20150301 gc market overview march 2015

Paper Market Overview:March 2015

Executive Summary: 2014…Outlook for 2015Supply Review - 2014

Verso completes the acquisition of NewPage DOJ forces divestiture Biron, WI and Rumford, ME mills Verso is now the NA market leader in CFS, no longer produces

CGWCatalyst has completed the purchase of legacy NewPage’s Biron and Rumford mills

Catalyst is now the NA market leader in CGW papersClosures of Verso – Bucksport, ME and FutureMark – Alsip, IL mills

Reduction of 530,000 short tons of capacity in the U.S. Removed approximately 200,000 tons of No. 5 Roto capacity

Exchange rates Euro at 1.13, expected to drop to 1 – 1.05 and hold CDN at .80, expected to hold in short terms

Will lead to more imports from Europe into NA, and likely keep S/D imbalance, price improvement difficult for mills

Demand Review - 2014Catalogs mailed in 2014 declined -2.5% vs. 2013 levels.

Total circulation of 11.79BB, with reduced page countsMagazine ad pages in 2014 were down -9.0% vs. 2013 levels.

Poor newsstand sales, electronic substitutionUncoated Groundwood down -2.4% vs. 2013.Supercalendered demand up +3.4% YTD vs. 2013Coated Groundwood demand down -8.0% vs. 2013Coated Freesheet demand down -0.7% vs. 2013

Demand Outlook - 2015

Catalogs mailed expected to decline -2.1% vs. 2014 levels.

Magazine ad pages expected to decline -3.1% vs. 2014 levels.

Coated Groundwood operating rates expected to be 95% (RISI)

Coated Freesheet operating rates expected to be 93% (RISI)

Imports expected to have effect on operating rates in 2015

2015 YTD Demand for Printing and Writing Papers:

Coated Groundwood demand down -6.2% Jan.2015 vs. 2014

Coated Freesheet demand down -1.7% Jan.2015 vs. 2014

Uncoated Freesheet demand down -2.4% Jan.2015 vs. 2014

Uncoated Groundwood down -3.4% Jan.2015 vs. 2014

Supercalendered demand down -5.5% Jan.2015 vs. 2014

USPS

Announced avg. increase of ~ 2.0% across most categories, effective April 2015

Mill Financials not Strong

Poor demand, historically low pricing, increased input costs, and high debt loads (Verso ~$2.5BB)

GDP growth for 4Q 2014 at + 2.5%

Unemployment rate now at 5.7%

Price Increase Announcements – 2015

Mills Increase Date Announced Grades Date Effective

Twin Rivers $2.00/cwt 1/8/2015 On all Packaging, Publishing and Label paper grades Effective with shipments on or after 2/16/15

Verso

$2.00/cwt

$1.50/cwt$1.00/cwt

1/30/2015

All CFS / CGW / SCA / Economy sheet grades incl...Arbor Plus web / Sterling Ultra web / Sterling Ultra caliper web / ArborWeb web / Influence / Orion web / Velocity / Vision web / Voyager Web / Superior Gloss web

Advocate / Consoweb web / Anthem Plus sheets/sheeter rollsEscanaba web / Liberty Gloss / Dependoweb web / Capri web

Effective all orders entered 1/30/15 & all orders shipping on or after 3/2/15

Appleton Coated $2.00/cwt 2/4/2015U2:XG Web / Utopia Two web / Utopia Three web / Utopia Book web Utopia Think Book web / Utopia Film Coat web / Utopia GW Book web

All private label web / Altima sheetsEffective with shipments 3/2/15

Catalyst $2.00/cwt ($40/st) 2/6/2015Orion / Vision / Ascent / Escanaba / Pacificote / Dependoweb / Capri / Electracote

Brite / Consoweb / ElectracoteApplies to all basis weights, finishes, grade extensions and related private label

products.

Effective with all new and existing orders with confirmed deliveries 4/1/15

Sappi $1.50/cwt 2/6/2015Flo Folio Sheets & Sheeter Rolls / EuroArt Plus / HannoArt

- all basis weights, all finishes. Standard differentials and upcharges apply. Includes all private label programs.

