One Newspaper Decides to Increase Costs!

The San Francisco Chronicle will become the first daily newspaper to switch from newsprint to a glossy publication paper. The glossy paper will be used on the front page and on the first page of most sections, along with select inside pages. The objective is to secure more high end advertisers (and their scarce dollars).

Finland Reports Reduced Paper Shipments

Paper shipments in Finland are down 17% versus the 3Q08 at 2.8million tons. Magazine papers were down 25% and printing and writing grades declined 10%.

Raw Material for Pulp becomes More Expensive

Due to poor new construction in both the USA and Canada, residual wood chips historically allocated to the paper industry for pulp have also declined. Lumber production in Canada is down 50% over the last 3 years, thus creating a true lack of chips and forcing pulp mills to consume more expensive 'round wood'. The Wood Resources Group estimates that fiber costs in Canada for pulp is currently 70% higher than for the USA producers.

Bloomberg Reviewing a 'paid for' Web Site for BusinessWeek

The new owner of BusinessWeek, Bloomberg, continues to be confident that printed magazines will survive and accordingly, announced they produce a BusinessWeek that is bigger, glossier and more international. At the same time, the new owner reported they are exploring a strategy to charge for content on their own Web site.
Bloomberg plans to keep most of its content free while on its web site, and in time, create deep, vertical content areas that paying users could access for roughly $100 a year.

US House Reviewing Paper Producers' Tax Credits

U.S. House of Representatives are trying to raise more money for the nation's health care by keeping Weyerhaeuser, Temple-Inland. and other manufacturers of pulp and paper from claiming up to $24 billion in tax credits.
The proposal would bar the companies from using an Internal Revenue Service ruling made public last month to claim a $1.01/gallon tax credit for producing biofuel from so-called black liquor, a wood byproduct from pulp making.
I am sure the paper industry will fight this. In many cases, it is the tax credit that creates the difference between some producers surviving or closing their doors and letting employees go.

Quick Update on a Few Markets

Market Pulp producers have started to announce yet another price increase. The new pricing is slated for November shipments, but will most likely not be implemented until December. The $30/mt pop will bring NBSK to $830/mt in North America ($700/mt for BEK).

Transaction prices continue to climb for Uncoated Free sheet, although cut size / business papers remains somewhat flat at $1010-1060/t; 50lb rolls are now $845-865/ton. Envelope papers also up $40/ton

Containerboard pricing remains flat, but with pulp and other raw material costs increases, the producers must do something. There has been equipment curtailment, which will assist the mill's efforts to increase pricing.

Verso Paper Recieves Federal Stimulus Funding

Verso Paper Corp. was awarded $9.3 million in federal funding through the Department of Energy from the American Recovery and Reinvestment Act for infrastructure improvements at its plants in Maine and Minnesota. The company will install waste energy recovery equipment at its plants in Jay and Bucksport, Maine, and one in Sartell, Minn., as part of 12 waste energy recovery projects.

Printer's September Sales Down

September is generally the first of commercial printing’s three biggest months; however, printing shipments dropped 11% to $7.5 billion vs. last year, the lowest level in Sept. since 1994.

No New Sustainability Efforts Seen

Notes for a Robert Half Survey-
New survey of most USA businesses indicate few are planning to introduce new eco-friendly programs - especially if it costs money. The majority of companies are quick to add that they have already included many 'green initiatives' and feel they are doing their part. The survey concluded by stating that end users are not willing to pay more for an environmentally friendly product (although in many cases it DOES cost more to produce).

December Advertising Magazine Pages Looking Up

Revenue from advertisements in magazines has been a real challenge in 2009, but several publishers are reporting good numbers for December issues.
-Time Inc.’s titles, Real Simple, Cooking Light, and Southern Living will run significantly more ad pages vs. last year.
-Conde Nast’s Glamour is up 5%, with Wired posting much smaller declines and many advertisers returning.
-Martha Stewart Living Omnimedia’s November issue was down less than 5%, and their December issue has a triple cover with inside cover ads.
-Hearst’s Cosmopolitan, Country Living, Good Housekeeping, Marie Claire and O are all posting bigger Dec. issues. Smaller declines are an improvement this year, when advertising pages fell 27% Jan-Sept 2009.

