Tuesday, May 18, 2010

Containerboard Market Remains Strong

Shipments for containerboard and boxes continue to improve with box shipments up 4.8% from 2009. Inventory levels are also showing modestly reduced levels at both the mill and the box plants. This marks the third straight month of improved demand, shipments, and operating rates. Suffice it to say, the price announcement in April for $60/ton is firmly implemented.

Printed Magazines Desired over Digital

The Chief Marketing Officer Council conducted a survey and confirmed that 90% of adults that currently subscribe to magazines prefer the print format. It was noted that 24% of the respondents would review EReaders in the future. All 90% reported that they do use the Internet, mainly for research.

Thursday, May 13, 2010

AF&PA Reports Increase in Shipments

The American Forest and Paper Association issued its report for April shipments for Printing and Writing papers. The numbers are up; paper shipments rose nearly 11% to 1.5Million tons in April (vs. 2009).
Coated Papers increase was 28% to 584,000 tons
Uncoatd Paper increase 2% to 899,900
Coated Free increased to 33% to 312,400
Coated Publication increased 22% to 272,000 tons
Uncoated Freesheet decreased slightly -0.6% to 745,800 tons
Uncoated groundwood increased 16.5% to 154,000 tons
Total year to date paper shipments increased 10.7% to almost 6Million tons

Coated Prices UP

The coated paper markets continue to witness strength and the current $40/ton price initiative is being implemented. Coated Free producer's backlogs are strong, primarily due to the anti dumping fees imposed by the USA against the Chinese and Indonesian mills. Both the Publication groundwood and coated free markets are seasonally strong.

Market Pulp Update

Market pulp continues to enjoy a snug market. The producers are taking advantage of the reduced supply and increased demand with the May 1 price increase of $40 to 50/ton. Although reports from China outline falling prices and given the downward trend of the Euro, pulp might have reached its peak offshore.
The North America NBSK market price is now $1000/MT. We await June .....

Thursday, May 06, 2010

Fraser Sells both the Pulp and Paper Mills

Fraser Papers completed the sales of its specialty papers business to Twin Rivers Paper Company and of its pulp mill in Thurso, Quebec to Fortress Specialty Cellulose Inc. Fraser Papers remains under creditor protection pursuant to CCAA, with its stay of proceedings extended to July 9th, 2010.

AbibitiBowater to Reorganize

AbitibiBowater filed a plan to reorganize in an effort to emerge from bankruptcy. The plan will be filed in both USA and Canadian courts. The company’s common stock will be canceled and holders will not receive any recovery. The unsecured creditors would receive a pro rata share of equity in the reorganized company. The plan is subject to approval.

Wednesday, May 05, 2010

Paper Prices Continue to Increase

Folio Magazine, a large consumer of paper, recently published a spreadsheet that outlined grades that increased in price from all the major mills. I attach for your reference. http://www.foliomag.com/files/images/folio_table2.gif

Coated Producers begin to Announce Price Increases

UPM, Catalyst, and FutureMark all have announced price increases on their pubication grades for shipments after June 1; NewPage, will delay their increase until 7/1.

Magazine Advertisements to Improve First Half

Bullet points on article by Lucia Moses on Advertising -

After a disappointing first quarter and brutal recession, magazine ad pages finally seem to be heading into positive territory.

Industry advertising pages fell 9.4 percent in the first quarter, per Publishers Information Bureau, in contrast to many publishers’ statements that the ad climate was improving.

Moving into the second quarter- pages are trending up, according to a survey of major publishing houses.

After a flat first quarter, Hearst expected to report an 8.2 percent increase in magazine ad pages (excluding Food Network Magazine) for the first half of the year.

Condé Nast expects to post a 3.7 percent increase for its monthlies in the first half, with nine of 16 titles recording gains.

Time Inc. said it would be up about 6 percent in ad pages in the same period. Meredith estimated in a conference call that magazine ad revenue would be flat to up slightly in the second quarter.

“I’m encouraged,” said Lou Cona, evp, Condé Nast Media Group. “We’re seeing an increase in ad budgets. Companies that were completely focused on driving sales are now reintroducing brand-building measures into their media mix.”

Publishing execs said the gains were coming from a range of ad categories.

“We’re seeing it in beauty, packaged goods, primarily, but we’re also seeing some rebound in automotive,” said Michael Clinton, Hearst’s evp, chief marketing officer and publishing director. “A bit of the luxury market’s beginning to come back.”

Bright spots among titles include Condé Nast’s Wired, up 19.7 percent; and Teen Vogue, up 14.6 percent. Time Inc.’s Real Simple and Cooking Light, which redesigned last year, will be up an estimated 32 percent and 21 percent, respectively. InStyle will be up 18 percent driven by a 20 percent uptick in luxury ads.

And while how much the Apple iPad and other tablets will help magazines over the long haul remains anyone’s guess, some titles are starting to see a related paging bump.

Condé Nast’s Vanity Fair said ad programs tied to its launch on the iPad helped drive an 11.6 percent paging increase for the first half. Wired also cited its iPad edition as a factor in its first-half increase.

Not all are sharing in the gains. Many shelter and luxury ad-dependent books remain soft, as do travel and men’s lifestyle titles. Condé Nast’s W declined 13.8 percent for the first half and Details, 9.3 percent. Time Inc. said its News Group would be down due to a decrease in issues at Fortune.

Indeed, publishing execs still sounded a cautious note. “The economy seems to be tentative,” Condé Nast’s Cona said. “A lot of our business ties in to how the economy continues to do.”

Tuesday, May 04, 2010

Coupons Continue to be Strong

The redemption of coupons increased 27% in 2009 and newspapers remain the primary source of distribution. Perhaps the last frontier for newspapers' success. Newspapers accounted for nearly 90% of all the coupons redeemed with free standing inserts generating 53%. Although Internet coupons increased 263%, they still remain a small percentage of over all redemption. The increase in coupons is most likely a direct result of the challenging economy and lack of disposable dollars. Let's hope, for the survival of newspapers, that this trend continues - for more coupons - not a poor economy......

Pulp Markets Stay Tight

Any day now, we expect the producers of pulp to announce yet another price increase of approximately $40/ton. The global markets continue to witness extended backlogs and good demand creating lower inventories. Chilean pulp mills are slowly coming back on stream, but many domestic mills are taking required Spring Maintenance down time - so look for pulp to remain tight for several months.

Coated Papers Demand Continue Up

Most producers are reporting on continued demand improvement for both publication groundwood coated and free sheet coated papers. Printers and publishers paid approximately $5-10/cwt more for coated papers in April and manufacturers are surely reviewing a formal July price increase. The recent announcement on anti dumping will also assist domestic producers. Last week, the US imposed Anti-Dumping duties on Chinese and Indonesian imports. For Chinese mills, this adds 31-90% to the 4-
13% duties already in place, and Indonesian mill face an additional

Friday, April 30, 2010

Asia Pulp & Paper Hopes for the Best in Coated Paper Anti Dumping Case

Asia Pulp & Paper (APP), the leading exporter of coated paper from China and Indonesia (capacity of 15Million tons), fully expects the preliminary ruling to be overturned for the Anti Dumping case. They maintain the mills that export from China and Indonesia have never sold their products in the United States at less than fair value.

The preliminary ruling outlined the company illegally dumped paper in the United States. The USA Producers maintain the domestic market was being flooded with imported coated paper. The offshore produces state domestic shipments of coated paper are down because overall demand is down in this bad economy, not because of any alleged unfair practices of Chinese and Indonesian producers and importers.

In the current case, the preliminary anti-dumping and countervailing duty applied to Asia Pulp and Paper products are 43.65% on products from China, and 28.1% on products from Indonesia, as reported in our past releases.

The Department of Commerce’s final rulings are expected to be released in September. The last phase of the cases takes place in October or early November, when the U.S. International Trade Commission will determine if the U.S. paper industry has been harmed.

Internet Advertising passes Printed Advertisements

The year 2009 was a struggle for anyone selling advertising space, but it might have been a little easier for those selling space on the internet. For the first time, the percentage of dollars (12.6%) favored the global spending on internet advertisements versus the segments such as magazines (10.3%). Newspapers, also, continue to loose market share for advertising dollars to the web. The overall reduction in ad spending for 2009 was 12.3% ($22.7Billion), and I note online spending was also down, declined 3.4%.

Thursday, April 29, 2010

Future Revenue for Printers Expected to increase

The Freedonia Group recently made a study available
Study Highlights:

-Revenue for the USA commercial printing industry, which includes prepress and printing services on a job order basis, is expected to increase 2.1 percent per year to $77.7 billion in 2014.

-Gains will be aided by a cyclical rebound in advertising expenditures and increased outsourcing by newspaper publishers. Although the volume of printed pages in periodicals such as newspapers will fall, commercial printers will benefit as many publishers outsource their printing operations.

-Digital printing is expected to achieve the fastest gains based on its lower cost, quick turnaround and ease of customization for shorter print runs. Digital technology is a game-changer in many printing applications -- such as direct mail and book publishing -- as it accommodates both variable-data printing, which allows for the creation of individualized products, and print-on-demand, which allows customers to shrink inventories.

Paper Up in March

Notes from a recent RISI report-
Pulp & Paper Product's Council reported that printing and writing paper shipments up 10% in March to 1.9Million tons, the fifth month of gains. Coated paper shipments grew to 665,000 tons, with coated freesheet up 27% and coated mechanical up 24%. Uncoated mechanical paper grew 6% to 431,000 tons while uncoated freesheet was up 2% to 829,000 tons. Total exports increased 37.2% in 1Q to 279,000 tons and mill inventories shrunk 22% to 1.55Million tons by the end of March.
These findings are consistent with our past releases.

Smurif-Stone to Exit Bankruptcy

Smurfit-Stone Container, one of the industry's largest containerboard and corrugated packaging producers, announced plans to exit chapter 11. The company will reorganize and become a much leaner organization.

UPM-Kymmene Posts Profit

The world's largest magazine paper maker,UPM-Kymmene, posted a first quarter profit of $93Million (euro70Million), compared with a 2009 loss. The company reported that sales rose 10%.

Tuesday, April 27, 2010

All Paper Grades up

•Uncoated free sheet (UFS) shipments up versus year-ago for fourth consecutive month.
•Coated free sheet (CFS) shipment surges; this is fourth double-digit growth versus year-ago.
•Year-ago shipments of coated mechanical (CM) robust enjoying better gains than Coated Free and fifth consecutive double-digit year-ago increase.
•Increase of uncoated mechanical (UM) shipments passes 20% for second time in past three months.
This is fifth consecutive month of increase. Maybe the improved economy and new paper demand is for real and sustainable!

Newspaper Circulation Continues Down

Recent reports for the USA Newspapers confirms the deep circulation declining trend is continuing. The average publisher reported weekday sales were down nearly 9% from 2008. Sunday sales have decreased 6.5%. This trend is universal, with almost all chains, and most of the smaller newspapers, sighting decreases. The nation's top 10 newspapers reported over 10% declines and added that it is a direct result of the electronic media cannibalizing market share.