Increase on new and unconfirmed orders with confirmed delivery dates on or after 3/2/15

Exchange Rates: Euro and CDN to USD

Source: Forex

2002Feb.Mar.Apr.MayJun.Jul.Aug.Sept.Oct.Nov.Dec.2003Feb.Mar.Apr.MayJun.Jul.Aug.Sept.Oct.Nov.Dec.2004Feb.Mar.Apr.MayJun.Jul.Aug.Sept.Oct.Nov.Dec.2005Feb.Mar.Apr.MayJun.Jul.Aug.Sept.Oct.Nov.Dec.2006Feb.Mar.Apr.MayJun.Jul.Aug.Sept.Oct.Nov.Dec.2007Feb.Mar.Apr.MayJun.Jul.Aug.Sept.Oct.Nov.Dec.2008Feb.Mar.Apr.MayJun.Jul.Aug.Sept.Oct.Nov.Dec.2009Feb.Mar.Apr.MayJun.Jul.Aug.Sept.Oct.Nov.Dec.2010Feb.Mar.Apr.MayJun.Jul.Aug.Sept.Oct.Nov.Dec.2011Feb.Mar.Apr.MayJun.Jul.Aug.Sept.Oct.Nov.Dec.2012Feb.Mar.Apr.MayJun.Jul.Aug.Sept.Oct.Nov.Dec.2013Jan.Feb.Mar.Apr.MayJuneJulySept.Oct.Nov.Dec.2014Jan.Feb.Mar.Apr.MayJunJulAug.Sept.Oct.Nov.Dec.2015Jan.Feb.Mar.0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

CDN – Mar 20150.80

NA Graphic Paper Capacity Changes

Source: BD Internal, RISI

North American Graphic Paper Capacity by GradeThousand Tons

North America Totals

Grade 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014CGW 5,917 5,989 6,110 6,022 6,236 6,303 5,952 5,875 5,408 4,886 4,459 4,158 3,850 3,705 3,629Y-O-Y Change --- 1.2% 2.0% -1.4% 3.6% 1.1% -5.6% -1.3% -7.9% -9.7% -8.7% -6.8% -7.4% -3.8% -2.1%

Change Since 2007: -38.2%Change Since 2000: -38.7%

CFS 6,756 6,558 6,175 5,938 6,145 6,281 6,184 5,843 5,492 5,009 4,918 4,770 4,706 4,695 4,544Y-O-Y Change --- -2.9% -5.8% -3.8% 3.5% 2.2% -1.6% -5.5% -6.0% -8.8% -1.8% -3.0% -1.3% -0.2% -3.2%


UFS 17,890 16,812 16,227 16,392 16,232 15,860 15,317 14,656 13,681 12,747 11,884 11,633 11,219 10,745 9,820Y-O-Y Change --- -6.0% -3.5% 1.0% -1.0% -2.3% -3.4% -4.3% -6.7% -6.8% -6.8% -2.1% -3.6% -4.2% -8.6%


Newsprint 17,988 17,395 16,897 16,228 15,170 14,595 13,931 13,228 12,022 10,440 9,022 8,708 8,062 7,684 7,197Y-O-Y Change --- -3.3% -2.9% -4.0% -6.5% -3.8% -4.6% -5.0% -9.1% -13.2% -13.6% -3.5% -7.4% -4.7% -6.3%


UGW and SC 5,897 5,900 6,195 6,310 6,588 6,832 7,000 7,139 6,747 6,616 5,878 5,290 4,393 4,497 4,348Y-O-Y Change --- 0.1% 5.0% 1.9% 4.4% 3.7% 2.5% 2.0% -5.5% -1.9% -11.2% -10.0% -17.0% 2.4% -3.3%


Total 54,448 52,654 51,604 50,890 50,371 49,871 48,383 46,741 43,350 39,698 36,161 34,559 32,230 31,326 29,538Y-O-Y Change --- -3.3% -2.0% -1.4% -1.0% -1.0% -3.0% -3.4% -7.3% -8.4% -8.9% -4.4% -6.7% -2.8% -5.7%


Note: Coated freesheet includes coated bristol and uncoated freesheet includes uncoated bristol and cotton.Note: Coated groundwood includes the removal of FutureMark Alsip mill (9/14), and Verso Bucksport mill (12/14)

Printing & Writing Growth Projections 2014 - 2019

Source: RISI

Coated Groundwood

-4.6%

2.3%

-3.5%

1.5%

-1.6%

0.3%

2.3%3.5%

-2.8%

19.3%

-3.4%

0.0%

-1.8%

0.7%3.7%

0.0%

(1,400)

(1,200)

(1,000)

(800)

(600)

(400)

(200)

-

200

400

W. Europe Other Europe N. America Latin America Japan China Other Asia Africa/ME

Sup

ply

/Dem

and

Ch

ange

(K S

ho

rt T

ons)

Demand Supply Percentages represent '14-'19 CAGR

Global 2014-2019 CAGR:Demand: (1.9)%Supply: (2.0)%

Printing & Writing Growth Projections 2014 - 2019

Source: RISI

Recap - No. 5 Coated Groundwood: 34#

Jan 1989 Jul 1990 Jan 1992 Jul 1993 Jan 1995 Jul 1996 Jan 1998 Jul 1999 Jan 2001 Jul 2002 Jan 2004 Jul 2005 Jan 2007 Jul 2008 Jan 2010 Jul 2011 Jan 2013 Jul 2014$35.00