Paper Maker Says Demand Up For Recycled Paper

Like so many other paper producers, Longview Fiber Paper and Packaging Inc.had to let employees go due to poor sales. But recently, the company introduced FibreGreen, which is made entirely with recycled paper and is used for grocery bags and fast-food sacks. The company’s sales are now doing fine!
Longview Fiber obtains 40 percent of the material used to make FibreGreen from paper recycled by consumers. The mill’s challenge initially was 100% recycled paper is often relatively thin and weak, but Longview developed technology to maintain quality. Most of the 60% balance comes from paper products rejected by the mill.
A 100% recycled product such as FibreGreen is the type of product that customers are demanding. A couple of success stories so far include Whole Foods Market becaming the first grocery retailer nationwide to switch to 100 percent recycled bags. Starbucks is pushing to increase its recycled packaging, and so is the nation's largest retailer, Wal-Mart..
FibreGreen is manufactured on the company's No. 12 paper machine, which produces about 400 tons of paper per day. The 100 percent recycled paper was about one-fifth of the machine's September output.

BusinessWeek Quotes P. Scott Vallely on Paper Industry

As quoted in the October 9, 2009 BusinessWeek article called Kill a Newspaper, Save a Tree? Not Quite
The article reported on the challenges that the paper industry is experiencing – equipment shutdowns might save a tree or two – but its killing employment.
Many of AbitibiBowater's rivals "are losing money or breaking even," and have had to shutter operations temporarily, if not permanently, says P. Scott Vallely, CEO of Coy Paper, a specialty-paper distributor in New Canaan, Conn. "They're surviving by issuing more bonds and taking on more debt, which isn't sustainable."

Kohl’s the Boosts Mailings and Digital Ads for Holiday Season

In an attempt to gain share of limited pockets for the consumer, Kohl’s will launch their holiday campaigns right after Halloween, earlier than usual. They will increase spending on digital ads by 25% and will increase customized mailings, i.e. jewelry, general gift guide, men’s holiday gift guide based on past purchase behavior. If competitors follow, the stronger media presence will assist the paper industry with increased paper demanded as a result of the additional mailings.

iTunes now for the Magazine Industry

Maggwire.com has confirmed a model that allows magazine publishers to monetize online content. Maggwire will let readers browse magazine articles—currently almost 10,000 per week, including Time, PCWorld, Vogue and Yachting, among others—free of charge. But , the new model will use the Apple iTunes system which proved people will pay for reliable music downloads, now they people will pay for a personalized magazine experience.
Current thought for the economics include subscriptions priced at $1.99 to including one magazine title and one channel; each additional title or channel $0.99. Single articles outside of reader-selected titles or channels will be $0.15 per basic article, and $0.25 per cover article (determined by the publisher).

Worldcolor and Macmillan Partner Up

Worldcolor announced it signed one of the largest book printing agreements in North America with a multi-year agreement with Macmillan. The agreement is for Woldrcolor to print approximately 800 million major trade bestsellers, textbooks and mass market (paperback) books. Also included in the agreement are related warehousing and distribution services. Some of the Macmillan names in book publishing include St. Martin's Press, Farrar Straus & Giroux, Henry Holt, Tor, Forge, Bedford/St. Martin's, and W.H. Freeman and Worth Publishers

Meredith Posts Positive Results

Excerpts from Meredith release-
Meredith’s national media group reported $39 million in operating profit, a 14 percent increase of the prior-year period, the company said. Revenues dropped, though, from $294 million during the fiscal 2009 first quarter compared to $272 this year. The group’s operating expenses declined 10 percent to $233 million, including a 9 percent drop in paper prices.
According to Meredith president and CEO Stephen M. Lacy, national media advertising revenues are “trending in the right direction, and we continue to outperform our major peers and gain share.” Meredith said its share of overall magazine industry ad revenues increased to 12.2 percent during the fiscal first quarter, compared to 8.7 percent this time last year.
Eleven of Meredith's 14 PIB-tracked titles increased share of advertising revenues during the third quarter, the company said.

Stora Enso Boosts Largest and Fastest SC Machine

Stora Enso’s Kvarnsveden paper mill in Sweden houses PM #12, which is the largest paper machine producing supercalendered paper like newsprint and uncoated magazine paper, with capacity of 420,000 tons. PM #12 set speed records, reaching 1,929 meters/min increasing productivity and capacity.

Newsday to Charge for Online News

Coy Paper recently heard that Newsweek has decided start to charge a fee for access to the news on their website. This new model will make the paper the biggest general-interest daily to charge for access to its digital information. The service will be free to those who currently subscribe to the printed edition - or pay $5.00 per week.

West Coast ‘Green’ Mill Closes

Freshwater Tissue, California's last pulp mill and the only chlorine-free/dioxin-free mill in the USA, plans to permanently close. The mill has struggled since the mid 1990's to compete with foreign competition. The owners were planning on building a tissue mill as well. This west coast mill was a model of responsible and environmentally sound American manufacturing, but failed to attract both federal assistance nor private investors.