Coated Paper Anti-Dumping Update Decision Delayed

The Department of Commerce’s second preliminary decision, anti-dumping charges, in the trade case regarding certain imported coated paper from China and Indonesia was delayed to Friday, April 30. The first preliminary decision, March 2, covered countervailing duties. The final ruling will be in September for both issues
The last phase of the cases takes place in November, when the U.S. International Trade Commission will determine if the U.S. paper industry has been harmed. Only an affirmative ruling at that time would lead to the imposition of duty order on the coated paper in question from China and Indonesia.

International Paper Buys SCA's Packaging Business

International Paper will buy SCA's packaging business in Asia for $200Million. This acquisition includes 13 box plants and $250Million in sales. This purchase will compliment International Paper's current non integrated container business in Asia and enforce the objective of growing its global footprint.

Wednesday, April 21, 2010

New Capacity Starts up in China

China's Sun Paper reported that #3 machine, with a capacity of 350,000TPA, is now in commercial production. The company plans to also install a new uncoated mechanical paper machine, PM #24, at the same facility.

A second Chinese company, Fujian Nanping, rebuilt two newsprint machines at its mill and converting them in March to uncoated printing and writing paper. Both PM #3 and PM #4 have capacity of 50,000TPA. We suspect most of this capacity will remain in Asia.

Update on Japanese Mill Curtailments

The PPI edition for Asia reported on the following-
In Japan, last year, a total of 32-paper machine closures were announced, with combined capacity taken out of 1.463Million TPA, representing 5% of total paper and board. In 2010 there have been additional closings, including Oji’s shutting down the 130,000 TPA coated paper machine, PM #10, at its Kasugai plant, Aichi prefecture. They also plan to close a kraft paper machine, PM #4, at the Kure mill, Hiroshima prefecture, and convert the 180,000TPA PM #5 from printing/writing paper to kraft paper, taking that capacity out of the market. Despite curtailments, prices remain stagnant.

Pulp Markets Remain Strong

The global pulp market remains extremely tight. Recall, we have announced numerous pulp mills that were shut down due to poor economics, now the lack of supply has hurt availability for most fibers. Catalyst Paper announced the reopening early May of the second pulp line in British Columbia, with a capacity of 165,000 tons of NBSK, this should help.
Major producers have all announced $30-50/MT price increases for May. Price levels for Domtar, Canfor and Mercer International for NBSK will transact at $1,000/MT for May (up $40/MT). NBSK in North America prices will be up 13% from the July 2008; note, this is 57% from May 2009 (the lowest price point of this current cycle). Pulp producers in Europe have also increased pulp prices for May $30/MT and $50/MT for hardwood - BEK.
The disruption of supply from the Chilean earthquakes, the strikes in Sweden, and now, spring maintenance have all resulted in even less availability.

Electronic Coupons on the Raise

Coupons that are now sent to an Internet address or a mobile devise are gaining in popularity. These are the fastest growing segment on redemption of coupons. On line product coupons increased 263% or 50Million from 2008. Perhaps, like newspapers, books and maybe magazines, printed coupons might start to decline with the cannibalism from electronic communication.

Monday, April 19, 2010

Coy Paper News Releases on Twitter

You can catch all the headlines from the Coy Paper Company LLC current news on the pulp and paper industry on Twitter. Or set up this blog on our RSS feed, located on the lower right side of this page.
The Twitter site can be found on http://twitter.com/CoyPaper There is no requirement to be a Twitter member.

Printed Book Sales continue to Decline

Overall book sales fell almost 2% in 2009 (vs 2008) to approximately $24Billion. One segment hard hit was the 5.2% decline in sales for adult paperback books.
Although the EReader only accounted for 1.3% of book sales for 2009, most industry experts feel this will grow dramatically. This could, ironically, assist printed book sales ..... short term; however, if electronic reading devises catch on, printed books could experience a dramatic decline.

ContainerBoard Stays Strong

The March figures for Containerboard are beginning to be reported and it appears inventories are down (down 40,000 tons vs. February) and box shipments are up nearly 7% (vs. March 2009). All positive signs for the success for the recent April price increase.

Reed Closes 23 Publications

Reed Business Information (RBI), a division of Reed-Elsevier, has been unsuccessful in confirming a buyer for many of its business-to-business publications, announced that it is closing 23 book publications.

Friday, April 16, 2010

Top Paper Companies for Alternative Fuel Credit

Much has been written about the black liquor credit many of the USA pulp and paper producers enjoyed. This tax credit allowed many of the manufacturers to report a profit in 2009, despite both depressed demand and pricing.
The top 5 that enjoyed their share of the $8Billion total paid include
International Paper $2Billion
Georgia Pacific $1.02Billion
Smurfit Stone $560Million
Domtar $495Million
MeadWestvaco $$320Million

MRI Reports E-Reader Owners Read More Magazines

From a recent MRI report-
In the Mediamark Research & Intelligence Survey of the American Consumer, findings show that 91% of e-reader owners read magazines, reading on average 13 magazines each month. This is higher than the US adult population in general, of which 84% read magazines reading an average of 11 magazines/month. E-reader owners also appreciate and value the benefits of magazines more, i.e. they are 26% more likely than an avg adult to say magazines relax them, 20% more likely to report that magazines make them think and 11% more likely to feel that magazines give them good ideas. This is a good indication of the potential of these devices to become strong magazine platforms in the future. MRI ‘s Survey of the American Consumer interviews 26,000 US adults, aged 18+, in their homes each year, with results being projectable to the entire US adult population. Data is released twice yearly, in the spring and fall.

Thursday, April 15, 2010

Heard in the market – Uncoated price Increase

We have released several pieces on the recent uncoated paper price increases and many of you have commented. The most recent announcement of $60/ton for May, follows a $40/ton price increase in April. This will bring cut-size office paper list prices to $1,050 to $1,100/ton or an average $1,075.
Buyers polled by Purchasing.com say March delivered prices averaged $1,090. Forms bond dipped under $1,000 last April and for the past year have averaged $978/ton, delivered. PPI Pulp & Paper Week says forms bond list has averaged $985for the past year, as compared with $1,115 a year-ago-March.

AF&PA Reports on First Quarter

Yesterday, we issued a release from UBS on the industry, today, the American Forest and Paper Association reported preliminary printing and writing paper increased 10.7% (4.435 million tons)in the first quarter of 2010.
Total coated paper shipments through 1Q rose 20% to 1.743 million tons with coated freesheet volume up 17.1% to 881,700 tons and coated mechanical shipments up 23%, to 860,000 tons. Total uncoated paper shipments rose 5.4% to 2.692 million tons in 1Q with uncoated mechanical shipments up 27.3% vs. last year, and uncoated freesheet up 2.2% to 2.275 million tons.
Note, these statistics are still preliminary (and slightly different than UBS). Of particular note - both reports illustrate increased demand.

Increased Pulp Prices Could Hurt Global Paper Industry

Although the vast majority of USA paper producers are integrated (produce pulp on site), the smaller mills must purchase fiber at market pricing. In contrast, nearly all of the European and Asian paper producers are non integrated and must buy pulp. This model, over the past several years, with depressed pulp prices, has been advantageous. However, with the current aggressive price increases, the non integrated mills are experiencing dynamic cost increases. Also, the foreign mills must also contend with the stronger US Dollar.
Two large USA mills to watch that buy fiber include Wausau and NewPage. Clearly, without the support of the black liquor credit and, now, fiber increases, their margins will be under pressure.

Wednesday, April 14, 2010

Preliminary Printing and Writing Paper Figures for March

Based on recent UBS report-
UBS reported that coated freesheet shipments in the USA in March increased 27.1% vs. last year, the 5th consecutive month of growth reaching the highest level since Oct 2008. Coated groundwood shipments rose 33.9% vs. last year, also the 5th consecutive month of growth. Both grades were compared against easy baselines last March. Uncoated groundwood shipments increased 26.5% vs. last year, but uncoated freesheet paper was a bit weak, almost flat with last year. Note, these are preliminary figures.

Advertising Pages Suffered in First Quarter

The all important index of advertising pages for magazines fell 9.4% in the first quarter of 2010 to 34,800 pages (compare to 1Q2009). This was a disappointment for most publishers, hoping the improved economy would turn the trend around. It was especially frustrating in that 2009 ad pages for the first quarter were down nearly 26% from 2008 to 37,200.
Comparing 1Q2010 to 2009, financial, insurance, and real estate actually saw an increase of 11.3% and cosmetics were up 7.6%; however, apparel and accessories were down 15.7%, pharmaceuticals down 15.6%, transportation and hotels down 13%, and media was down 13%. Fewer advertising pages generally translates into less editorial pages, as well, which means less paper consumed.

Tuesday, April 13, 2010

Paper Demand and Prices continue Up

Demand and prices continue their upward trend for both pulp and paper. In almost every paper and pulp grade, tight markets and elevated costs are pushing prices higher. Supply is down and demand (versus a depressed 2009) appear up. Perhaps the most notable advanced pricing initiative is in containerboard, where producers announced $60/ton
increase for April 1, immediately after a $50/ton increase in January. Producers sight improving demand, lean inventories, limited capacity, and higher costs all create a good environment for price increases.
As reported recently in the Coy Paper releases, all uncoated paper producers for literally all free sheet uncoated markets have announced a $60/ton price hike for early May.

USA Printing Shipments Down in February

USA commercial printing shipments dropped 7.2% in February, reaching $6.57 billion. Shipments were down 6.4%, for the first two months of 2010 indicating a yearly forecast of approximately $82-84 million.
Increased paper prices and the recent advancement of EReaders will not help this trend.

International Paper Introduces Environmental website

International Paper launched its new environmental website, Down2earthonline.com. The site reviews issues to assist consumers to better understand some of the myths and misconceptions of recycled paper. By educating those inside our industries, customers and end users can better understand these complex environmental issues and the steps that the forest products and printing industries are taking to become more sustainable and make positive contributions to our world.
As we have written in our past releases, the paper industry continues to be a good environmental stewart, yet, have not done a good job promoting this fact.

Thursday, April 08, 2010

Another Day, another Uncoated Free Sheet Price Increase

International Paper and Domtar announced a $60/ton uncoated free sheet price increase for May shipments. The initiative applies to desk top / copier paper, offset, and converting grades such as envelope. This is the second price increase for 2010.
Current pricing for cutsize business paper is $1050-1100/ton; rolls are $885-900/ton
We assume the remaining producers, such as Boise, Wausau Paper, & Glatfelter will also increase.

Europe Reports on Strong Shipments

Report from CEPIFINE
CEPIFINE reported that fine paper shipments in Europe increased in Feb, both domestically and exports. Coated woodfree shipments rose 10.9% to 633,000 tonnes, with domestic deliveries up 7% to 501,000 tonnes and exports up 2% to 104,000 tonnes. Uncoated woodfree shipments rose 12.1% to 647,000 tonnes, with domestic up 4.8% to 543,000 tonnes and exports up 120% to 132,000.

Digital Book Publishing may Grow Faster

The digital media already has built in efficiencies – no warehouse costs, no make ready, cost effective small runs, no need to repulp the unsold books, and zero inventory, to name a few. Other advantages include quick turnarounds as well as provide the ability for unknown authors to publish and distribute a book.
The forecast is for growth of digital publications to increase to 15-20% of the print volume over the next 5 years. This would yield a market share of 10% by 2013 and 15% by 2015. Printed books reached their peak with sales of 3.13Million units in 2007.

