In Analytical Cornerstone (AC), Materials Cost reflects the non‑labor, non‑energy consumables required to keep a mill operating. These are modeled using benchmark maintenance data, regional wage structures, and grade‑specific direct material usage.

1. What “Materials” Includes

Materials represent the physical inputs and consumables needed for production, excluding energy, fiber, and labor. They cover:

• Maintenance parts & supplies
• Contract maintenance (external service providers)
• Operational consumables such as felts, wires, rolls
• Mill supplies & shipping materials
• Other incidental costs not classified under fiber, chemicals, energy, or labor

These items collectively form the Materials and Maintenance category.

2. How Material Costs Are Estimated

Material costs are computed using year‑over‑year benchmark data that incorporate:

• Maintenance material costs
• Maintenance labor costs
• Direct costs specific to the grades being produced

Fastmarkets RISI uses regional benchmark data for maintenance man‑hours per ton to determine the appropriate maintenance cost level for each mill.

3. Adjusting for Mill‑Specific Maintenance Intensity

Each mill’s actual maintenance man‑hours per ton are compared to regional benchmark averages.

If a mill uses more maintenance hours per ton
→ Materials cost is adjusted upward to reflect higher parts & contracted maintenance needs.

If a mill uses fewer maintenance hours per ton
→ Materials cost is adjusted downward to reflect lower expected material usage.

This adjustment ensures the materials estimate matches the true operational intensity of the mill.

4. Relationship Between Materials and Labor Costs

It is important to distinguish:

(A) Labor Cost (included elsewhere in AC)

This covers regular maintenance personnel, who are part of the mill’s staffed workforce and appear under the Labor line item.

(B) Materials & Maintenance Cost (this category)

This includes contract maintenance, i.e., external contractors and purchased maintenance services, not the mill’s own employees.

5. How Materials Cost Fits Into Total Cash Cost

Materials cost is one of the five core elements of cash cost:

1. Fiber
2. Chemicals
3. Energy
4. Labor
5. Materials & Maintenance

6. Summary

Materials cost reflects all maintenance‑related consumables and contracted services, modeled using:

• Benchmark maintenance man‑hours per ton
• Grade‑specific materials usage
• Regional maintenance and wage data
• Adjustments for mill‑specific operational intensity

Regular maintenance staff are included under Labor, while Materials represents parts, supplies, and contracted work.