The ratings on Domtar Corp. reflect Standard&Poor's Ratings Services' view of the company's leading market position in the North American uncoated free sheet (UFS) market and good cost profile. The ratings are constrained, however, by what we see as a steady decline in demand for UFS; volatile prices for commodity paper, pulp, and lumber products; and a weak lumber business. With about 33% of industry capacity, Domtar is the largest UFS manufacturer in North America. It has 4.2 million short tons of integrated fine paper capacity at 11 pulp and paper mills. The majority of its paper capacity is in the U.S.; Domtar also manufactures and sells coated groundwood paper, pulp, and lumber. Standard&Poor's considers Domtar's