I would assume if EReaders, like the recently introduced IPAD, continues to grow, it may come at the cost of printed material. That said, it may also bring more people to books and magazines and assist Digital publishing and printed books and magazines, at least short term.

Wednesday, April 07, 2010

Sales Down for Label Giant Avery Dennison

Avery Dennison reported sales revenue of $6Billion for 2009, a decline of 11 percent from $6.7 billion in 2008. Net sales in the company’s pressure sensitive materials segment, which comprises 56% of its business, decreased 9% last year after a 4% gain in 2008. The company also reported a loss in net income of $746.7Million.

Avery Dennison's CEO reported “Sales volumes dropped during the first half of the year as customers substantially reduced inventories and recovered only modestly later in the year”.

USA Printers Profitable in 2009

As reported in these releases in past, the USA commercial printers witnessed declines in volume; however, with respective cost reductions, the industry recorded a $700Million profit in 2009.
There are still challenges ahead. Shipments for January and February dropped 6.4% vs. 2009 and it is difficult to remain profitable with declining volume.

Tuesday, April 06, 2010

IPAD Introduction Could be Game Changer

As I am sure all our readers are more than aware, Apple introduced the IPAD and sold
over 300,000 IPADs. By comparison, they sold 270,000 iPhones when first available in 2007.
Initial reports reveal, many magazine customers are embracing the new format for print but appear upset at the 'excessive' prices for single issues.
Magazines are pinning their hopes on the EReaders and hope that, like the cel phone, MP3, and lap top, that Apple and IPAD will greatly assist the current decline in publication circulation and advertising revenue. But, these companies need to be careful on pricing so they do not alienate readers.

Pulp and Paper Producers continue to Go Green

from Wood Resource Quarterly-
The global pulp and paper industry has substantially increased its use of woody biomass for energy the past few years, which has consequently reduced dependence on fossil fuels, reports the Wood Resource Quarterly. Since 2006, energy generated from biomass has gone up over 50%, last year accounting for 18% of the total energy consumption by this industry sector. Pulp and paper manufacturers worldwide consumed 75 million tons of woody biomass for energy in 2009.

Price Increase for Containerboard a 'done deal'

Shipments for both January and February (and early reports for March) on box shipments
appear strong and, therefore, all the major producers have announced a 10% box price increase for April shipments. Note, Coy Paper confirmed a $60/ton April containerboard price increase announcement. This new announcement will be the second increase of 2010. Not only is demand stronger than 2009, but inventories are declining and operating rates are hoovering in the mid 90's.

Pulp Market Update

Consistent with the Coy Paper recent releases, the global pulp market remains tight and the major producers have announced $50/MT increase for April. The real story is spot prices in the USA have increased sharply, with spot NBSK up $20/MT to almost $850/MT. Manufacturers in Chile are bringing to restart capacity, this will provide some relief to supply (and pricing) pressure.
World inventories are low, demand appears increased, and spring is generally the time most mills conduct maintenance; accordingly, do not look for much relief, short term.

Pricing recap
$50/MT for April; NBSK to $960/MT for North America

Friday, April 02, 2010

Economics of Printed versus Digital Books

The IPAD will be introduced this weekend, and we thought it a good time to review the economics of Digital versus print.

The New York Times recently documented an article describing the economics of producing a traditional printed hard cover book and a digital book. They state the typical hardcover retails for $26.00, and the publisher generally is compensated 50% or $13.00 of this price. The publisher than must pay approximately $3.25/book for printing, warehousing, and shipping the book to the store. The publisher also pays a 15% royalty ($$3.90) to the author, $1.00/book for marketing, and about 3% or 0.80/book for design and editing. Accordingly, the publisher is left with about $4.00/book before paying staff and overhead expenses.
The current agreement with Digital distributors is to compensate the publisher 30%, or $9.00/book on a book retailing for $12.99 (or $7.00 for a book retailing for $9.99 – the level most are now looking at). Costs are lower than a printed book, outlined as 0.50 to convert the text to a digital file and .0.78 to market the book. The royalty is still being worked out, but currently most authors are settling in at 25% of the digital price or about $3 for the $12.99 retail or $2.50 for the $9.99 price. Given the math, the author makes slightly less, but hopefully sells more books, meanwhile the publisher makes slightly more.
Currently digital books make up a very small percentage of the market, but the growth potential is large.
Will you be making the switch from hard bound to tablet?

Coated Paper Capacity Forecasted to Decline

AF&PA recently published a report on capacity, included is executive summary-
The annual survey of the American Forest & Paper Association reported declines in the U.S. capacity for all of the Printing & Writing Paper grades, excepting uncoated mechanical. Coated mechanical capacity fell -10.4% in 2009 and is forecast to decline by -6.8% in 2010 and -1.9% in 2011, remaining flat in 2012. Coated woodfree capacity in the U.S. decreased by -11.8% in 2009 and is projected to fall
-4.3% in 2010 and remain unchanged in 2011 and 2012. Uncoated woodfree declined -5.4% for last year, but it has decreased -25% since 2000. Further decreases are forecast for 2010, -6.3% and 2011, -0.7%. There is no change forecast for 2012. Of the four P&W paper grades, the only increase in 2009 was in uncoated mechanical capacity, 6.2%. Projected numbers indicate continued expansion: 4.8% in 2010, 1.6% in 2011 and 0.6% in 2012.

Smart Papers Announces new Recycled Grade

U.S. papermaker SMART Papers introduced Knightkote® 50 brand, FSC-certified, premium matte coated line which will have the highest amount of post-consumer waste (PCW) and recycled fiber.
Knightkote 50—available in a 92-bright, cool-blue White and Creme—is a comprehensive selection of 70,80 and 100lb. text papers, 65,80,and 100-lb. cover papers, a 7 and 9pt. business reply card and a 130lb. double-thick cover.
Knightkote 50 can be used in all offset, digital printing and converting applications including advertising and marketing materials, direct mail, brochures, books, free standing inserts, premium packaging, greeting cards and more.
Mohawk Papers will distribute this sheet.

Thursday, April 01, 2010

Magazines stay the Course of Printed Publications

Notes from ABC report-
Print subscriptions remain the core of consumer magazines. As reported by the Audit Bureau of Circulations, 278 million print subscriptions were active in the second half of 2009. As AdAge reported, even if 5 million people buy the iPad and every one of them buys the digital version of their magazine, print is still by far the dominant format. The Internet is increasingly useful to magazines in other ways, though; not only does it provide a centralized database of names and information, but it also is a platform for selling subscriptions on-line. Hearst reported that 45% of its subscriptions were generated on the Internet, up from 5% in 2005. Rodale said web subscriptions for its titles were up 15-25%. Condé Nast said 25% of its total new subscriptions were added on-line. The five publishers in the coalition to create a new digital storefront will be selling on-line editions of their magazine, yes, but the new venue will also be selling print subscriptions.
Comments on print vs. digital for getting and reading your favorite publications?

Burgo also Announces Coated Price Increase

Burgo joins the major European coated paper producers in their announcement of a 6-8% increase in coated mechanical paper prices, effective in May and an increase for coated woodfree in June. The price of uncoated woodfree will also jump in May. This Coy Paper news release reported earlier that Norske Skog, Myllykoski, Arctic Paper and Lecta cited their plans to raise prices to combat raw material cost increases particularly of pulp.

Catalyst Joins newsprint Price Increase

Catalyst will raise its 30 lb. newsprint prices to match the recent AbitibiBowater $25/MT on May 1 and $25/MTon June 1. Looks like all systems GO for this increase.

Wednesday, March 31, 2010

Price Increases are Announced for Europe

Due to increased costs, particularly for pulp, Norske Skog, Myllykoski, Arctic Paper and Lecta have announced coated paper increases. Effective with orders placed on or after April 1; Norske Skog will increase coated mechanical and supercalendered paper prices by Euro 35/MT and Myllykoski will raise the price of its publication papers by Euro 40/MT. Arctic and Lecta have announced increases of 10-12% for woodfree papers.
Surely, these increases will also effect USA purchases.

Newprint Prices to Increase

AbitibiBowater is the first to announce more price increases for Newsprint. The company has scheduled two newsprint price increases, for $25/MT each, for May 1 and June 1. The company had previously hiked prices twice this year, bringing the total scheduled for the first half of 2010 to an increase of $100/MT.
This additional cost is bad for the struggling newspapers, but the paper producers need it for survival!

Monday, March 29, 2010

RISI Reports on State of Paper Industry

RISI reported the following on the Graphic Paper Outlook
John Maine, RISI’s VP of World Graphic Papers, said that although the USA leading economic indicators are the strongest in 5 years, “in paper, it doesn’t feel that way”. In 2009, world demand for printing/writing paper dropped 10% overall, with the biggest decline seen in coated papers, which fell 13-15%. He predicted that Printing and Writing paper would be flat in 2010, with uncoated freesheet stable and coated paper the strongest to come back, noting that Jan-Feb 2010 saw coated paper shipments up 6%. Both magazine advertising spending and catalog circulation are expected to drop 3% in 2010, a great improvement over the double-digit declines of 2009, but still a reduction. Through 2011, he sees the world market facing overcapacity, especially in coated freesheet, due to the more than 4Million tons of new Coated Free capacity coming online in China.

Thursday, March 25, 2010

Pulp Prices continue to Rally

Coy Paper's current News on the pulp and paper Industry continues to report on the tightening of the world pulp supply and that global prices have soared. We firmly predict that North American pulp prices are heading toward 15-year highs. Accordingly, paper and packaging materials will also increase.
Our past releases have included supply disruptions in Chile and Finland, two large producing countries supplying almost 12% of the world's annual pulp demands, coincided with a recovery in demand in China. Pulp is the raw material used to manufacture newsprint, fine paper, magazine paper and cardboard.
The two week strike at the Finnish ports resulted in plant shut downs in Finland and much of Chile's 4Million tons of annual market pulp is out of production due to the earthquake and tsunamis.
The March transaction price for Northern bleached softwood kraft of $890/MT is just under list of $910, past the 2008 cyclical high of $880 and heading toward the $925 transaction peak in the fourth quarter of 1995. Northern bleached hardwood kraft, at $785/MT spot this month, compares with $820 list and still has a way to go to reach the $865 peak in late 1995.

Wednesday, March 24, 2010

News from AF&PA Meetings

The American Forest & Paper Association is currently conducting their annual meeting in NYC and reported that USA paper and paperboard capacity dropped 2.5% in 2009 to 93.9 million tons, with 2010 capacity expected to decline 3.4% followed by stability in 2011 and 2012. In 2009, 14 US mills were permanently closed, shutting down 16 paper and paperboard machines, with an additional 11 machines permanently closed at other mills. Other machines and mills have been indefinitely idled and may be restarted in the future. AF&PA represents 90% of USA industry capacity.