New York Times and Gannet Report Revenue Down

Like so many other national newspapers, the New York Times continues to reduce costs (estimate 2009 reduction of $475Million) due to declining revenue (down 16.9% from last year).
Advertising continues to struggle
-Classified down 38.3% (automotive,-32.1%; real estate, -44.1%; and help wanted,-52.5%)
-Retail advertising down 25.1%
-Circulation revenue actually increased 6.7% last quarter (but, both the NYT and Globe introduced price increases)
Meanwhile Gannett Company posted a revenue decrease of 53% in the third quarter. A few comments-
-Print newspaper advertising down 31.2%; revenue fell 28.4%
-Online advertising declined 18.5%
-Classified down (automotive, -35% ;real estate, -37% ; employment, -56%)

Paper Wins Another Battle

The San Jose, California City Council joined several other city in their fight against plastic bags. The group voted to make the city the largest in the nation to ban most plastic and non recycled paper shopping bags. This will take effect until 2011, war on plastic bags continues! The council reported that it would allow paper bags made with a minimum of 40 percent recycled materials.

Corner Brook Mill Starts up

The Corner Brook Pulp and Paper mill will start up. It was down since October 12.

Update on Containerboard Market

International Paper announced 1.4Million tons (4% of the market ) to be removed from their capacity (still no word from Smurfit). This will boost operating rates into the mid 90s and the producers are hopeful that pricing will improve. The real improvement will come when the economy improves and end users begin to buy things that go into boxes!
Current pricing (although there are discounts available)-
-42lbs Linerboard $525-535
-42lbs Unbleached kraft linerboard $440-460/ton

Update on Uncoated Free Sheet

The current curtailment of 800,000 tons by International Paper and Domtar, higher pulp prices, and lower inventories, as well as a 'very' slight increase in demand have all assisted the producers in achieving a price increase. While business papers (cutsize) pricing remains at approximately $1010-$1060/ton; the uncoated offset - 50lbs witnessed an increase of $35-40/to to $845-865.
Shipments through September are still down 13.5% from 9/08. Envelope producers just announced a price increase for November of $40/ton.
One area of concern is the new Portucel uncoated freesheet machine in Portugal. The 500,000TPA machine has started and 30% of the production might hit the USA.

Regional and Town Newspapers Surviving Well

As Coy Paper has reported in recent past releases that the big daily newspapers are losing circulation and advertising revenue. The New York Times, today, published an article outlining decreases in circulation for the countries national and large metropolitan papers; confirming over a 10% drop this year. However, the story is not so grim for community and small town newspapers. Many of the small papers actually grew. Although the internet has cannibalized much of this media, the small town papers are very focused on local issues, local events, nearby movies and restaurants, etc. These writers live, eat, and ‘play’ in the community.

Packaging Segment by Shipments

Total North American packaging industry shipped $79.7Billion worth of products in 2008
Folding Carton $10.9Billin
Tag and Label $15.0Billion
Corrugated $25.8Billion
Flexible Packaging 28.0Billion

International Paper Announces more Equipment Curtailment

International Paper will curtail 2.1Million tons of capacity. The company, the world's biggest supplier of containerboard, will shutter 1.4Million tons of containerboard (note, this is 12% of the mill's capacity and 4% of the USA capacity). Regarding the uncoated shutdown, International Paper will close 600,000 tons of capacity which is 19% of the mill's capacity. They are the second largest producer of uncoated paper. IP also reported to curtail 140,000 tons of bleached coated board which is 7% of their capacity.

Until the markets improve, the mills effected by this announcement include, plants in Albany, Ore., Pineville, La., Franklin, Va., and the Valliant, Okla., mill.

Following these permanent shutdowns, IP will have about 10 million tons of North American containerboard capacity, 2.6 million tons of North American uncoated freesheet production capacity and 1.7 million tons of North American coated paperboard capacity.

This should significantly assist the mill in correct the excess supply and poor demand.

Poor Advertising Causes Fortune to make Changes

Fortune Magazine recently announced it will publish 25% fewer issues, which translates into 18 issues versus the current 25. Fortune lost 35% of their advertising pages this year. The publisher will restructure the organization, 'beef up' and perhaps charge for content on the website, and add editorial pages to the magazine in an effort to generate additional revenue.