$40.00

$45.00

$50.00

$55.00

$60.00

$65.00

$70.00No. 5 CGW 34# Rolls

Source: RISI



$35.00

$40.00

$45.00

$50.00

$55.00

$60.00

$65.00 No. 5 CGW 40# Rolls

Source: RISI



$40.00

$45.00

$50.00

$55.00

$60.00

$65.00 No. 4 CGW - 40# Rolls



$35.00

$40.00

$45.00

$50.00

$55.00

$60.00

$65.00No. 4 CGW - 50# Rolls



$35.00

$40.00

$45.00

$50.00

$55.00

$60.00

$65.00No. 4 CGW - 60# Rolls

N.A. Coated Mechanical Capacity (3/05/15)

Source: RISI

Producers of Coated Groundwood Paper in North America2014 Capacity, Thousand Tons

(Includes FutureMark - Alsip and Verso - Bucksport, ME closures, Catalyst – Biron / Rumford Purchase)

Mill Capacity (ST) Market Share Cumulative Share

Catalyst 1,005 31.2% 31.2%

Verso 785 24.3% 55.5%

Resolute 562 17.4% 73.0%

UPM 405 12.6% 85.5%

Kruger 267 8.3% 93.8%

Evergreen 200 6.2% 100.0%

Total Capacity* 3,224

Supply and Demand Scenarios: CGW

Source: BD Internal, RISI, P&PW, PPPC

Current State - 2015: CGW Mill Supply Supply Demand Scenarios - 2015: Coated Groundwood

Scenario #1 - 2015: Scenario #2 - 2015: Scenario #3 - 2015:Mill Capacity (ST) Market Share Cumulative Share Demand: - 4% vs. 2014 3,123 Demand: - 5% vs. 2014 3,090 Demand: - 6% vs. 2014 3,058Catalyst 1,005 31.2% 31.2% CGW Supply: Flat vs. 2014 3,160 CGW Supply: Flat vs. 2014 3,160 CGW Supply: Flat vs. 2014 3,160Verso 785 24.3% 55.5% Imports: Flat vs. 2014 400 Imports: +20% vs. 2014 480 Imports: +40% vs. 2014 560Resolute 562 17.4% 73.0% Exports: Flat vs. 2014 209 Exports: Flat vs. 2014 209 Exports: Flat vs. 2014 209UPM 405 12.6% 85.5% SCA+ Substitution: 50 SCA+ Substitution: 100 SCA+ Substitution: 50Kruger 267 8.3% 93.8% Supply/Demand Ratio: 91.8% Supply/Demand Ratio: 87.5% Supply/Demand Ratio: 85.9%Evergreen 200 6.2% 100.0%Total Capacity* 3,224

Scenario #4 - 2015: Scenario #5 - 2015: Scenario #6 - 2015:Demand: - 4% vs. 2014 3,123 Demand: - 5% vs. 2014 3,090 Demand: - 6% vs. 2014 3,058CGW Supply: - 2% vs. 2014 3,096 CGW Supply: - 3% vs. 2014 3,065 CGW Supply: - 4% vs. 2014 3,033Imports: Flat vs. 2014 400 Imports: +20% vs. 2014 480 Imports: +40% vs. 2014 560Exports: Flat vs. 2014 209 Exports: Flat vs. 2014 209 Exports: Flat vs. 2014 209

Current State: 2014 Tons SCA+ Substitution: 50 SCA+ Substitution: 100 SCA+ Substitution: 50Total North American Demand* 3,253 Supply/Demand Ratio: 93.6% Supply/Demand Ratio: 90.0% Supply/Demand Ratio: 89.1%Total North American Supply** 3,160Total North American Imports 400Total North American Exports 209 Scenario #7 - 2015: Scenario #8 - 2015: Scenario #9 - 2015:Supply/Demand Ratio: 97.1% Demand: - 5% vs. 2014 3,090 Demand: - 5% vs. 2014 3,090 Demand: - 5% vs. 2014 3,090

CGW Supply: - 5% vs. 2014 3,002 CGW Supply: - 6% vs. 2014 2,970 CGW Supply: - 8% vs. 2014 2,907Imports: Flat vs. 2014 400 Imports: +20% vs. 2014 480 Imports: +40% vs. 2014 560

* Includes closure of Verso Bucksport, ME and FutureMark Alsip Exports: Flat vs. 2014 209 Exports: Flat vs. 2014 209 Exports: Flat vs. 2014 209** Assumes 98% uptime SCA+ Substitution: 100 SCA+ Substitution: 100 SCA+ Substitution: 150

