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Midland National Fresh ideas on paper

Midland National Fresh ideas on paper. IMC Paper Market Update 6/26/08 Tom Pankow, GM Procurement Strategy. Who is Midland Paper?. One of largest independent fine paper merchants in the U.S. Privately held, under current ownership since 1983. We have been in business for over 100 years

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Midland National Fresh ideas on paper

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  1. Midland NationalFresh ideas on paper IMC Paper Market Update 6/26/08 Tom Pankow, GM Procurement Strategy

  2. Who is Midland Paper? • One of largest independent fine paper merchants in the U.S. • Privately held, under current ownership since 1983. We have been in business for over 100 years • Midland is now over $750MM in sales annually • I joined Midland in 2006 as GM Procurement Strategy • Prior to joining Midland, I spent 11 years with Meredith Corp. where I was responsible for directing all aspects of the paper procurement operation (>155M tons & >$145MM annually) and consulting on print procurement • Prior to joining Meredith, I spent 9 years with Quebecor World – 4 years in paper purchasing and 5 years in manufacturing management

  3. Paper Market Snapshot • The fifth price increase in the past 13 months has been announced for July 1st shipments • The increases impact all grades of paper, and range from $2.50 to $3/cwt • There are “holes” in mill schedules, however, this is typical for Q2. The market is forecast to firm for most grades, especially groundwood grades as we enter Q3 • Many producers are offering to pre-make Q3/Q4 tons now to ensure delivery because their customer forecasts suggest that demand will far exceed production capacity in Q3 • Demand forecasts for LWC and high end SC papers are especially strong and many producers of these products are bullish on Q3 & Q4. The recent news that Katahdin Paper will shut its 180M TPY SC machine at the end of July was quickly followed by price increase announcements for shipments on/after July 1 • The Katahdin shut represents a North American capacity reduction of SCA equal to 12% • NewPage announced that they will take 25M tons of machine down time in June/July across their coated platform and that they will cease production at their Niagara mill by June 22. The net effect of these actions is a reduction of North American coated capacity of approximately 60M tons in 2008. • US dollar remains weak compared to currencies of key trading partners (Euro & Canada$) • The weak dollar makes exports of paper from Canada and especially Europe unattractive and has lead to an increase in exports from the US, further tightening the market. • Pulp, energy and other material input costs continue to hit new records, placing pressure on paper mills to continue raising prices to cover these cost increases in an effort to survive. • Evidence suggests that real demand for paper has fallen significantly due to the paper and postal cost increases, the weak economy and slack consumer confidence. Paper producers, printers and end users of all types are struggling to survive the current market situation as they endure challenges from all sides.

  4. RISI Market Pricing for Key P&W Grades

  5. Exchange Rates are Currently Unfavorable for Exports to the US Market

  6. US Imports fall due to weak US$

  7. Printer Held Inventory Very High Compared to Consumption

  8. Catalog Circulation Hurt by Postal Rate Increases. Circs down 2.2% Q1 YOY

  9. Magazine Ad Pages tumble 6.4% in Q1 YOY. • Categories up 1Q ‘08 • Food Products + 19.4% • Retail + 1.8% • Media & Advertising + 1.1% • Categories down 1Q ‘08 • Automotive - 21.3% • Technology - 16.3% • Home Furnishing & Supplies - 15.5% • Direct Response Companies - 14.1% • Toiletries & Cosmetics - 8.9% • Apparel & Accessories - 5.8% • Financial Insurance and Real Estate - 5.6% • Drugs & Remedies - 4.3% • Public Transportation, Hotel & Resorts - 0.3%

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