Forecast is Growth in Demand for PaperBoard

According to market research firm Freedonia Group in a study titled “Corrugated & Paperboard Boxes,” demand for corrugated and paperboard boxes is projected to increase 2.4% annually through 2014 to $36.4 billion. Gains will be driven by an expansion in manufacturing output after the real declines registered during the 2004-2009 period. In particular, an acceleration in shipments of nondurable goods, such as food and beverages, will support demand for related boxes.
The study reported that sales of corrugated and solid fiber boxes accounted for more than 70% of demand in 2009, and advances will be aided by their well-entrenched position as the shipping container of choice in nearly all manufacturing sectors. Demand will also benefit from the favorable environmental profile of corrugated boxes, which will become increasingly important as producers continue to seek ways to adopt sustainable packaging practices. Moreover, the study claims, value gains will be bolstered by heightened demand for more costly linerboard grades that can support high-quality printing and graphics.
Further, demand for folding paperboard boxes will rise 1.8% per annum through 2014, slower than the corrugated box pace, as folding cartons face stiff competition from alternative packaging (e.g., pouches, blister packs and clamshells) in many markets. Source reduction efforts will also restrain demand. However, the study indicates, gains will be supported by advances in printing and graphics capabilities and a more favorable environmental profile than plastic packaging. Set-up box demand will be supported by their widespread use in high-end confectionery, silverware, and jewelry applications.
Food and beverages will remain the largest box market, accounting for 45% of demand in 2014, the report reveals. Good prospects for boxes are expected in markets such as frozen foods, dairy products, and meat, poultry and seafood products. Other nondurable goods markets offering favorable opportunities for boxes include cosmetics and toiletries, and rubber and plastic products. In the durable goods sector, box demand will post healthy gains in the machinery and equipment, motor vehicle parts, and instruments markets as both industrial machinery and automotive industries recover from sharp declines in the 2004-2009 period. In nonmanufacturing markets such as retail shipping and carry-out foodservice, box demand will be supported by consumer preferences for online shopping and food prepared or eaten away from home.

Tuesday, March 23, 2010

ContainerBoard Supply Continues to Tighten

Consistent with Coy Paper's past reports, the containerboard market is witnessing an increase in shipments (up 6% February 10 vs 09) and lower inventories (down 97,000 tons). Exports remain strong and operating rates are hoovering at 95%. Most USA producers have announced a $60/ton price increase and the European manufacturers are beginning to also report increases.

Neenah Paper Announces Organizational Changes

Neenah Paper reported that John P. O'Donnell will be the Chief Operating Officer, reporting to Sean Erwin, Chairman and Chief Executive Officer, effective June 1. Mr. O'Donnell has been President of Neenah's Fine Paper segment.

Worldcolor to Close Printing Plant

Worldcolor reported it will close another facility, Dyersburg, TN, in early 2011. This location joins four others Coy Paper had announced earlier, Carroll IA, Oberlin OH, Bromont QB, and Richmond ON. The Tennessee plant has rotogravure and web offset capabilities and printed magazines, catalogs and freestanding inserts.

Monday, March 22, 2010

Apple’s IPAD Confirms Publishers for the EReader

Apple just confirmed an agreement with five of the six biggest publishers for books to be included on the IBookstore application. Although Random House is still considering working with Apple, Macmillian, Simon & Schuster, Hachette, HarperCollins, and Penguin have all signed up. Apple will market these publisher’s books on the IPAD and collect a 30% commission on the selling price.

Finnish Strike is Over

Union officials confirmed an agreement and this will end the Finnish stevedore strike. The Transport Workers’ Union and the employers’ representatives accepted a compromise. The strike began on March 4th, and has temporarily shut down 50% of paper production in Finland. Mills will restart gradually over a few days, to ensure paper quality reaches target level.

Caraustar Announces Paperboard Price Increase

Caraustar announced they will increase prices by $60 per ton on all uncoated recycled paperboard grades and $45 per ton on coated recycled paperboard grades produced by its mills. The increases are effective with shipments after April 5, 2010. Coy Paper notes that inventories are becoming tighter and demand up slightly; therefore, this increase should have limited challenges.

Carbonless Price Increase

M-Real has reported that they have experienced a significant increase in raw material costs, particularly pulp and logistic costs. Accordingly,M-real Zanders will increase prices for carbonless papers for deliveries after 19 April 2010 by 10%.

Friday, March 19, 2010

Update on Chilean Pulp & Paper Market

Reports from Chile after the earthquake and tsunami hit the country is that paper companies are making progress on restarting their operations, however, pulp mills are still idle, as their damage is more extensive. Chile’s only two newsprint suppliers, CMPC’s Inforsa mill and Norske Skog’s Bio Bio mill, are still closed. They have combined capacity of 340,000TPA of newsprint. This will artificially assist the USA newsprint producers.

Kruger Extends Downtime at Wayagamack Paper Mill

Kruger will extend the downtime of PM 3 at its Wayagamack Mill in Trois-Rivieres, Quebec, Canada for a period of one month starting March 31.
Kruger said the decision to extend downtime is the result of low demand for directory paper from the ongoing weak market conditions. Recall the Coy Paper news releases outlined this paper machine was shut down on December 31, 2009 with a planned restart set for March 31.
Production is now planned to resume on May 1.
PM 3 has the capacity to produce about 74,000 metric tons per year of directory paper.

NewPage to Purchase Domtar Coated Product Lines

NewPage announced they reached an agreement with Domtar to purchase Domtar's coated groundwood paper product lines and all the respective accounts and book of business. The purchase will include the coated groundwood paper book of business, Choctaw, Saturn, and Jupiter brands.

Deutsche Bank reports on a Potential Additional Tax Credit

from Deutsche Bank - Equity Research

We have received some reports from our industry contacts that recent legislative moves may allow the industry to claim a Cellulosic Fuel credit (IRC 40(b)(6)) for Black Liquor produced and fired between 1/1/10 and the enactment date of the new bill (likely to be in next several days). This could produce a substantial 1Q10 windfall for kraft-based producers. The size of the cellulosic fuel credit is $1.01/gallon, rather than $0.50/gallon with Black Liquor. The cellulosic credit appears taxable, while the tax status of the black liquor credits is still an open question. It also appears that companies may have the ability to re-file for 2009 (depending on their tax situation) and claim the larger cellulosic credit, rather than the black liquor credit. Our contacts suggest that all the big four accounting firms as well as several law firms are currently working on this issue.
Thus, it is safe to assume most paper companies are digging into the

Update on Containerboard Market

Containerboard and box shipments for February were up 6.0% ! Also, inventories fell at mill and at box plants by 96.800 Tons - roughly 4.5%. More good news included the industry ran at 95% of capacity in February and USA containerboard exports totaled
319,000 tons, up 49.1% from 2009. This is all good news for the producers .... converters, look for price increases.

Thursday, March 18, 2010

Many Paper Producers Announce Price Increases

Many of the major paper producers in North America recently announced price increases on coated, uncoated and supercalendered paper of about $30/ton effective with shipments on or after April 1st. Companies to announce so far include NewPage, Kruger, Verso, AbitibiBowater, Catalyst, Evergreen Packaging, Myllykoski, FutureMark, West Linn Paper and Irving Paper. Supply as a result of shuttered equipment is reduced, demand appears up, and the mills are grabbing this opportunity to announce new price levels. Look for the producers to attempt to raise prices throughout the year.

Update on Paper Markets for February

The stronger shipments were reported for most of the paper and pulp grades in February, as well as December and January, this will support our position that the business is now recovering and the paper industry, accordingly, is reviewing pricing increases.
Uncoated Papers
The Uncoated Freesheet shipments were up 5.7% from February 2009. This was the largest increase in over 3 years (Note, February 2009 vs 2008 was down 20.8%).
Mills such as International Paper and Domtar continue to take significant capacity reductions.
Coated Papers
Coated paper shipments also witnessed increased shipments.
Lightweight (publication) coated paper (LWC) shipments increased 21.0% versus February 2009 and coated free sheet increased 9.7%. (Note, last January, those two
categories posted declines of 37.4% and 24.6%, respectively).
Producers of coated free sheet will continue to benefit from duties recently announced for some Chinese and Indonesian imports and I suspect shipments will continue to advance.

Market Pulp

Domtar announced a $50/mton price increase in North America and Europe for both the NBSK and NBHK grades, effective April 1. If successful, the hike would be the 10th price increase in the last 12 months. The market has absolutely tightened as a result of both the Chile earthquake and strike at the Finnish ports. Additional market pulp producers that reported an increase include, Sodra's $40/ton April price hike on NBSK for Europe. Fibria announced a $50/mton global increase on (hardwood) BEK.
Reports suggest that the $30-50/mton price increase for March on softwood and hardwood grades in North America, Europe and Asia have gone through without much push back.
If the April price announcement is successful, NBSK pulp prices would
be up 50% from this time in 2009. NBSK (benchmark grade) pulp list price will be at $960/mton, up 30%.

Domtar Closes a Paper Mill

Domtar just announced it will permanently close its coated groundwood publication paper mill in Columbus, Mississippi. The Domtar coated groundwood paper mill has an annual production capacity of 238,000 tons of coated groundwood and 70,000 metric tons of thermo-mechanical pulp.

Friday, March 12, 2010

Chilian Earthquake Disrupts Pulp Supply

Notes from Deutsche Bank - Equity Research paper

Chile produces nearly 5Million MTA of market pulp or 8% of the world's supply. Nearly 80% of the pulp capacity is located within 150 miles of Concepción.

Reports from the region suggest that mills will be down for 30-60 days. Aftershocks could easily push the restarts back even further. If the entire Chilean industry is out for just 2 months, this could result in a loss of 800,000/MT.

Some analysts are predicting modest price gains of only $30-40/MT (3-5% increase). On the other extreme, some contacts in the pulp brokerage community are pointing to April list price increases of as much as $80-100/MT (9-11% increase). Deutsche Bank forecast is for April hikes in the $60/MT range.

OnLine Sales Continues to Grow

Notes from a Forrester Research Report-
Online retail sales, in the US, excluding auto, travel and drugs, grew 11% in 2009 to $155.2 billion or 6% of total. Forrester predicts 11% growth in 2010, reaching $172.9 billion or 7% of sales and similar growth annually through 2014, bringing online sales up to $248.7 billion by 2014.
The overall web-shopping audience is growing, up 4% in 2009 to represent 67% of the US online population. Forrester predicts consumer electronics to continue seeing double digit growth online, with apparel, accessories, footwear seeing a 17% growth online in 2009 and expecting over 10% growth for the next few years.
The trend for online sales is mirroring online/ Digital advertising.

Thursday, March 11, 2010

St Mary's Paper will Shut Down Paper machine

St. Marys Paper will close PM 5 at its Sault Ste Marie, Ontario mill. The machine has a capacity to produce 130,000MTA of SC-A paper. The mill’s other machines, PM3 and PM4, have been closed since December.

Catalyst May Restart Two Paper Machines

Catalyst has proposed a plan to the union that could restart 2 specialty paper machines at the Elk Falls paper mill. The Elk Falls mill is located in Richmond, BC with annual capacity of 153,000 tons of uncoated mechanical specialty paper and 373,000 tons of newsprint.