Pulp Inventories Continue Downward Trend

World pulp inventories were reported to be 26 days in September - down substantially from 44 days in September of 2008. As released in earlier Coy Paper articles, pulp producers curtailed production in the first half of this year because of limited demand, but, today, China continues to purchase large shipments. Therefore, the second half of 2009 appears to witness strong shipments. Worldwide shipments increased nearly 11% in September (vs September of 2008) to 3.5Million metric tons; meanwhile, North American market pulp producers shipped 628,000 market pulp tons, down 3% (vs September 2008). Note, shipments to China doubled to 638,000 metric tons.

This is National Forest Week

In 1960, Congress, in an effort to recognize the forest products industry, announced October 18-24 as National Forest Products week. Our industry makes up 6% of of the GNP manufacturing sector. The paper industry is included in the top 10 manufacturing employers. The industry now estimates that 57% of all the paper consumed is recycled.

Direct Mail Still Surviving

The DMA just reported that direct mail advertising is enjoying a larger share of total advertising dollars. The forecast for 2009YE is for Direct Mail to grow to 54% of total (although the total pie is down). DMA estimates total advertising will be down 11% to $150Billion for 2009. They forecast a steady spend for the end of 2009 and a slight rise of 2% for 2010.

Playboy Reduces Advertising Fees

Playboy, like the majority of other magazines, has suffered with depressed advertising demand and revenue. The publisher just announced they will reduce its advertising rate base by 38% in an effort to stimulate demand. Will other magazines follow?

Domtar Reduces Paper Capacity and Adds to Pulp Production

Domtar will shut down its Plymonth, NC paper making operations and transition the equipment to Fluff Pulp. The company will invest almost $75million to accomplish this and effectively increase capacity of their Fluff Pulp by three times current output to 444,000TPA. This project will be completed by 4Q2010.
After Domtar ceases to produce paper in Plymonth, they will have reduced capacity of uncoated business papers by 200,000TPA.

More on Pulp Market

Coy Paper continues to be surprised at the current strength for market pulp. The price increases all seem to be accepted, and the deep discounts are drying up. The strong demand from China along with low mill inventories and curtailed capacity have all assisted with the tightening of supply. NBSK will soon be up another $30/MT to $800/MT; SBSK also up $30 to $750/mt; BEK to $700/mt; HBSK to $690/mt; and SBHK to $670/mt.
With new list prices at this level, one might assume some of the curtailed pulp producing equipment might be re engaged!

Postmaster General Reports no Increases for 2010

Postmaster General Jack Potter recently confirmed that the USPost Office would not increase postal rates for market dominant products in 2010. This includes First-Class Mail, Standard Mail, periodicals and single-piece Parcel Post. Changes in pricing for other products such as Priority Mail, Express Mail, Parcel Select and most international products, These USPS products are still under consideration.
This should assist the magazine, Catalogue, and direct mail vendors.

Newpage Confirms more Down Time

Consistent with our earlier Coy Paper release, NewPage will take 160,000 tons of market related downtime in the forth quarter. The #63 coated paper machine in Whiting, WI will be shuttered 'indefinitely' and #10 in Rumford. ME will be curtailed until market demand and production can be better balanced. NewPage, along with other USA coated paper producers have combined efforts with United Steelworkers to file an anti dumping duty case against China and Indonesia in violation of international trade rules.

Conde Nast Evaluates more Publications

Conte Nast’s two golf publications were the most recent causalities for the company and the publication industry. Golf Digest’s advertising pages are down 21% and Golf World is down 24% causing the company to reduce staff for both magazines to cut costs.

AbitibiBowater Starts up Paper Machine

AbitibiBowater restarted its #6 paper machine in Fort Frances, Ontario and will keep it operational through mid November to meet orders. As reported in earlier Coy Paper releases, it has been down since early March.

China's Yueyang Paper Starts Paper Machine

Yueyang started trial runs on the new #9 uncoated paper machine in Yueyang City, Hunan Province. Coy Paper has reported on this expansion with a forecast to have a capacity of 200,000 TPA.

