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Paper Mills Plan 3.3 Percent Annual Capacity Expansion

December 21, 1988

NEW YORK (AP) _ U.S. paper mills plan to expand capacity for making paper and paperboard by an average of 3.3 percent a year over the next three years, reflecting growing U.S. demand and healthy exports, the American Paper Institute said Wednesday.

The capacity to produce wood pulp, the raw material for paper, will grow a smaller 2.6 percent a year over the same 1989-91 period, the institute said. The difference will be made up by increasing use of recyclable paper, it said.

The institute’s forecast is based on a survey of producers’ expansion plans. This marks the second year in which producers raised their plans for capacity expansion, the institute said.

Last year the institute predicted total capacity in 1990 would reach 84.1 million tons of paper and paperboard and 64.4 million tons of wood pulp.

This year it predicted capacity would exceed those figures in 1990 and in 1991 would total 88.6 million tons of paper and paperboard and 67.8 million tons of wood pulp.

Paper output is closely tied to the health of the overall economy because paper is used in all areas of business. Paperboard is used in boxes, so its use grows when production and shipments increase.

Improved productivity and the decline in the dollar also put American producers in a better position to increase exports, said Richard Storat, the institute’s vice president for economic and financial services.

The producers predicted annual capacity growth of 3.9 percent for printing and writing papers; 5.2 percent for newsprint; 2.7 percent for tissue papers; 2.1 percent for solid bleached paperboard; and 1.8 percent for recycled paperboard. Capacity for unbleached kraft packaging papers, the kind used in grocery bags, should rise slightly after two years of decline, they predicted.

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