Advertising, both Print and Digital, will Grow

The Outsell research firm released an optimistic report on a forecast growth for both digital and printed advertising. The report also outlined digital advertising ($119.6Billion) may exceed print ($111.5Billion) for the first time. Magazine advertising spending is expected to increase 1.9% or $9.4Billion, including a 4.2% increase for consumer titles and 1% for B-to-B titles. One additional trend noted in the report was business to business advertisers see cross-media marketing as most effective.

Wednesday, March 10, 2010

Shipping Ports in Finland Remain on Strike

Following up on the Coy Paper earlier releases, the stevedores that work the ports in Finland remain on strike. The Finnish Transport Workers Union has forced several of the Finnish paper makers to cease operations. The mills are not able to receive raw materials, they are unable to warehouse finished paper, and most importantly, the paper mills can not ship paper.
Of notable mention, the following mills are shut down
-UPM shut down Rauma mill, capacity 720,000MT/YR, of coated mechanical and 540,000 mtpy of supercalendered paper
-Sappi closed its Kirkniemi mill, 740,000MT/YR of coated mechanical.
-UPM closing of Kaukas (Lappeenranta), 570,000MT/YR of coated mechanical and Kaipola, with 700,000MT/YR of coated mechanical, directory and newsprint papers
-UPM at Kymi, 850,000MT/YR of coated and uncoated woodfree capacity.
-Stora Enso will begin closing mills.

Negotiations with the stevedores continue. 
Finland has 25 major ports, 10 of which handle 75% of their exports.

Commercial Printers Down 7.2%

Consistent with our Coy Paper earlier releases, initial reports outline shipments for commercial printers declined 7.2% in January (versus January 2009) to $6.7Billion. Many believe this might be a trend, with the advent of EReaders and other electronic devices cannibalizing traditional print.

January Paper Shipments Up

The official American Forest and Paper Association (AF&PA) released final figures for January and confirmed Printing and Writing paper shipments were up 8.9% (vs. January 2009).
Highlights of January (versus JAN 2009 report include-
-Coated Papers up 14.6%
-Uncoated Mechanical up 28.3%
-Uncoated Freesheet up 1.9%
-USA Purchases (shipments and imports less exports) up 4%
Inventories of Printing and Writing rose 1%, up 9800 tons from December 2009.

Tuesday, March 09, 2010

Fraser Paper to Emerge with New Name

When Fraser Paper completes its sale (sometime in April), the new specialty papers business will consist of the integrated pulp, energy, and paper operation in Edmundston, New Brunswick and Madawaska, Maine, as well as two lumber mills located in Plaster Rock and Juniper, New Brunswick. The company will be called Twin Rivers Paper Company. This new company name is reflective of the location of the pulp and paper operations at the Madawaska and Saint John Rivers.

Paper Industry Continues Growth into Alternative Energy

The worldwide producers of pulp and paper have substantially increased the use of renewal wood for biomass for their massive energy demands. The result is less (nonrenewable) fossil fuels consumed. A recent release from the Wood Resource Quarterly confirmed that since 2006, energy generated from biomass has gone up over 50%, last year accounting for 18% of the total energy consumption by this industry sector.

Apple IPAD Coming...could be Game Changer

Apple delayed the introduction of its new IPAD EReader to retail stores until April 3, although orders will be accepted on the web as early as March 12. The IPAD will come with the iBookstore application and 11 other free download applications. Many are watching this device with interest to determine if Apple will change the way we read, much like this company changed the way we listen to music and use our phones.

Friday, March 05, 2010

Coy Paper Expands into AF 21 Fire Proof Paper Chemicals

The Coy Paper Company has always focused on the specialty paper market and now has included chemicals to its product offerings. The company has technical support and blending facilities and will market and distribute the Hartindo Anti Fire chemicals to include AF 21, AF 11E and AF 31.
Many paper mills and coaters are evaluating Coy's product to include in their product lines. Imagine, a fire proof paper and a flame proof paper!!
The chemical offers permanent protection from fire once applied, Hartindo AF21 will protect your home and family, hotels, night clubs, schools, Hospitals libraries and museums, etc. from the ever present danger of fire, giving you peace of mind 24 hours a day. Contact Coy Paper at info@coypaper.com for more information.

Prospective on Publication Paper Pricing

Even with a slightly improved demand at the end of 2009, coated publishing paper prices are almost $150 below their mid-2009 peak. Despite the combined rising costs of raw materials and the loss of black liquor credits, pressure continues on margins for the producers of coated groundwood publication papers. The forecast is for coated paper prices to continue to trend upward and producers to look for more improvement throughout the second half of 2010, assuming the economy does not enter another dip.

While it was true that during 2009, coated paper prices declined, but, in the first half, so did production costs. Unfortunately, the price slide continued despite the return of increased costs toward the end of the year. Pulp costs increased such as softwood pulp, up $200 per ton since their 2009 low, while coated publication prices fell $130 over the same time frame. Producers are also facing further pressure from the rising costs of energy, chemicals, transportation, and other cost components.

The challenge remains for mills due to rising fiber costs and the elimination of the black liquor credits (which will not be renewed). These credits reached as much as $100 per ton of paper. Combined with the other cost concerns noted above, producers will face tremendous margin pressure in 2010 if prices remain at their current levels. Accordingly, look for producers to introduce increased pricing thorough 2010.

Pulp & Paper Companies Report Increased Profits in 4Q

The index known as the Pulp & Paper Week composite (includes 23 USA companies) reported forth quarter 2009 earnings up 60% (vs. 4Q08) with sales down 7.5%. For all of 2009, the group’s earnings were down 34.2% with sales down 11.4% when compared to 2008 results. It was noted that 15 of these companies benefited by the alternative fuel black liquor tax credits which offset losses, improved balance sheets, and substantially boosted earnings.

Worldcolor to Close, yet another, Printing Plant

Worldcolor will close its plant in Carroll, IA which will be the fourth closure in the last 12 months. Other shutdowns previously reported on Current News on the Pulp and Paper Industry were located in Oberlin OH, Bromont QB, and Richmond ON.

Thursday, March 04, 2010

Post Office Documents Plan

So many of our readers mail publications or print direct mail marketing pieces; accordingly, a summary of the newest USPS plan. Mail volume is forecast to drop 15% from 177Billion pieces to less than 150Billion by 2020. If no action is taken, this will result is a deficit of -$240Billion by 2020.
Proposed plan is to
-Restructure retiree health benefits
-Fewer delivery days; more locations, more self service kiosks, more user friendly website
-Establish more flexible workforce
-Review pricing on each program, to include a price increase in 2011
-Introduce more products

USA Manufacturing, including Paper, Expanded in February

Notes on report from Business Wire
The Institute for Supply Management (ISM) reported that US economic activity in manufacturing expanded in February for the 7th consecutive month, with the overall economy growing for the 10th consecutive month. New orders and production showed significant month-over-month growth, with the Employment index increasing for the 3rd consecutive month. The paper and printing sector indicators are summarized below.

Finnish Mills Look at Downtime because of Strike

The Finnish Transport Workers’ Union went on strike this week. If the strike effects the Finnish ports, mills such as UPM Kymmene will lack raw materials, paper storage, and a means to export paper. The mills will have no choice but to shut down. Note, almost half of UPM’s paper production capacity is in Finland, but they plan to deliver orders from mills in other countries.

Wednesday, March 03, 2010

Preliminary Ruling on Anti-Dumping of Coated Papers

USA Department of Commerce reported on their preliminary results in its countervailing duty investigation of coated paper from China and Indonesia. They announced a preliminary duty of 12.83% on products from China, and 17.48% on products from Indonesia. Asia Pulp & Paper (APP), a major exporter of coated paper from China and Indonesia to the USA, expressed disappointment with the initial findings.

Department of Commerce’s final ruling is expected to be released in September along with the final ruling on anti-dumping. The last phase of this investigation will occur in October or early November, when the USA International Trade Commission will determine if the domestic paper industry has been harmed.

USA Printers share in the foreign producers disappointment on this ruling. Their coated paper costs will surely increase in a challenging market.

International Paper Closes Another Paper Mill

International Paper, the world's largest producer of paper, will permanently shut down the two remaining paper machines at its Franklin Virginia plant.

Tuesday, March 02, 2010

Are E-Books Really Taking Over?

To date, electronic books only make up less than 2% of all books sold. Trade books, both hard and paperback, are 35% and mass market printed books are 21%. As far as distribution is concerned, Book chains sell nearly 30% of all the books sold, followed by e-commerce sites at 20%, and the independent shops account for 5%. I would image the digital distribution will be a new channel and experience robust growth once the EReaders start hitting the market in a bigger way.

The Power of the Printed Word

Condé Nast, Hearst, Meredith, Time Inc. and Wenner Media with the support of Magazine Publishers of America and Bonnier Corp.; National Geographic; ESPN; and New York Media, have reported they will place front-of-book advertisement placements to answer tough questions about their relevancy. In all, close to 100 titles are planning to give up prominent space in their issues for an industry ad campaign that aims to promote magazines as vital.
The community is ferociously determined to correct the misconceptions that have been swirling around the advertising industry. The primary objective is to confirm that printed magazines are still exciting, Mobile, and will still be a strong presence for all to read 'the printed word'. The publications will also educate the public on how, long term, electronic media will devalue its product by offering its content for free online.

European Paper Output Confirmed Down in 2009

Just reading another report confirming producers of Paper and Board in Europe were down nearly 11% to 90Million tons, from 2008. This is the lowest level of shipments since 2001. Similar to the USA, the European manufacturers experienced weak demand and several capacity closures.

Update on Market Pulp

Domtar and SAPPI recently announced yet another increase for their market hardwood pulp of $50/ton for shipments. It was also reported that most of the producers of BEK will increase pricing $30/ton. This move follows all the North American producers of softwood pulp with the earlier announcement for an increase of $30/ton. Once all prices are into the market, the NBSK price for North America will be $910/MT and Europe will be $890/MT.
Most pulp buyers will not have a choice, but to pay the increase. Pulp supply has been tight due to continued strong demand in China. Also, the earthquake in Chile will impact several producers.
Pulp prices have staged a remarkable rally in the last 10-11 months, with most grades rising more than $200/MT.

Monday, March 01, 2010

2010 and the Paper Industry

The last decade yielded only limited new domestic capacity for the paper industry and an unprecedented number of plant and equipment shut downs. The industry is entering 2010 with a slight breeze to our backs with many markets witnessing small increases in order books from end users that most likely had to restock. Unfortunately, the economy is still not improving to a point that housing starts, bank credit, nor consumer buying has returned with any sustainability. Many of the raw materials consumed in paper making have increased and the black liquor alternative fuel credit is gone. NBSK pulp may raise to almost $880/MT – a 16 month high - and come close to matching the August 2008 peak.
Newsprint continues its challenge into 2010, with both advertisers and readers down, although pricing has improved for the producers. The price has steadily risen from a recent low of $450 to nearly $530/MT. The forecast is for still more shuttering of equipment to balance, the declining demand, with supply.
Uncoated Freesheet producers have announced an increase of $40/ton on business papers and demand appears to be stabilized (although current base is low). The major producers reduced capacity in 2009 and this will balance the market.
The manufactures of Coated Freesheet and Groundwood are still experiencing challenges from the a reduction in both advertising pages and over all circulation. The manufactures have announced price increases, but printers continue to push back citing fear of alienating their customers with advanced pricing.
Virtually all products for Containerboard have increased prices, and converters are paying the new levels. Current order backlogs are OK at best, with export shipments doing well. Real challenge is if the economy does not improve, no one will consume goods that go into boxes.
Our forecast is for a gradual recovery for the paper industry, and trending up from a poor 2009.