Fewer Magazines Folding in 2009

By: Vanessa Voltolina
Once again, the number of magazine closings has outpaced the number of titles being launched, according to the latest report from MediaFinder. But when comparing the number of titles (383) folded through the third quarter of 2009 to the same time period in 2008 and 2007, the pace is significantly less.
According to MediaFinder's most up-to-date numbers, 643 magazines ceased publication in 2007, and a total of 613 magazines closed in 2008. Right now, that means we’re 230 titles off from last year’s total. So unless there’s a dramatic push in closings through the fourth quarter, it looks like the industry may be looking at fewer magazine closings from the past two years.
Of the 259 titles to launch so far in 2009, the report showed that publishers have pulled the plug on 104 more magazines since the first half this year, when 279 folded publications were counted. During the third quarter, 72 titles launched while 104 magazines closed, including the high-profile closings of publishing giant Condé Nast's four titles—Gourmet, Cookie, Modern Bride and Elegant Bride. Other titles to vanish in ’09 included Meredith’s Country Home, Hallmark, American Express Publishing’s Travel & Leisure Golf, Time Inc.’s Southern Accents and Rodale’s Best Life.
Of the launches in 2009, the regional category topped the list with 15, but also experienced the most folded titles (31), including Tampa Bay Living. Both business and lifestyle categories also declined, folding 14 and 13 titles each, respectively.
The food (14), health & fitness (13), and home (13) categories proved to be popular for launches this year.
B-to-b publications accounted for 75 of the new title launches, 130 of the shuttered magazines, and 24 of the magazines that ceased print editions over the past nine months, the report said.

A few thoughts on Paper

Most of the paper companies have attempted (some successfully) announcing and successfully implementing price increases or at least transaction prices (that is reduction of deep discounts). Although pulp prices continue to increase, many of the other raw materials have been steady such as labor costs, transportation and energy.
Creating demand continues to be the biggest challenge and Coy Paper safety predicts more capacity rationalization - both shuttering equipment and short term production curtailment. Beyond stimulating demand, prices will remain under pressure and the end to the infamous 'black liquor ' credit are large concerns.

New York TImes will not Sell Boston Globe

The New York Times Company has decided not to sell The Boston Globe indicating that it did not think the bids it received were high enough to merit a sale.
The NY Times management had been considering shuttering The Globe because of heavy losses ($85 million estimated for 2009). But after deep cost cuts, some achieved in a bitter showdown with labor, the paper’s finances improved.
Two bidding groups reportedly had made preliminary offers of about $35 million cash and the assumption of pension obligations

Magazines find Success with Niche Publications

The magazine publishers are finding that special issues are attracting the advertising dollars. This follows the same logic as to why advertisers pay premiums for the Oscars or Super Bowl, special issues are seen by more people who are more engaged and it creates a lot more buzz than regular issues. Publishers such as ESPN’s Body Issue was up 35%; Time’s ‘Man of the Year’ and People Magazine run several special issues a year, they report 20% more advertising dollars.

NewPage Shuts Down Another machine

NewPage will shutter #63 paper machine in Whiting, WI. The machine produced 160,000 tons of coated paper. Customers will be supplied for coated groundwood publication papers from Biron, WI and Rumford, ME, where capabilities have been expanded.

MeadWestvaco to Sell Specialty Paper Mills

Onyx Specialty Papers agreed to the purchase of MeadWestvaco's South Lee, MA complex. The facility produced laminates and many other special industrial papers. Onyx was formed by the plant’s current general manager, Patricia Begrowicz, and vice president of Sales and Business Development, Chris Mathews. The deal is expected to be completed this year.

Business Week Sold

Looks like Bloomberg will purchase BusinessWeek.

Market Related Shutdown at Corner Brook

Corner Brook Pulp and Paper in western Newfoundland will take the mill down for two weeks.
The company has been effected by the poor demand resulting from unfavorable market conditions, the loss of some orders, the high Canadian dollar, and the low price of newsprint.

Containerboard still down

The major producers of containerboard grades continued to offer an additional discount price of $10-20/ ton for September shipments in an effort to stimulate demand. Prices have been sliding steadily since May. Short of the economy improving, allowing for folks to start buying products that 'go into boxes', - many look for the two market leaders, International Paper and Smurfit, to shutter capacity to balance the excessive supply.

Magazines need to Think Outside the Box

MediaWeek recently published an article on the depressed advertising revenue for magazines. They stated the obvious, that is, no one needs reminding that 2009 was a horrible year for print. Overall, the industry was headed to shed nearly twenty percent of its advertising pages, although some are seeing their pages plummet by as much as 50 percent. MediaWeek, like many others, believe pages are unlikely to return to levels titles enjoyed in the past. To stay afloat, magazines are aggressively seeking new initiatives of growing revenue outside the traditional ad-based model. Fewer advertising pages generally lead to fewer editorial pages which yields less paper demanded; this is especially bad for coated groundwood publication grades.

Sun Times to now be Sold

The bankruptcy court approved the sale of the Sun-Times Media Group to STMG Holdings LLC, led by James Tyree.

Kruger Elects to keep one Machine Running

Coy Paper had reported that Kruger was to shutter two coated publication paper machines; however, management just announced they will continue one of two coated paper lines at Trois-Rivieres. Annual production will shrink from 130,000 to 75,000 metric tons. The remaining paper machine and the pulp plant will shut down indefinitely later this month.

