Statement from Appvion 10/30/2017

Statement from Appvion, 10/30/2017

Update on Leuco Dye Market: In mid September the global thermal paper market was shook when two Chinese chemical producers of colorant, including the world’s largest supplier of leuco dye, were shut down along with other manufacturing sites over environmental concerns by the Chinese government as part of their anti-pollution crackdown on industry. The closures are expected to last at least three months or longer and created the possibility of coaters across the globe shutting down if supplies of leuco dye become short or unavailable.

The closures hit at a bad time for the US economy and consumers as supplies of direct thermal paper are already extremely tight in Europe and North America as the busy holiday retail season approaches.
Following the Chinese government mandated environmental plant closures, three (3) additional dye suppliers were closed over the past several weeks due to unexpected shutdowns related to the Chinese Party Congress. During this time approximately 80% of the world’s dye supply was closed.

Coming out of these latest shutdowns, our dye suppliers have failed to make contractual deliveries of product elemental to our production of direct thermal POS papers. While we’ve done everything we can to get material to meet or customer’s POS paper requirements – including using airfreight from China – our production will be impacted by the dye market. Over the next two weeks we will not be shipping our Alpha 400-2.1 and Alpha 400-2.3 grades to converter customers.

There remains some uncertainty after the week of Nov 6th. We will keep you informed as we get more information on the impact to shipments beyond that week.

Please let me know if you have any questions or if we can provide any additional information.