Supply/Demand Ratio: 93.9% Supply/Demand Ratio: 92.5% Supply/Demand Ratio: 90.7%

Global Coated Mechanical Capacity

Source: RISI

Worldwide Capacity & Market Share of Top Twenty

Producers of Coated Mechanical Paper

Rank Company Tonnes (000) Mkt. Share1 UPM 3,029 20.5%2 SAPPI 1,205 8.1%3 Burgo Group 1,195 8.1%4 NewPage 1,061 7.2%5 Stora Enso 918 6.2%6 Verso 633 4.3%7 Norske Skog 530 3.6%8 Resolute 529 3.6%9 Leipa 520 3.5%

10 Oji Paper Holdings 518 3.5%11 SCA 490 3.3%12 Nippon Paper Group 443 3.0%

13 Shandong Chenming Pap. Holdings 366 2.5%14 Daio Paper 280 1.9%15 Kruger 253 1.7%16 Catalyst 214 1.4%17 Metsa Board 200 1.4%18 Perlen 190 1.3%19 Open Gate Capital 180 1.2%20 Tiger Forest & Paper 175 1.2%

Coated Freesheet

-4.3%

1.9%

-1.4%

1.5%

-1.4%

1.4%

1.3%

2.6%

-2.5%

0.0%

-1.3%

2.3%

-1.3%

0.2%

0.0% 0.0%

(1,200)

(1,000)

(800)

(600)

(400)

(200)

-

200

400

600


Sup

ply

/Dem

and

Ch

ange

(K S

ho

rt T

ons)



Coated Freesheet Growth Projections 2014-2019

Source: RISI

Recap - No. 3 Coated Freesheet: 60#


$40.00

$45.00

$50.00

$55.00

$60.00

$65.00 No. 3 CFS - 60# Rolls

Recap - No. 3 Coated Freesheet: 70# - 100#


$35.00

$40.00

$45.00

$50.00

$55.00

$60.00No. 3 CFS: 70# - 100# Rolls

North American CFS Capacity (3/5/15)

Source: RISI, Forestweb, PPPC, Published Company Reports

Producers of Coated Freesheet Paper in North America2015 Capacity, Thousand Tons

(Includes FutureMark - Alsip closure, Catalyst – Biron / Rumford Purchase)

Mill Capacity (ST) Market Share Cumulative ShareVerso 1,984 49.0% 49.0%Sappi 1,240 30.6% 79.7%Appleton 307 7.6% 87.2%West Linn 266 6.6% 93.8%Catalyst 250 6.2% 100.0%Total Capacity 4,047

Supply and Demand Scenarios: CFS


Current State - 2015: CFS Mill Supply Supply Demand Scenarios - 2015: Coated Freesheet

CFS Scenario #1 - 2015: CFS Scenario #2 - 2015: CFS Scenario #3 - 2015:Mill Capacity (ST) Market Share Cumulative Share Demand: Flat vs. 2014 3,902 Demand: Flat vs. 2014 3,902 Demand: Flat vs. 2014 3,902Verso 1,984 49.0% 49.0% CFS Supply: Flat vs. 2014 3,966 CFS Supply: Flat vs. 2014 3,966 CFS Supply: Flat vs. 2014 3,966Sappi 1,240 30.6% 79.7% Imports: Flat vs. 2014 771 Imports: Flat vs. 2014 771 Imports: Flat vs. 2014 771Appleton 307 7.6% 87.2% Exports: Flat vs. 2014 606 Exports: Flat vs. 2014 606 Exports: Flat vs. 2014 606West Linn 266 6.6% 93.8% UFS Substitution: 100 UFS Substitution: 200 UFS Substitution: 250Catalyst 250 6.2% 100.0% Supply/Demand Ratio: 96.8% Supply/Demand Ratio: 99.3% Supply/Demand Ratio: 100.5%Total Capacity 4,047

CFS Scenario #4 - 2015: CFS Scenario #5 - 2015: CFS Scenario #6 - 2015:Demand: - 1% vs. 2014 3,863 Demand: - 2% vs. 2014 3,824 Demand: - 4% vs. 2014 3,746CFS Supply: - 2% vs. 2014 3,887 CFS Supply: - 3% vs 2014 3,847 CFS Supply: - 4% vs 2014 3,807

Current State - CFS in NA: 2015 Tons Imports: Flat vs. 2014 771 Imports: + 10% vs. 2014 848 Imports: +20% vs. 2014 925Total North American Demand 3,902 Exports: Flat vs. 2014 606 Exports: Flat vs. 2014 606 Exports: Flat vs. 2014 606Total North American Supply* 3,966 UFS Substitution: 150 UFS Substitution: 200 UFS Substitution: 250Total North American Imports 771 Supply/Demand Ratio: 99.0% Supply/Demand Ratio: 98.3% Supply/Demand Ratio: 96.6%Total North American Exports 606Supply/Demand Ratio: 94.5%