European Survey Reports Paper Shipments Down

As an update to an earlier Coy Paper release on current news of the Pulp and Paper Industry, The Association of European Fine Paper Manufacturers, CEPIFINE, reported on August uncoated and coated woodfree papers and the news reflected a decline in shipments. The coated woodfree shipments in August fell nearly 21% to 576,000 metric tons. On the uncoated woodfree grades, these deliveries declined 20% to 411,000 metric tons.

Pulp and Coated Publication Up, Containerboard Down

As Coy Paper reported earlier, the price of pulp continues to increase and all the majors are standing firm on their price increases and capacity slowdowns. Also, discounts are slowly being reduced.
Recently, the producers of groundwood containing coated publication papers are working with end users toward a reduction in discounts by as much as $60-$80/ton (must feel good after witnessing a decreased price level nearly every month so far in 2009). Demand increased better than 15% in September (vs. August) and the paper market for these grades are ‘only’ down 8% vs. this time last year.
Meanwhile, containerboard demand still remains somewhat weak and pricing remains under pressure. The real key in near term is will the big producers (International Paper and Smurfit) reduce capacity to control supply.

Another Publisher Files for Chapter 11

Questex, who publishes 23 trade publications as well as 150 digital publications filed for bankruptcy protection

Printing Shipments Continue Downward Trend

Commercial printers reported on their August shipments and commented they continue to trend downward. The August shipments dropped to $7.3Billion, down 11.5% or $950 million, the steepest dollar decline so far in 2009 (vs. last year).

Conde Nast closes Four Publications

Conde Nast announced that they would close four magazines: Gourmet, Cookie, Elegant Bride and Modern Bride because the advertising pages dropped significantly, The company reported that Gourmet was down 46%, Cookie’s down 19.5%, Elegant Bride down 32.5% and Modern Bride down 21.5%. Remaining Brides magazine will increase frequency to monthly and Bon Appétit will continue. Condé Nast is keeping alive Bon Appétit, an in-house rival of Gourmet.
Gourmet's circulation is 950,000 and Bon Appétit's is 1,300,000.

Most Recent Pulp Price Increase...Done Deal

Pulp inventories continue to be low, China's appetite for pulp is on the increase, and supply is in balance (with several producers shuttering equipment) - the October pulp increase of $30/MT for HBSK and SBSK is being being paid.

Worldcolor to End Production at Olive Branch Plant

Worldcolor (previously called Quebecor World) will stop production at their Olive Branch, MS printing facility by end of this year , 2009. Two other divisions will take over the production upon closure.

Flexible Packaging Demand to Increase

Excerpts from Converting Magazine
World demand for converted flexible packaging is forecast to increase 3.5 % annually to over 19 million metric tons in 2013. Factors contributing to this rising demand will include growth in food and beverage production, which represents the largest market by far. In addition, cost, performance and source reduction advantages, will continue to favor flexible packaging products over their rigid counterparts.
Gains will be limited by the mature state of the packaging industry in developed areas such as the US, Western Europe and Japan, where the main markets for flexible packaging but are well-established.
The fastest increases will occur in the world's developing regions. Asia, Latin America, Eastern Europe and the Africa/Mideast region will all outpace the global average.
Some of the best gains are expected in China, which has surpassed Japan to become the world's second largest converted flexible packaging market (behind the US); and India, which will benefit from strong growth in domestic output and consumer product markets. The fastest world growth (5.2%/year) is forecast for the Asia - Pacific region. Rapid gains are also expected in Russia and Indonesia, which will benefit from greater investment in state-of-the-art manufacturing equipment, resulting in improved product quality.
Plastic films, which account for almost three-quarters of global converted flexible packaging material demand, will continue to make inroads at the expense of paper and aluminum foil.

Ahlstrom Joins in with Price Increases

Ahlstrom is beginning to inform customers about price increases on all of its specialty paper grades, a result of rising costs for raw material and energy.
Ahlstrom's Specialty Papers segment has production sites in Brazil (Jacarei), France (Bousbecque, La Gere, Pont-Audemer, Rottersac, Saint-Severin and Stenay), Germany (Osnabrück and Altenkirchen), Finland (Kauttua), Italy (Turin) and USA (West Carrollton).

Apple to Introduce Tablet ... it will Create a Challenge to Publications

Apple is aiming to redefine print using the Apple Tablet – just as they did with the computer, cel phone and MP3. The Apple Computer device is expected to be ready for sale in January. If the Tablet becomes popular for digital magazines, publishers will be correct in fearing a faster decline in printed material.

