COPA Market & Industry Data December 12th, 2012 Domtar Market & Industry Data North American UFS Industry Data • UFS demand decreased 4.3% in YTD Oct. 2012 vs. YTD Oct. 2011 • UFS mill inventory ended Sept. 2012 at 26 days of supply, same as Sept. 2011 • UFS operating rates were 89% MTD Oct. 2012 & 90% Oct. YTD Source: PPPC 2 Domtar Market & Industry Data UCF DEMAND YTD Oct.-12 YTD Oct.-11 000’s tons Uncoated woodfree Operating rate (Oct. MTD: 89%) Total UFS demand Cut-size demand Offset & Opaque demand Envelope demand Forms Bond demand Other UFS demand 90% 8,189 3,760 2,012 814 617 988 90% 8,559 3,890 2,135 871 654 1,010 % change -4.3% -3.3% -5.8% -6.5% -5.7% -2.2% 3 Domtar Market & Industry Data UFS Industry Demand 950,000 2010 900,000 850,000 2011 800,000 2012 750,000 Oct. YTD demand is 4.3% below 2011 700,000 Source: PPPC 4 Domtar Market & Industry Data North American Cut-Size* Shipments 10 shipments 11 shipments Mar Jun 12 shipments 400,000 350,000 300,000 Jan • Source: PPPC Feb Apr May Jul Aug Sep Oct Nov Dec Cut-size includes colors multipurpose 5 Domtar Market & Industry Data N.A. UFS Share by Capacity - 2012 Total Capacity* = 11,096,000 short tons Source: RISI Capacity Report 6 Domtar Market & Industry Data N.A. UFS History of Capacity ‘000 of tons 15,500 15,000 14,500 14,000 13,500 13,000 12,500 12,000 11,500 11,000 10,500 -6.0% -6.2% 2005 2006 2007 2008 2009 2010 -2.4% 2011 -1.4% 2012 • UFS capacity declined 6.2% in 2010, 2.4% in 2011, and -1.4% so far in 2012 *Capacity numbers include the following: Mohawk’s, Wausau’s & Appleton closures, scheduled maintenance shutdowns, and scheduled UFS annual capacity of coated producers. Also added are the reopenings of Gorham & Gray’s Harbor paper machines Source: PPPC 7 Domtar Market & Industry Data N.A. UFS Demand Forecast in ’000 of tons 14,000 -5.3% 12,000 PPPC Forecast -7.6% -12.7% 0.1% 10,000 -3.8% -3.5% 8,000 -3.8% 6,000 -12% 2007 2008 2009-12% -1% -0% 2010 -1.0% -1.0% 2011 -2.8% -3.2% -4.0% 4,000 RISI Forecast -4% -4% 2012 -2.8% -3% -4% 2013 • %’s from past years may differ due to different calculation methologies (Imports, exports, ITB etc.) Source: PPPC/RISI 8 Domtar Market & Industry Data UFS Demand Forecast by Grade In‘000 tons Forecast 6,000 -2.7% in 2012 5,500 Copy -2.0% in 2013 5,000 4,500 4,000 3,500 -5.5% in 2012 Offset & Opaque -4.8 % in 2013 3,000 2,500 -5.7% in 2012 2,000 Envelope 1,500 -3.8% in 2013 1,000 -6.8% in ’12 500 Forms Bond -3.8% in ‘13 0 2004 Source: PPPC 2005 2006 2007 2008 2009 2010 2011 2012 9 Domtar Market & Industry Data Printing & Writing N.A. Operating Rate YTD 2012 vs. 2011 (Operating rates %) Oct. 2011 Oct. 2012 95% 94% 94% 93% 93% 93% 92% 92% 91% 90% 91% 90% 90% 89% 89% 88% 87% 86% UCFS Source: PPPC Unc. Mech CWF CM 10 Domtar Market & Industry Data Distribution Channel – Market Share Online/Direct 8% Club Stores .4% Food/Drug/Mass .7% Wholesalers 8.3% Distribution Channel 2011 Tons 2010 % Market Share 2011 % Market Share Merchants 869,000 25.2% 21.9% OEM 232,000 5.5% 5.9% Office Store – Retail 400,000 8.2% 10.1% Office Store - Contract 1,774,000 46.8% 44.7% Food/Drug/Mass 28,000 .7% .7% Club Stores 17,000 .8% .4% Wholesalers 329,000 7% 8.3% Online/Direct 315,000 5.9% 8.0% Total 3,965,000 Merchants 21.9% Office Store – Contract 44.7% OEM 5.9% Office Store – Retail 10.1% Source: PPPC 100% Domtar Market & Industry Data Brand – Market Share All Others 2.8% OEM 8.7% Mill Brand 29.3% Source: PPPC Private Label 59.2% Brand 2011 Tons 2010 % Market Share 2011 % Market Share Mill Brand 1,163,000 30.5% 29.3% OEM 344,000 9.2% 8.7% Private Label 2,347,000 57.9% 59.2% All Others 111,000 2.6% 2.8% Total 3,965,000 100%