CFS Scenario #7 - 2015: CFS Scenario #8 - 2015: CFS Scenario #9 - 2015:* Includes Catalyst acquisition of Rumford mill from NewPage Demand: -2 vs. 2014 3,824 Demand: - 4% vs. 2014 3,746 Demand: - 5% vs. 2014 3,707** Assumes 98% uptime CFS Supply: - 5% vs. 2014 3,768 CFS Supply: - 6% vs 2014 3,728 CFS Supply: - 7% vs 2014 3,688

Imports: +15% vs. 2014 887 Imports: +20% vs. 2014 925 Imports: +20% vs. 2014 925Exports: Flat vs. 2014 606 Exports: Flat vs. 2014 606 Exports: Flat vs. 2014 606UFS Substitution: 50 UFS Substitution: 100 UFS Substitution: 150Supply/Demand Ratio: 95.6% Supply/Demand Ratio: 94.9% Supply/Demand Ratio: 96.1%

Global CFS Capacity

Source: RISI, Forestweb, PPPC, Published Company Reports

Worldwide Capacity & Market Share of Top TwentyProducers of Coated Woodfree Paper

Rank Company Tonnes (000) Mkt. Share1 Asia Pulp & Paper 4,826 16.6%2 SAPPI 3,141 10.8%3 UPM 1,580 5.4%4 NewPage 1,474 5.1%5 Stora Enso 1,372 4.7%6 Shandong Chenming Pap. Holdings 1,261 4.3%7 Lecta 1,233 4.2%8 Nippon Paper Group 1,109 3.8%9 Oji Paper Holdings 1,077 3.7%

10 Moorim SP 988 3.4%11 Hokuetsu Kishu Paper 898 3.1%12 Burgo Group 817 2.8%13 Sun Paper 790 2.7%14 Hansol 730 2.5%15 Sequana Capital 729 2.5%16 Daio Paper 571 2.0%17 Verso 552 1.9%18 Shandong Huatai Paper Grp 425 1.5%19 Mitsubishi 364 1.2%20 International Paper 357 1.2%

Supercalendered / UGW

-3.3%

2.0%

-2.4%

1.5%

-2.4%

3.1%

-1.1%

2.2%

-2.9%

-19.7%

-1.9%

0.0%

-2.3%

2.7%

-0.5%

0.0%

(1,200)

(1,000)

(800)

(600)

(400)

(200)

-

200

400


Supp

ly/D

eman

d Ch

ange

(K S

hort

Ton

s)