Containerboard Price Hike Still On

As of today, all the major producers of ContainerBoard including International Paper, Georgia Pacific, and Temple Inland have increased pricing. These three leading producers are digging their heels in on the $60/ton announcement for April 1. More than likely, this second increase of the year will happen, despite persistently weak demand. Key issues include tight supply/demand balance, lean inventories, and surging fiber costs.

WorldColor Closes Another Plant

The printing plant in Oberlin, Ohio owned by WorldColor will shut its doors by May 21. This facility focused on direct mail and magazine inserts.

Thursday, February 25, 2010

White Birch Announces Bankruptcy

As we assumed, White Birch joined AbitibiBowater in announcing they will file for bankruptcy protection. White Birch is the second-largest newsprint manufacturer in North America with newsprint mills in Quebec City, Riviere-du-Loup and Gatineau. The company expects operations to continue producing paper for end users.

Printing and Writing Papers Shipments Up in January

From recent report by American Forest and Paper Association

The AF&PA reported that USA printing and writing paper shipments went up 9% in January vs. 2009. This is the third consecutive monthly increase when compared to the year before. All paper classifications grew, with coated fee and groundwood - publication having double-digit growth. US purchases (shipments + imports - exports) also went up by +4%, and inventory levels increased 1%, by 9,800 tons from December.

RR Donnelley to buy Bowne

RR Donnelley will acquire Bowne & Co.for $481Million and is expected to close in the second half of 2010. Bowne had revenues of $675Million in 2009 and offers digital print services for healthcare, financial services and others.

Wednesday, February 24, 2010

Another Prospective on the Paper Industry

Most CEOs running pulp and paper companies believe the ‘worst is over’ and now look for a slow recovery over the next 2+ years. Most admit the industry cycle is mature or even declining and much of the lost demand may not return. The paper, pulp, and packaging industries all need to review their models for long term survival. The last two decades illustrated a trend of mergers, acquisitions, consolidation, and plant and equipment closures. This assisted with the over supply challenge, but if demand continues to be decreasing, a transformation must occur.

The paper companies will need to review other segments and models to be viable as a long term entity. Areas of focus perhaps should include, Chemicals, water treatment, energy, logistics, forest management, and recycling. The paper companies all currently have expertise in these areas as a normal course of business. Now, maybe they should evaluate if these areas could generate new streams of revenue and recreate a ‘new’ entity.

Printers Upset at Anti Dumping Case

The USA printing industry continues to lobby against the coated paper manufactures that have asked the US International Trade Commission to levy a tariff on Chinese and Indonesian producers. Overall demand for printing is down and the continued competition from electronic communication is fierce. Reports confirm over 73,000 workers in the printing industry lost their jobs in the past 2 years. The printers feel that the imported paper maintains a competitive market, and without China and Indonesian paper, the cost of the largest component for printing costs, would increase. Increased raw material costs will further drive clients away from the printed media and potentially close down printers.
The printing community is fighting to keep the imported coated paper coming into the USA without a penalty tariff.

PaperlinX Profits Down

We often report on the financial conditions for the paper and pulp producers as well as printers, but the entire supply chain has been negatively effected. Poor demand from the printing community negatively effected the latest set of financials from global paper distributor giant PaperlinX. The merchant's sales for the six months to December 2009 fell across the board, with Australian, New Zealand, European and North American operations showing double digit declines; meanwhile, Asia did illustrate some positive results.

We reported earlier in the year, that PaperlinX was successful in the sale of their Tasmanian paper manufacturing operations to Nippon Paper; however, the company is still looking to sell its Burnie paper manufacturing plant, and, if no buyer is found it will close in June 2010.

For the first half of the 2009-10 financial year PaperlinX reported a loss of $175Million, the bulk of this coming from costs associated with its exit from paper manufacturing. The company recorded a 28% drop in group revenues to $2.7Billion, as well as a 24% drop in paper volumes, which the company attributed to its exit from paper manufacturing operations in Australia and the impact of weak markets.

Tuesday, February 23, 2010

Container Board Pricing and Market Update

International Paper just announced a $60/ton price increase on containerboard for shipments starting in April. We assume fellow producers will follow such as Temple-Inland, Packaging Corp, Rock-Tenn, Greif, and Sonoco. Also, Boise and Kapstone.

Although inventories for containerboard are down from historical highs for the month of January, they DID increase from January 2008. Prices have increased, but demand for boxes appears stagnate, at best. In fact, Deutsche Bank reported shipments were down over 4% and inventory rose 67,000 tons. The past price increase went through, will the April pop also be successful?

Reader’s Digest Out from Chapter 11

The Reader’s Digest Association has officially emerged from Chapter 11 protection. As part of its restructuring, the publisher reduced its debt by 75% (from $2.2 billion to $525 million). Holders of senior secured debt transferred ownership of Reader's Digest to the lender group and will effectively receive equity.

Monday, February 22, 2010

Paper Producers Continue to Look for Price Increases

Most of the major paper sectors have announced price increases, and end users are paying the new price. It appears many of the raw materials including chemicals, pulp, energy, and transportation have all increased, and the infamous black liquor credit is gone. As we outlined in past releases, the forecast will be a slow one for paper producers to recover. Demand continues to be soft and the industry continues to have too much capacity.

Several Magazines Rethinking Audit Bureau of Circulations

The current challenging magazine industry on publication's revenues has resulted in many reviewing their membership to the Audit Bureau of Circulation (ABC). For decades, ABC was considered the bible of auditing over 750 consumer magazines for circulation. However, over the past few years, about 100 of the smaller (or shuttered) have dropped ABC. The most common reason relates to the $10,000 fee ABC charges each year for the audit.
Advertising pages have dropped some 23% from 2008 to 2009, and significant revenue along with it. Many of the smaller publishers are cutting cuts to merely survive.

Anti Dumping Case Hearing March 1

Appleton, SAPPI, and NewPage continue their efforts with the USA International Trade Commission to review coated paper imports from China and Indonesia. The USA paper producers would like the government to impose a 100% tariff because they feel the Asian governments are unfairly subsidizing the coated paper producers. Most believe the final ruling will not be awarded until the Fall of 2010; however, the USA Dept. of Commerce is to make a ruling by March 1.
Many of the domestic printers are fighting this hearing for fear that if the results support the USA producers, coated paper will cost more. During the past 18 months, although the paper markets have been poor, there were no significant increases in imports. Printers also cite domestic coated manufactures have not witnessed their market share to decrease.
Printers already are experiencing a challenge just with poor demand, the fear of coated paper increases will only produce a more depressed industry.

Wednesday, February 17, 2010

UPM Kymmene Reduces Workforce

The world’s largest paper producer of magazine papers, Kymmene, just announced it will temporarily reduce its work force at both the Kaukas and the Kymi mills in Finland. Management cited poor demand for the companies paper products and an objective to improve costs. UPM Kymmene has 64 plants in 15 countries.

Newpage Paper will Restart Paper Machine

The NewPage mill in Rumford Maine recently started up a paper machine that was shut down in September. This machine manufactures coated paper for magazines. The mill is now operating all equipment at the Rumford location

Some Mills Announce Coated Paper Price Increase

Lately, pulp and transportation cost increases have forced many mills to evaluate paper prices. Sappi will increase prices on coated woodfree paper sheets and rolls by 10% starting with March shipments. Also citing increased costs and unsustainable margins, Lecta, the second largest European coated woodfree paper producer, announced a 9-12% price increase on coated woodfree paper, effective with deliveries as of March 15th.

Penton Media Files for Bankruptcy

The publisher, Penton Media, will reorganization under Chapter 11. Penton Press is the parent company of such trade magazines as American Printer and Paper, Film & Foil Converter magazines. The publisher had more than $1 billion in liabilities and the assets reported were between $500 million and $1 billion, according to court documents.

Wednesday, February 10, 2010

Fraser Paper Reduces pay to Workers

The workers at the Fraser Paper Madawaska paper mill in Maine agreed to have their paychecks cut by 8.5% as part of a new contract mill management says is needed to keep the facility from closing. This initiative will save the company $4Million in annual savings.

Meredith Magazine is on Top

Reader’s Digest had historically controlled the top spot for the biggest selling consumer magazine. The Audit Bureau of Circulation’s latest figures reveal that
this is no longer the case.

Meredith's Better Homes and Gardens now holds that distinction, with a total circulation of 7.6Million, according to the ABC covering the June-December 2009 period. It should be noted, Reader’s Digest, now No. 2 at 7.1 million, deliberately cut its circulation in recent years to improve its profitability.

15 Companies to Obtain FSC Certification on Forests

15 companies recently obtained Forest Stewardship Council certification for their management practices covering a total area of over 1.5Million hectares. Applicants, including AbitibiBowater, Domtar, and Kruger among others. The Rainforest Alliance’s Smartwood Program conducted the assessment. Sustainability and environmentally friendly initiatives continue to be important programs for the Pulp and Paper industry.

Tuesday, February 09, 2010

Can Direct Mail compete with Digital Marketing?

The major marketers are learning that traditional (mailed) direct mail becomes a more successful campaign when combined with digital marketing. The final figures for 2009 are not yet in, but, in 3Q 2009, US consumers received 5.2 billion pieces of direct mail, a drop of 27% from 2008. Marketers are finding that with reduced spending budgets they are sending fewer pieces, but more targeted. The companies are complimenting these efforts with emails and witnessing increased responses.

A few Words from Barclay's Paper Analyst

From a Pulp and Paper Week Report
Barclay's Capital analyst, Peter Ruschmeier, estimated US uncoated mechanical paper (groundwood containing paper used in inserts, paperback books, and certain magazines) is to increase 22.6% in 2010; coated freesheet to rise 14.4%; coated mechanical (publication papers) to be up 13.2%; market pulp up 2.0%; and uncoated freesheet up 1.1%; with newsprint down 7.2%. Many industry observers feel that demand will increase in 2010 and rising costs will squeeze margins. Most pulp, paper, and board producers will focus on raising selling prices to offset margin pressure.

Coy Paper might take some exception with the aggressive growth figures on both uncoated and coated groundwood papers as well as coated free sheet. Unless advertising dramatically improves, I would be hard pressed to forecast a growth of even half these figures. We DO agree that mills will attempt to increase pricing (for all grades) throughout the year in an effort to stay ahead of the cost curve.

Monday, February 08, 2010

Finally, Some Good News for Magazines

After a punishing first half of 2009 for magazine sales at the newsstand, many of the industry’s biggest newsstand sellers witnessed sales declines begin to at least level out in the second half of the year.

Single copy sales declined 12.4% in the first six months of the year. It should be noted that results were partly affected by a disruption in the wholesaler delivery chain which led to delays in getting issues to stores. The challenging economy is also at blamed for a decline in single-copy sales.

In the second half, though, single-copy sales declines narrowed for big newsstand sellers like People, In Style, Glamour, Family Circle and Cosmopolitan.

