our asset base is good enough and strong enough to be very solid in terms of its cost position.
So we're still working hard to make our choices and get sufficient data to make a good choice.
I think the wildcard is pricing here.
So I wanted to make it own judgment, when I think of where pricing will be.
We're positive but I mean, quantifying right now is very difficult.
But there's no doubt we'll have the weather back.
There's a little bit of usage of outside of weather in the first quarter that is negative, that should get back to us, and we'll have, there's no doubt, the negative of the higher maintenance.
And the impact on volume, we will lose 42,000 tons of pulp production and 18,000 tons of paper production in the quarter, but we have a tough Q1 so, I mean, we believe the ball is rolling in the right direction, and the price is, as always, the toughest part, but, again, the signs are very positive.
Well, I think it's ---+ quite frankly, I can only talk about our own business but I look at sort of supply-demand, and I look at people right now looking hard to find pulp.
And we had our operational challenges in quarter 1, which I think probably caused part of the issue.
And actually realized prices are still well below the 9-year average, by sort of $25 million, $30 million ---+ $30 a grade.
So it's not as if there's some massive ramp up versus historical norms.
I mean, to my mind, this is ---+ we're still below the 9-year average on pricing.
We haven't really had peak pricing much within that 9-year period, maybe for a year.
So I see no particular reason why it shouldn't continue.
Your question on prebuying is always difficult to answer.
We had good volumes in Q1, so one can assume that there's a little bit of prebuying.
We sold from inventory, so can we repeat that performance in a high maintenance quarter.
Probably not.
So expecting a little bit lower volumes in Q2 is reasonable.
In terms of inventory, it's more ---+ I think the method is more that Q4 was a very high quarter for us in terms of pulp shipments.
We actually produced well and sold 50,000 tons out of inventory so that the 460-some-thousand tons we've shipped in Q4 is not something you should expect every quarter.
Our normal shipments should be more around ---+ if you look on an average, there will plus and minuses because of maintenance, but we should ship about 425,000 tons per quarter.
So Q4 was abnormally high.