Demand SupplyPercentages represent '14-'19 CAGR


Uncoated Mechanical Growth Projections 2014-2019

Source: RISI

Recap – SC-A: 35#

Source: RISI


$650.00

$700.00

$750.00

$800.00

$850.00

$900.00

$950.00

$1,000.00

$1,050.00

$1,100.0035# SC-A

Recap – SC-B: 33#

Source: RISI

Jan

2010

Feb

2010

Mar

201

0Ap

r 201

0M

ay 2

010

Jun

2010

Jul 2

010

Aug

2010

Sep

2010

Oct

201

0No

v 20

10De

c 201

0Ja

n 20

11Fe

b 20

11M

ar 2

011

Apr 2

011

May

201

1Ju

n 20

11Ju

l 201

1Au

g 20

11Se

p 20

11O

ct 2

011

Nov

2011

Dec 2

011

Jan

2012

Feb

2012

Mar

201

2Ap

r 201

2M

ay 2

012

Jun

2012

Jul 2

012

Aug

2012

Sep

2012

Oct

201

2No

v 20

12De

c 201

2Ja

n 20

13Fe

b 20

13M

ar 2

013

Apr 2

013

May

201

3Ju

n 20

13Ju

l 201

3Au

g 20

13Se

p 20

13O

ct 2

013

Nov

2013

Dec 2

013

Jan

2014

Feb

2014

Mar

201

4Ap

r 201

4M

ay 2

014

Jun

2014

Jul 2

014

Aug

2014

Sep

2014

Oct

201

4No

v 20

14De

c 201

4Ja

n 20

15

$600.00

$650.00

$700.00

$750.00

$800.00

$850.00 33# SC-B

NA SC Capacity


Mill Capacity (ST)* Market Share Cumulative Share

Irving 453 25.3% 25.3%

Port Hawkesbury 324 21.2% 46.5%

Resolute 252 15.2% 61.7%

NewPage 265 14.8% 76.5%

UPM (Madison) 245 13.7% 90.1%

Catalyst 177 9.9% 100.0%

Total Capacity* 1,716

UGW Capacity – North America

Source: RISI, PPPC

Company UGW Mkt. Share

Resolute 1,420 32.7%

Catalyst 656 15.1%

Irving 462 10.6%

Belgravia/Stern Group 397 9.1%

Norpac 350 8.0%

NewPage 256 5.9%

UPM 242 5.6%

NPI USA 163 3.7%

White Birch 133 3.1%FutureMark Paper Group 112 2.6%

Atlas Holdings 82 1.9%

Rank Group 24 0.6%

Inland Empire 20 0.5%

Tembec 20 0.5%

Verso 8 0.2%

Great Northern Paper 3 0.1%

Total 4,348

Producers of Uncoated Mechanical Paper in North America

2014 Capacity, Thousand Tons

Supply and Demand Scenarios – SC


North American SC Mill Supply - 2014 Supply Demand Scenarios - 2015: SC

Scenario #1 - 2015: Scenario #2 - 2015: Scenario #3 - 2015:Mill Capacity (ST)* Market Share Cumulative Share Demand: +2% vs. 2014 1,836 Demand: + 4% vs. 2014 1,872 Demand: + 5% vs. 2014 1,890Irving 453 26.4% 26.4% SC Supply: Flat vs. 2014 1,682 SC Supply: Flat vs. 2014 1,682 SC Supply: Flat vs. 2014 1,682Port Hawkesbury 324 18.9% 45.3% Imports: + 10% vs. 2014 485 Imports: Flat vs. 2014 441 Imports: Flat vs. 2014 441Resolute 252 14.7% 60.0% Exports: Flat vs. 2014 15 Exports: Flat vs. 2014 15 Exports: Flat vs. 2014 15NewPage 265 15.4% 75.4% Supply/Demand Ratio: 85.3% Supply/Demand Ratio: 88.8% Supply/Demand Ratio: 89.7%UPM (Madison) 245 14.3% 89.7%Catalyst 177 10.3% 100.0%Total Capacity* 1,716

Scenario #4 - 2015: Scenario #5 - 2015: Scenario #6 - 2015:Demand: +2% vs. 2014 1,836 Demand: + 4% vs. 2014 1,872 Demand: + 5% vs. 2014 1,890

Current State: 2014 SC Supply: Flat vs. 2014 1,716 SC Supply: Flat vs. 2014 1,716 SC Supply: Flat vs. 2014 1,716Total North American Demand 1,800 Imports: + 20% vs. 2014 529 Imports: + 15% vs. 2014 507 Imports: + 20% vs. 2014 529Total North American Supply** 1,682 Exports: Flat vs. 2014 15 Exports: Flat vs. 2014 15 Exports: Flat vs. 2014 15Total North American Imports 441 Supply/Demand Ratio: 82.3% Supply/Demand Ratio: 84.8% Supply/Demand Ratio: 84.7%Total North American Exports 15Supply/Demand Ratio: 85.4%

Scenario #7 - 2015: Scenario #8 - 2015: Scenario #9 - 2015:Demand: Flat vs. 2014 1,800 Demand: + 2% vs. 2014 1,836 Demand: + 4% vs. 2014 1,872SC Supply: -5% vs. 2014 1,598 SC Supply: - 5% vs. 2014 1,598 SC Supply: - 5% vs. 2014 1,598

* Includes removal of 90K tons of Laurentide SCB Imports: + 20% vs. 2014 529 Imports: Flat vs. 2014 441 Imports: Flat vs. 2014 441** Assumes 98% uptime Exports: Flat vs. 2014 15 Exports: Flat vs. 2014 15 Exports: Flat vs. 2014 15

Supply/Demand Ratio: 85.2% Supply/Demand Ratio: 90.7% Supply/Demand Ratio: 92.5%

Global Uncoated Mechanical Capacity

Source: PPPC

Worldwide Capacity & Market Share of Top TwentyProducers of Uncoated Mechanical Paper

Company Tonnes (000) Mkt. Share

UPM 2,925 20.1%

Stora Enso 1,705 11.7%

Resolute 1,273 8.7%

Holmen 832 5.7%

Norske Skog 665 4.6%

Catalyst 595 4.1%

Heinzel 530 3.6%

Nippon Paper Group 452 3.1%

Irving 419 2.9%

Stern Group 360 2.5%

H2 Equity Partners 265 1.8%

Verso 232 1.6%

Marusumi 213 1.5%

Oji Paper Holdings 200 1.4%

MCC Paper Group 182 1.2%

Weyco 159 1.1%

Bohui Paper Mill 150 1.0%

White Birch 121 0.8%

Shandong Chenming Pap. 120 0.8%

Shandong Golden Cailun Paper 113 0.8%

Uncoated Freesheet

-2.8%

1.1%

-2.4%

1.5%

-1.7%

0.7%

2.6%

3.6%

-2.6%

1.8%

-1.5%

1.5%

-3.8%

0.7%

0.5%

0.9%

(1,500)

(1,000)

(500)

