Due to Covid-19, the demand for toilet paper, one of Clearwater Paper’s products, increased historically in March 2020.
Now Clearwater Paper executives believe that the market has more than a month’s supply of excess tissue goods inventory.
The executives said consumers are using what they stocked at the beginning of the pandemic before they buy more, so the stores that Clearwater Paper supplies are not ordering as much as they had in the past.
Even though Clearwater Paper expects this reduction in tissue goods consumption, it’s too soon to know how Clearwater Paper’s Lewiston mill will be affected, said Shannon Myers, Clearwater Paper’s spokeswoman.
“The downtime will serve two purposes. It’s to match up with demand in the second quarter, which is weak, but also to start reducing some of our own inventory overhang in our system. Frankly, with record pulp prices, this is the right time to take these curtailments across our system and not make inventory we don’t need.”- said Clearwater Paper President and CEO Arsen Kitch in a conference call for stock market analysts Wednesday after the company reported it had a net income of $12 million in its first quarter. “The sluggish demand for tissue is anticipated to be short-lived,” – he said.
Clearwater Paper’s CEO complemented his speech, saying they’re expecting long-term consumption growth to continue between 1 and 2 percent per year, with private brands continuing to gain share. Based on what he said during the conference call, the company continues to monitor channel and customer trends to ensure that it’s aligned with areas in the market with the highest growth prospects.
The dynamics are different in the markets for paperboard, Clearwater Paper’s other product that is used for packaging and paper dishes.
Clearwater Paper has increased paperboard prices, Kitch said.
The CEO finalizes his speech, saying that the company will continue observing strength in demand from their folding carton customers. They’re starting to see a recovery in the foodservice segment. He affirmed that the demand for food packaging products and retail paper plates has remained healthy throughout the pandemic.