Not all shared in the improvement. Good Housekeeping’s newsstand sales fell nearly 30% on top of a 17.7% decline in the first half. Vogue was down 15% and Men’s Health, 14%.

Printers Beware of Continued Pressure for 2010

Dr. Joe Webb, director of Economics and Research Center, said “2009 was a tough year for printers, and the trend of displacing print with new media by retailers and others continues. The longer the slow economic times last, the more entrenched these new media budget allocations will be.” Dr. Webb emphasized that print businesses will continue to be under pressure to merge and consolidate because of these shifts. “The most successful print businesses had specialized equipment and processes that were targeted to the exact needs of those markets, such as magazines, catalogs, and newspaper inserts. The higher profits those organizations enjoyed for many years were the rewards they had for concentrating on those niches. It wasn't until those niches started to contract that the printers realized that specialization had risks, which were often underestimated, that quickly eliminated those rewards.”
Total Shipments for printers for 2009 for Year are $88 Billion

Friday, February 05, 2010

Top Printers for the USA Government

The USA Government Printing Office (GPO) awarded bids to more than 1800 printers in 2009 for $425Million (down from $421Million in 2008). Top five include
NPC (News Printing) $29.3Million
RRDonnelly $27.0Million
Monarch $19.5Million
Gateway Press $17.5Million
SourceLink $16Million

Time Magazine Down

Time Warner reported that its publishing unit, Time Inc., generated $3.7 million in revenue in 2009, down 19% from 2008. Those losses were fueled largely by a 22% or $541 million decline in advertising revenue. Meanwhile, subscription revenues declined 13% for the year and other revenues fell 24%.

Thursday, February 04, 2010

Standard and Poors Outlines Slow Recovery for Paper Industry

S&P recently generated a report that outlined a slow recovery for companies involved with USA forest products. 
The document reviews a slight improvement in outlooks for 60% of forest sector companies. This report is titled “The US Forest Products Sector is Entering a Slow Recovery” and says that the positive trend reflects significant debt reduction that these companies achieved, despite poor economic conditions. They believe that the economy and housing markets have hit bottom and that the sector’s credit profile will improve over the next few quarters.
I, on the other hand, am not as bullish, especially if one is focused on the pulp and paper segment of the forest products industry. There will be some improvement, assuming the economy picks up, but debt reduction will be a challenge.

International Paper Posts Loss - Domtar Reports Profit

The International Paper Company, the world's largest pulp and paper producer, reported a loss for the forth quarter of $101million due to a decline in sales. The Industrial Packaging unit dragged down the balance of the corporation, posting a loss of $391Million.
Meanwhile, Domtar experienced strong pulp sales and benefited from recent pulp price increases. The company announced a profit of $124Million for the forth quarter (compare to a loss of $676Million 4Q2008).

Wednesday, February 03, 2010

AF&PA Reports on December Paper Shipments

As announced by AF&PA Report
In December, paper output in the USA was 2.9Million tons, up 3.3%, yet for the year, paper output was down 13%. Coated paper improved 12.8% for the month, but was down 18.7% for the year. Uncoated mechanical grades increased 1.4% in December, but dropped 20.5% for the year. Uncoated freesheet was up 1.9% for the month and down 11.1% for the year. This is the second consecutive month of increased output vs. 2008.

R.H. Donnelley is Now Dex One

R.H. Donnelley changed their name to Dex One and also announced it will emerge from Chapter 11. The 124-year-old local business directory publisher and marketing company also provides business search engines and pay-per-click networks. The new name will tie into their search website dexknows.com. The company is attempting to rebrand itself as a search engine company.

Tuesday, February 02, 2010

Paper Industry in North America

The paper industry continues to produce fewer tons each year. Not a healthy trend!

The last decade has not been friendly for the North American packaging paper producers, considering the demand peaked in 1999 at nearly 56Million tons. Several believe the market will have fallen below 46Million tons in 2009, when the final numbers come out. Meanwhile, the producers for graphic papers last witnessed very good growth in 1970 and the 80s and than 90s- but the market topped out at 50Million tons in 2000. In 2001, the demand fell to about 46Million tons – and managed to stay at this level until 2007. Between 2007 and 2008, demand fell 15% to 39Million tons and most forecast 2009 will end up at slightly under 32Millions tons (19% down).
The biggest element in this decline was lack of advertising (especially for Auto, Financial, and Real Estate). It is predicted that the next few years will generate a flat demand, and than decline, beyond 2011. One study indicated that this segment might be down to 25Million tons by 2024. Newsprint could well be the largest component of this decline.

Corrugated Box Prices Increase

RockTenn, Graphic Packaging International, and Sonoco have all announced an increase for corrugated box prices by 10 percent and corrugated sheets by 12 percent, effective with shipments on or after February 22. The industry had previously increased the price for uncoated recycled paperboard by $50/ton and bleached board products by $40/ton.
The converters have all absorbed a 40% increase in the cost of recovered paper.
Another cost pressure is the price announcements for Old Corrugated Containers (OCC)increasing in January from $80 to $110/ton.

Monday, February 01, 2010

All Uncoated Producers Advance Pricing

Consistent with our previous releases, as of today, Domtar and NewPage
announced $40/ton price hike on its offset grades, effective Feb 22.
Others, including International Paper, Glatfelter, Finch, Flambeau, and Grays Harbor have already announced similar price hikes on offset grades. Georgia Pacific, Boise, Suzano, Soporcel have limited their efforts to cut-size office grades. The continued rally in pulp prices is pressuring margins at nonintegrated mills.

Will Books Printers loose to Electronic Devices

Verso Digital recently presented their findings on a survey based on millions of Internet users and found that avid readers forecast they will split purchases between print and electronic. Most of the 'avid' reader group is over 45 years of age (66%). Only 28% of those in the 18+-age bracket are avid readers. 27% of avid readers are not willing to pay more than $10 and 37% not sure how much they would pay.
Apple just announced the IPAD device. I note Apple has revolutionised computers, cel phones, MP3 players - and could now create lure to grow the audience for EReaders.
In any event - more EReaders mean less paper consumed, in an already depressed market for demand.

Friday, January 29, 2010

Top 2009 Printers

The top printers by category for 2009 include
Printer / Segment Sales –Millions-$USD / Total Sales –Millions -$USD

Publication Printers
Worldcolor /$884 / $4,017
QuadGraphics / $861 / $2,266
Conveco /$352 / $2,200
Brown / $332 / $415
Publishers Press /$222 / $234

QuadGraphics /$1,110 / $2,266
Worldcolor / $522 /$4.017
Arandell / $267 / $287
Consolidated /$115 / $1145
Sheridan / $94 / $348

Worldcolor / $482 / $4.017
Courier / $280 / $280
Arvato / $266 / 321
Taylor $113 / 113
Walsworth Pub $98 / $115

Direct Mail
Cenveco $550 / $2220
IWCO / $252 / $252
Consolidated / $172 / $1,145
Worldcolor / $161 / $4,017
Segerdahl / $158 / $175

Finding the Right Printer Partner

These are difficult and challenging environments in the paper and printing markets, it is important to review your printing platform to assure you are still as cost competitive as possible
-Does the printer’s equipment still fit your publication?
-Do you still invite competitive printers to quote your publication?
-Is your printer still financially stable?
-Where has the printer downsized? Has this area effected your publication?
-Slower response from CSR, no new ideas on distribution, the paper buyer has not recommended any alternative papers, etc.
-Is your printer taking the correct steps to be environmentally friendly?
-Has your printer invested in new technologies?
-Have you considered more cost effective alternative papers?
-Lower brightness; Uncoated Supercalender instead of coated, lighter basis weight, self-cover, Groundwood containing /LWC in stead of a 'free; sheet.
-Have you reviewed reducing the size of your publication or fewer pages?
-Are you still distributing to nonrevenue producing subscribers?
It's January, start the year by reviewing all your vendors to confirm they are still competitive and partner up with your vendors to mutually create ways to save money.

Wednesday, January 27, 2010

Uncoated Shipments down in 2009

Total Uncoated Free shipments were down -11% for 2009 to 9.7Million tons. USA imported 855,600 tons for 11 months - 16% lower than last year and exports declined 6% at 779,300.

Uncoated Recycled Board Prices Increase

Graphic Packaging International announced a price increase of $50 per ton on all grades of PaceSetter(R) uncoated recycled board (URB), effective with shipments after Feb. 18.
The company is one of the largest producers of folding cartons and holds a leading market position in coated-recycled boxboard and specialty bag packaging.

Coupon Clipping – Hope For Newspapers?

The recession of 2009 saw consumers begin to use more coupons than in recent years, in fact, it was the first increase in 17 years. Shoppers turned to both the newspaper as well as online and cell phone applications to find coupons. Of particular note was online coupon access increased 92% and redemption shot up 360%, although the Internet still accounts for only 1.5% of coupons redeemed, according to a report from Inmar. Despite the rapid rise of online coupons, newspaper inserts still account for 89% of coupons distributed to consumers and more than half of coupon redemption. Web sites accounted for 0.3% of coupons distributed to consumers and 1.5% of redemption. 19.6% of online coupons are redeemed and it is estimated that consumers redeemed a total of 3.3 billion coupons in 2009, a 27% increase from 2.6 billion in 2008.

World Color Sold for $1.4Billion to Quad/Graphics

From Company release.
Quad/Graphics Inc., the largest privately held printer in the US, will acquire Montreal based, World Color Press Inc. for an estimated $1.4 billion. The deal will close in the summer when the expanded Quad/Graphics will become the 2nd largest commercial printer in the US behind RR Donnelley & Sons Co. Worldcolor shareholders will own 40% and Quad/Graphics shareholders 60%. Quad/Graphics CEO Joel Quadracci, age 41, will lead the combined entity as chairman, president and CEO. Worldcolor’s CEO, Mark Angelson will be named to the board and oversee the integration. Worldcolor prints magazines like Sports Illustrated, Rolling Stone, The Crate & Barrel catalog and Yellow Book Directories. Quad/Graphics’ clients include Newsweek, GQ and the LL Bean Catalog. In the 12 months through Sept, their combined revenue was $5.1 billion.

Tuesday, January 26, 2010

December Paper Shipments Up

Excerpts from AFPA report

The official report from AF&PA outlined USA shipments of Printing and Writing Paper increased 6% in December versus December 2008, the 2nd consecutive increase, with all 4 grades reporting an increase for the month. YTD shipments were down 15%. USA purchases (shipments + imports less exports) also increased in December, up 3% vs. 2008, but still down 17% YTD. Printing and writing inventory levels decreased 2% or 41,000 in Dec09 vs. Nov09.

China Continues to be a HUGE consumer of Pulp

In 2009, China imported a record high 13.7Million tons of market pulp, increasing 44% over the 2008 deliveries. The extra demand was consumed by the new machines starting up without domestic fiber. Most exerts in the industry believe the Chinese will continue to grow their purchases of market pulp, despite less worldwide supply and increased prices. There has also been an increase in pulp consumption in India with solid demand in Bangladesh, Pakistan and Vietnam. Suppliers in Brazil and Indonesia had pulp availability decrease due to flooding, while Russian suppliers had unusually frigid temperatures, slowing production.