-

500

1,000

1,500

2,000


Supp

ly/D

eman

d Ch

ange

(K S

hort

Ton

s)


Global 2014-2019 CAGR:Demand: 0.3%Supply: (0.2)%

Uncoated Freesheet Growth Projections 2014-2019

Source: RISI

NA Market Share By Mill - Uncoated Free Sheet

Domtar31.7%

Int'l Paper

25.1%

Boise 9.4%

Georgia-Pacific 8.8%

Glatfelter6.2%

Atlas Holdings 3.2%

Rank Group2.6%

Neenah Paper2.0%

Cascade Fine Paper 1.4%

Flambeau River Papers 1.4%

All Others 8.2%

UFS Market Review

Source: International Paper, AF&PA, PPPC, RISI, USDOC, FRB, BLS, EMA, USPS

• U.S. UFS market demand -2.4% in January, and expected to fall ~ -3% in 2015.

• U.S. shipments were down -9.3% in 2014 vs. 2013.

• Total shipments in NA of UFS is down -4.8% in January 2015.

• Total exports in 2014 were down -7.8% vs. 2013 (IP-Courtland, AL).

• Total imports were up + 21% in 2014 vs. 2013.

• Price recovery of +2% projected in both 2015 and 2016 (RISI)

50# Uncoated Offset Rolls and NBSK Pricing

Source: RISI & P&PW

Jan 2006 Jun 2006 Nov 2006 Apr 2007 Sep 2007 Feb 2008 Jul 2008 Dec 2008 May 2009 Oct 2009 Mar 2010 Aug 2010 Jan 2011 June 2011 Nov 2011 Apr 2012 Sep 2012 Feb 2013 July 2013 Dec 2013 May 2014 Oct 2014$675

$700

$725

$750

$775

$800

$825

$850

$875

$900

$925

$950

$975

$1,000

$1,025

$1,050

$1,075

$1,100

$1,125

$1,150

$1,175

50 lb Offset Rolls USD/cwt min

50 lb Offset Rolls USD/cwt max

NBSK USD/cwt

P&PW NBSK Pricing

Source: RISI, P&PW

NBSK '06 NBSK '07 NBSK '08 NBSK '09 NBSK '10 NBSK '11 NBSK '12 NBSK '13 NBSK '14 NBSK '15

Jan 640 790 880 720 850 960 870 890 1010 1010

Feb 660 790 880 680 880 960 870 900 1010 995

Mar 660 790 880 650 910 990 870 900 1030 NaN

Apr 690 810 880 650 960 1020 900 930 1030 NaN

May 720 810 880 650 1000 1020 900 930 1030 NaN

Jun 720 810 880 680 1020 1040 900 950 1030 NaN

Jul 750 830 890 700 1020 1020 880 950 1030 NaN

Aug 750 830 890 730 990 990 850 945 1030 NaN

Sep 770 850 880 780 990 970 830 945 1030 NaN

Oct 770 850 835 800 970 950 850 970 1030 NaN

Nov 770 850 800 830 970 920 870 990 1025 NaN

Dec 770 880 750 830 960 890 870 990 1020 NaN

$575

$625

$675

$725

$775

$825

$875

$925

$975

$1,025

$1,075

$/A

DM

T

Global UFS Capacity

Source: PPPC

Rank Company Tonnes (000) Mkt. Share1 International Paper 4,248 6.98%2 Asia Pulp & Paper 3,537 5.81%3 Domtar 3,068 5.04%4 Nippon Paper Group 1,700 2.79%5 Mondi 1,651 2.71%6 Portucel 1,630 2.68%7 UPM 1,530 2.51%8 Stora Enso 1,401 2.30%9 APRIL 1,287 2.11%

10 Shandong Chenming Pap. Holdings 1,109 1.82%11 Double A 948 1.56%12 PCA 858 1.41%13 Oji Paper Holdings 852 1.40%14 Koch Industries 787 1.29%15 Shandong Huatai Paper Grp 755 1.24%16 Ballarpur Industries 692 1.14%17 Sun Paper 679 1.11%18 Shandong Tralin Group 627 1.03%19 Glatfelter 621 1.02%20 Tiger Forest & Paper 615 1.01%

Worldwide Capacity & Market Share of Top TwentyProducers of Uncoated Woodfree Paper in 2014

Market Data

Catalogs Mailed

Source: RISI

- 1.1% decrease in catalogs mailed in 2014 vs. 2013-1.0% total circulation reduction predicted in 2015