USA Paper Shipments Continue to Fall

From a AF&PA Report -
A new report by the American Forest & Paper Association presents final data for the U.S. paper and paperboard industry for 2008 and shows total production of these products declined 4.9% to 88.4 million tons, the lowest production amount in 15 years.
“These results follow a modest 0.8% decline in 2007, and reflect the severity of the recession in 2008 on the paper and paperboard industry in the United States,” said AF&PA Chief Economist Dr. Stanley Lancey.
The report shows the peak year for paper and paperboard production in the United States was 1999 when production totaled 98.6 million tons.
Ironically, worldwide economic forces suppressed imports to and boosted exports from the U.S. during 2008, according to Dr. Lancey. The report shows imports of paper and paperboard declined 9.5% in 2008 while exports increased 6.1% to an all-time high of 15.5 million tons.

Europe Reports on Downward Paper Demand

Report from CEPIPRINT
(tonnage figures are in metric)
The Association of European Publication Paper Products, reported a decline across all European paper in demand and shipments in August.
• Coated Mechanical demand dropped 16.5% to 527,000 tons, shipments down 18% to 635,000 tons. Volume to US/Australia down, with growth to Japan.
• SC-Magazine demand dropped 10% to 300,000 tons, shipments down 16.5% to 346,000 tons. Exports down 43% to 46,000 tons, due to US/Australia/Brazil.
• Uncoated mechanical demand fell 18% to 150,000 tons, shipments down by 22% to 183,000 tons.

Advertisings Spending Still on the Decline

Spending on advertising across 27 countries dropped nearly 6% in the second quarter, (note; less than 1Q09 drop of 8%).
Some highlights-
Asia spending +2.2%
North America down 15.9%
Europe down 9.1%.
Marketers in automobile and financial services cut back most, while retailers, consumer product and health care increased slightly.

Nielson Online Reports top Sites for News

Each month Nielson reports on the top sites, by unique visitors, for learning about current events. Note, only three newspaper websites hit the top ten list – NY Times, Tribune, and Gannett.
August results-
Yahoo! News -- 43,469,000 -- 7%
CNN Digital Network -- 38,024,000 -- (-2%)
MSNBC Digital Network -- 36,450,000 -- (-30%)
AOL News -- 26,309,000 -- 14%
NYTimes.com -- 17,183,000 -- (-13%)
Fox News Digital Network -- 16,999,000 --- 22%
Tribune Newspapers -- 15,801,000 -- (-10%)
ABCNEWS Digital Network -- 13,873,000 -- 4%
Google News -- 13,442,000 -- 11%
Gannett Newspapers/Newspaper Division -- 12,981,000 -- (-10%)

Are Printed Catalogs a Goner?

Most of the successful catalogers now compliment their respective printed publications with an on line e-ecommerce website. In today’s challenging economy, with distribution and printing on the rise, many are now focusing on the electronic editions. Websites allow for efficient speed, accessibility and overall ease over the printed catalog. Biggest benefit with online catalog is the large audience capability to expose potential end users. The web allows for timely data and updates on both current product offerings and new items. The online catalog also provides side-by-side comparisons and 24/7 satisfaction.

Top Paper Producers

Pulp and Paper International just reported on the top producers for 2008. The list illustrates some changes in that several mills merged or shuttered equipment. International Paper remains at #1, but two Chinese names entered the list, Shandong Chenming and Nine Dragons. Also companies such as Koch (GP), Kruger, White Birch, Asia Pulp and Paper, and APRIL did not make this list. Check Coy Paper's web site on Industry Resources Tab for more details.
Top Producing Areas tons per year (% world)
North America – 70,020,000tons paper (35%) / 13,921,000 mkt pulp (37.4%)
Europe – 70,480,000tons paper (35.4%) / 8,679,000 mkt pulp (23.3%)
Asia – 48,175tons paper (24.2%) / 1,884,000 mkt pulp (5.1%)

Top 10 Producers /2008 sales for paper and pulp
International Paper $24,782,000
Procter and Gamble $13,898,000
Stora Enso $13,450,000
Svenska Cellulosa (SCA) $13,427,000
UPM $13,043,000
Oji $11,084,100
Smurfit $10.335,500
Kimberly-Clark $9,992,000
Nippon $9,983,400
Mondi $9,284,300

Top 5 Tonnage producers (000's)
International Paper 17,128 tons
Stora Enso 11,746
UPM 10,641
AbitibiBowater 7,589,000
Oji 7,381

RISI Casts Shadow on Future of Paper Demands

John Maine of RISI advised that the decrease in shipments of 15 million tons of fine paper between 2007 and 2009 may never return because of all the major changes in electronic substitution and imports to North America and Western Europe. Worldwide there was a 3% drop in 2008 and 11% decline in 2009. A mild recovery is expected over the next year, but not to pre 2007 levels. Coy Paper news releases continue to report on China and India demand maintaining a growth of 3-4% with 4 million tons of new capacity coming on-line in China, mostly coated freesheet.