Chinese Continue Uncoated Expansion

Three new pulp & paper investments in China announced by Guangxi Yongkai Sugar and one by Guangxhi Huacheng Paper adding almost 1Million TPA of uncoated paper. China, now the largest producer of uncoated papers, also continues to witness increases in consumption.

Monday, January 25, 2010

Uncoated Price Increase Announced by ALL!

Last week we announced Domtar increased their price and, as assumed, most of the uncoated white paper mills joined Domtar in reporting a price increase for late February or early March. Most increases were $40/ton, the exception is Wausau which we reported as $60 for text and cover grades. Domtar and Boise told customers they would only increase cut-size business papers; however, International Paper, Glatfelter and Finch extended the increase to offset rolls, tag/index/file folder stock and other converting grades.

Newsprint Producers Hope for Improvement

The year 2009 was not kind to many paper markets, and Newsprint was hit especially hard. After a reduction of 14% in 2008, demand continued to erode another 24% in 2009. Electronic communication has truly hurt this industry. Capacity continues to outstrip demand, despite reduced pricing and plant closings. AbitibiBowater continues to operate under chapter 11 - commanding 43% of the market, White Birch is #2 at 22% - failed to pay an interest debt due last Fall, and Port Huron - filed for bankruptcy protection. Even if the economy improves, will end users go back to newspapers for news, classified advertisements, and coupons?

Friday, January 22, 2010

Printing Sales Continues Down in 2009

The NAPL reported that US commercial printing sales were down -16% in 2009 to $72Billion. The rate of decline slowed significantly since last summer, with a forecast for 2010 of rising +2 to 3% to $73-74 billion. NAPL forecasts a slow recovery, not hitting its stride until later in the year.

NY Times Charges Fee for Online News

The New York Times announced they will soon charge non subscribers for heavy use for attaining news on their website. The company will continue to provide free content for a limiting number of articles and print subscribers will continue to have free access to the site. Under the new metered model, a viewer can read a certain number of articles per month free before being charged a flat fee. This is a similar model to The Financial Times. The exact cost was not confirmed. Note, the NYTimes is one of the most popular newspaper site in the country (over 17 million readers) . The Times will begin charging in January 2011.

Catalyst Paper to Idle Paper Machine

The Catalyst Paper Company reported that the 1PM at its Crofton mill in British Columbia will be curtailed indefinitely due to weak newsprint and directory paper demand.
The machine has a capacity of 140,000TPA of commodity grades and was temporarily idled on December 23, 2009 for the holiday period.
The mill has an annual production capacity of 200,00TPA of newsprint and 210,000TPA of directory paper, along with the capacity to produce 343,000TPA of NBSK pulp.

Newsprint Machines Still Feel Results of Poor Demand 

Throughout the last several years, Coy Paper has reported on shuttered newsprint equipment. Today, we confirm AbitibiBowater’s Fort Frances mill in Ontario will now be shut down indefinitely due to an effluent problem. They will remain down until they are in compliance with all laws and regulations. 

Stora Enso will restart the #2 paper machine at Varkaus Plant in Finland after having been down for 6 weeks. The stop was due to market related down time. The Varkaus, facility has a capacity of 290,000TPA of directory paper and newsprint, while PM #3, which has remained running, has 310,000TPA capacity.

Wausau to Increase Paper Prices

Monday, March 1, 2010 Wausau Paper will increase the base price of the following grades by $2.00/cwt:
Exact Index; Exact Vellum Bristol; Exact Tag; Exact Opaque Colors; Exact Multipurpose

Wednesday, January 20, 2010

Uncoated Prices May Increase

Domtar just announced a $40/ton price increase on their business paper cut size grades, effective February 15. So far, this is the only grade line to be increased. We can only assume that all Domtar’s competitors will follow; especially in that demand is improving including December 2009 vs 08 shows shipments +1.2% ( this is the first positive comparable since April of 2007).
Certainly raw material costs including pulp prices and energy continue to surge. Also,inventories at both the mills and the merchants are down 20% down from this time last year. Lastly, recall International Paper and Domtar will close 800,000TPA of capacity by mid-2010, representing 7% of North America’s Uncoated Free Sheet capacity; furthermore, the artificial support from the black liquor credits are gone (that was $8Billion in 2009!!). All indicators that the price increase will most likely stick.

Containerboard Pricing is ‘on the move’

A price increase for both the East and the West Coast was announced in December for January shipments. We think these price increases might actually happen, or at least $25-30/ton of the announced increase; the balance will most likely be absorbed in the February / March time period. Although demand has not appreciably picked up, raw material costs certainly have increased, thus, creating this 'forced' increase.

Reader’s Digest on Target to end Bankruptcy

Reader’s Digest just reported that their restructuring plan was approved and the company could exit bankruptcy by January 31. The company’s debt would be reduced from $2.2Billion to $550Million and the retirement for past employees would be modified. They will reduce headcount and move headquarters to a more efficient faculty.

NewPage Appoints New President and CEO

From NewPage News Release
NewPage Corporatio announced that Richard D. Willett, Jr., President and Chief Executive Officer, has resigned from NewPage effective immediately. Mark A. Suwyn, former Chief Executive Officer and currently Executive Chairman, has been elected to serve as Chief Executive Officer until a new Chief Executive Officer is named.

NewPage is headquartered in Miamisburg , Ohio ,and is the largest coated paper manufacturer in North America , based on production capacity, with sales of $4.4 billion. The company's product portfolio is the broadest in North America and includes coated freesheet, coated groundwood, supercalendered, newsprint and specialty papers.
NewPage owns paper mills in Kentucky , Maine , Maryland , Michigan , Minnesota , Wisconsin and Nova Scotia , Canada . These mills have a total annual production capacity of approximately 4.4 million tons of paper, including approximately 3.2 million tons of coated paper, approximately 1.0 million tons of uncoated paper and approximately 200,000 tons of specialty paper.

Friday, January 15, 2010

December saw Improvement for Printing and Writing Papers

Printing and writing paper shipments improved in the USA for the month of December. Total shipments yielded 1.478Million tons, up 2.8% vs. November and 5% higher than last year. Full year shipments decreased 15.6% to 17,000 tons. Coated mechanical rose 15.5% to 306,300 tons and coated freesheet rose 12.1% to 256,500 tons vs. 2008, with both increasing vs. November YTD, both were down almost 20% with coated mechanical at 3.2Million tons and coated freesheet down to 3.25Million tons. Uncoated freesheet rose 1.2% vs. December 2008 to 752,399 tons, with YTD volumes down 11.6% to 9Million tons. Uncoated mechanical remained stable vs. December last year, at 131,800 tons, but dropped 21.8% YTD to 1.6Million tons.

Canon Still Progressing in the Acquisition of Oce

Canon, the Japanese maker of cameras, copy machines and other electronics and
Oce, which sells printers and copiers and has relied heavily on sales to banks and architecture firms are on target for Canon’s $1.1Billion purchase. The over riding objective is to be the #1 presence in the printing industry. The combination will yield a huge sales network in Asia, Europe and the USA.

The combined Canon-Océ will be up against competition from Fuji and Ricoh to dominate the European, USA and Asian markets. Canon’s acquisition comes just a year after Ricoh bought Ikon Office Solutions, based in Pennsylvania, for $1.62 billion.

Cenveo Plans to Close Another Plant

In addition to Cenveo closing its Charlottesville, VA printing plant, which they obtained through the purchase of Cadmus Communications they will also close the Baltimore commercial printing plant in February.

Wednesday, January 13, 2010

Subscribe to the P. Scott Vallely Pulp and Paper Blog

You can now have these timely releases come directly to you.
All new – you can now subscribe to Coy Paper’s Pulp and Paper Industry News releases and have them come directly to your computer – for free go to http://psvallely.blogspot.com/ on the lower right side click on FOLLOW and you will automatically receive this blog. The Current News on the Pulp and Paper market and Industry is a daily read by hundreds of professionals in the industry as well as research analysis’s and investors.

Magazines Post 25% Decline in Advertising Pages for 2009

The Magazine Publishers of America’s Publishers Information Bureau (PIB) reported on advertising pages for 2009. Pages were down 25.6% and revenues closed at $20Billion, which means a decline of 18.1%. The New York Times reported total magazine advertising pages were down over 58,500 pages when they compared 2008 page count to ad pages in magazines that were still published in 2009. Only 18 magazines enjoyed an increase of advertising pages.
The biggest decliners were financial, insurance and real estate ( down 41.4%) and automotive (down 40.5%). Estimated revenues were down in all categories except for food and food products, which posted a slight 1.4% gain.
PIB also noted that the advertising page reduction experienced in 2009 was so severe that many of the surviving publishers lost focus on their dependence for advertising revenues and, instead, began to concentrate on digital editions.
Fewer advertising pages translate into a decline in overall page count and thus less paper is consumed. If advertising in publications do not improve, difficult to forecast much advancement for publication paper demands.

Monday, January 11, 2010

Will 2010 be Better than 2009 for the Paper Industry?

The year, 2009, certainly created several challenges for the paper industry. Paper producers did a remarkable job of limiting price erosion despite sharply lower shipment volumes and variable (usually up) raw material costs. The industry responded with massive amounts of market downtime, as well as a significant amount of closures, in many cases even driving down inventories despite weak demand.

Although the last few months of 2009 illustrated some improvement; sustained improvement will only arrive once the economy improves. Keep in mind, 2009 paper demand continued to be lower than 2007 and the beginning of 2008.

The paper manufacturers continue to operate along a slippery rope – recently most grades experienced an announced price increase; meanwhile, demand continues to be below expectations, supply was controlled by down time (this is not sustainable ), input costs such as chemical, energy, and transportation are forecast to increase, and the infamous black liquor credit (worth billions of dollars) is gone.

I think we all agree that for the industry to be healthy, long term, a price increase is needed; however, most buyers are aggressively pushing back due to the inability to pass it on to their customers.

Of particular note is the containerboard price increase – without consumers buying 'stuff' – nothing to go into the box – therefore demand is forecast to be depressed. The other two markets sharing concern are the price increase for publication and newspaper papers. Both are hurting from lack of subscribers and depressed advertising.

Anyone of our Coy Paper Company News on the Pulp and Paper readers care to comment on forecasting 2010 prices, demand, and supply; also, venture an opinion on next mills to close?

Friday, January 08, 2010

Two of the Biggest Publishers to Mutually Buy Paper

Two of America's largest magazine publishers, Time Inc. and Meredith, have reportedly joined forces to buy paper. The two companies issued joint requests for proposals to potential paper suppliers late last year, according to several sources.
Together, the two consume several hundred thousand tons of paper, annually.

Time is a major buyer of lightweight coated (LWC - 29lbs to 32lbs ) for offset printing. Meredith's is more geared to rotogravure papers and higher basis weights. This will introduce added pressure for pricing on an already depressed market.

US Department of Commerce Delays Anti-Dumping Decision

Department of Commerce announced it will delay the decision on the countervailing duties against Chinese and Indonesian paper producers until February 22nd. The Department must determine if the imports from the two countries caused injury to USA paper producers and originally reported the decision would be made by mid December.