Q1 2007

Q2 2007

Q3 7007

Q4 2007

Q1 2008

Q2 2008

Q3 2008

Q4 2008

Q1 2009

Q2 2009

Q3 2009

Q4 2009

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q2 2013

Q3 2013

Q4 2013

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015

0

1,000

2,000

3,000

4,000

5,000

6,000

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

Catalogs Mailed (millions) %CHYA

U.S. Magazine Ad Pages

Source: RISI

2008Q1

2009Q1

2010Q1

2011Q1

2012Q1

2013Q1

2014Q1

2015Q1

-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%Percentage Change in PIB Magazine Ad Pages

%Ch Year Ago

Retail Sales

Source: Government Census

Aug-08Oct-

08

Dec-08

Feb-09

Apr-09

Jun-09

Aug-09Oct-

09

Dec-09

Feb-10

Apr-10

Jun-10

Aug-10Oct-

10

Dec-10

Feb-11

Apr-11

Jun-11

Aug-11Oct-

11

Dec-11

Feb-12

Apr-12

Jun-12

Aug-12Oct-

12

Dec-12

Feb-13

Apr-13

Jun-13

Aug-13Oct-

13

Dec-13

Feb-14

Apr-14

Jun-14

Aug-14Oct-

14

Dec-14

0

50,000,000,000

100,000,000,000

150,000,000,000

200,000,000,000

250,000,000,000

300,000,000,000

350,000,000,000

400,000,000,000

450,000,000,000

Consumption, Shipments, Operating Rates

Source: PPPC, RISI

2009 2010 2011 2012 2013 2014CFS

Consumption 3,559 4,280 4,430 3,952(- 4.3%)

3,919(-0.8%)

3,900(-0.7%)

CGWConsumption 4,144 4,133 3,803

(-8.0)3,829

(-0.7%)3,555

(-7.2%) 3,252(7.8%)

Uncoated Mechanical

Consumption5,031 4,958 4,647 3,809

(- 18.1%)3,9403.4% 3,884

(2.7%)

U.S. CGWOperating Rates 81% 95% 94% 91% 91% 94%

U.S. CFS Operating Rates 82% 96% 92% 88% 88% 90%

Uncoated Mechanical

Operating Rates81% 95% 93% 92% 99% 95%

Market and Economic Drivers

Source: RISI

2010 2011 2012 2013 2014

Magazine Ad Pages -0.1% -3.1% -8.2% -4.1% -10.4%

Commercial Printing 0.1% -4.3% -1.6% -0.6% 2.3%

Catalogs Mailed -1.8% -5.4% -0.6% -3.0% -1.1%

Economic Driver Outlook

Source: Global Insight

Economic Driver 2011 2012 2013 2014 2015 2016 2017

Real GDP (Percent change) 1.8% 2.8% 1.9% 2.4% 3.3%e 2.1% 3.2%

Federal Funds Rate (Percent) 1.0% 0.14% 0.19% 0.44% 1.69% 2.13% 3.03%

Ten-Year Treasury Yield (Percent) 2.8% 1.80% 2.36% 2.45% 1.91% 2.39% 2.53%

Oil Prices, Refiner Acquisition Cost ($/barrel) 102 94 98 78.37 49.52 75 71

Consumer Price Index (% change y/y) 3.1% 2.1% 1.5% 1.6% 1.2% 2.3% 2.1%

Housing Starts (Millions) 0.61 0.78 0.93 1.00 1.28 1.66 1.54

Consumer Sentiment (Univ. of Michigan) 67 76.5 83 92.6 95.4 92.4 91.4

Unemployment Rate (Percent) 9.0% 8.1% 7.1% 5.8% 5.7% 5.7% 5.5%

Ad Spending, By Region

Source: RISI Forecasts

2010 2011 2012 2013 2014

North America $162,165,0002.7%

$165,104,0001.8%

$172,039,0004.2%

$178,313,0003.6%

$186,344,0004.5%

Western Europe $106,344,0005.4%

$108,104,0002.2%

$107,885,000(0.7%)

$109,668,0001.7%

$112,642,0002.7%

Central / Eastern Europe

$24,181,0009.3%

$26,151,0008.1%

$26,631,0001.8%

$28,592,0007.4%

$31,089,0008.7%

Asia Pacific $125,059,00010.6%

$132,172,0005.7%

$140,383,0006.2%

$148,423,0005.7%

$157,155,0005.9%

Latin America $31,996,00018.5%

$35,344,00010.5%

$38,080,0007.7%

$41,935,00010.1%

$45,600,0008.7%

Middle East / North Africa

$4,881,0007.7%

$4,155,000(14.9%)

$4,198,0001.0%

$4,313,0002.8%

$4,412,0002.3%

Rest of the World $10,940,00016.2%

$11,592,0006.0%

$12,321,0006.3%

$13,468,0009.3%

$14,812,00010.0%

Global Total $465,566,0007.0%

$483,206,0003.8%

$501,536,0003.8%

$524,712,0004.6%

$552,054,0005.2%

20150301 gc market overview march 2015

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