AbitibiBowater to Sell Texas Paper Mill

AbitibiBowater is reviewing the possible sale of its Lufkin, TX mill to CIT for $20.5 million. The plant has been closed since Dec. 2007 and consists of 895.5 acres of land, suitable for industrial development. The sale would save AbitibiBowater $3 million a year and would protect them from any environmental liability, which would be assumed by CIT.

Update on Uncoated Woodfree Papers

Although the majors (incl Domtar, IP, Glatfelter, GP and Boise ) all announced a $40/ton price increase for uncoated freesheet grades (all except business papers) the reality is the price is just being implemented. A quick check of the market, 50-lb offset roll prices range from $805-835/ton and cutsize grades range from $1010-1060/ton.
The market is in an interesting position, pulp prices are up, demand is OK at best, inventories are low (due to curtailments), BUT, Portical has a monster of a paper machine with tons to sell. See more on the Coy Paper site under the tab for Industry Resources and news.

Coated Market Trying to Improve Price

Several of the the major producers of publication grades, NewPage, Myllykoski and Verso Paper, are working hard with end users to increase the price of their products by reducing discounts. However, Coated Groundwood list prices in September remained flat at $770/ton. Buyers continue to report overall demand remains weak and producers continue to take downtime.

A recent survey of manufacturers of coated Groundwood publication papers revealed shipments were down 8% for 315,000 tons (vs. 2008) for the month of August. Meanwhile, the producers of Coated Freesheet reported shipments were 300,000 tons or down 17% (vs. 2008) during August.

Containerboard Shipments take Slight Drop

The Containerboard producers saw a slight decline in September and prices also fell by $10-20/ton. This is consistent with declines in recent months. We have reported on box shipments falling most of the year; August shipments continued the decline with 9.5% decrease from 2008 (Nearly 10%YTD so far 2009).
Spot prices on 42-lb unbleached kraftliner for Midwestern converters is in $450-470/ton range, and Northeast as well as West Coat is in the $420-440/ton range.
Some buyers report the small recycled mills as low as mid-$300/ton levels.

Paper Market Recap for August Shipments

Deutsche Bank just reported August and year to date paper shipments for printing & writing papers from North American producers.:
Uncoated Free Sheet, -10.8%YTD / -14.1%(August),
Light Weight Coated groundwood publication -8.2%YTD / -28.0% (August)
Coated Free Sheet -14.4%YTD / 25.1%(August)

Another Uncoated Paper Machine Announced for China

Hamadan Baiyun Paper announced they will build a 280,000 TPA uncoated printing/writing Paper machine in China, slated to start up in March 2011. They also plan a new 100,000 TPA pulp line. This mill has current production of 7 small with uncoated machines that produce capacity of 100,000 TPA and a 37,000TPA pulp line.

Pulp Inventory Down, Shipments Up

The pulp market enjoyed shipments of 3.6Million tons for August, which is a 13% gain (vs. August 2008). Inventory levels at the producing pulp mills were down to 27 days supply, versus 41 days in August of 2008. Of particular note was Chinese shipments increased 23% from July to 830,000 tons – up 132% from 2008!

More on the Antidumping Charges for Coated Paper

The USA producers of coated paper, NewPage, Appleton, and SAPPI, continued to charge China and Indonesia on specific printing and writing coated papers. Recall we reported on similar charges against these countries in 2007 and the International Trade Commission ruled against the charges.

Cascades Acquires two More Recycling Plants

Cascades announced the purchase of Sonoco Recycling and Yorkshire Paper Corp. Both of these companies provide on-site collection for retailers recyclable materials such as corrugated containers, paper and plastics. Yorkshire collects nearly 24,000 tons from retailers in New York and New England and Sononco collects 190,000 tons across Canada.
Cascades now has 19 recovery facilities supplying the company with half of the 2.2Million tons Cascades processes in their paper making process.

USA Containerboard Shipments Down

Production for the USA containerbroad producers fell nearly 10% in August (vs. August of 2008) and July shipments appeared flat (vs July 2008). The AF&PA reported containerbroad production this year is down over 12% (vs 2008 YTD). Components of this market were also down - Linerbaord down 12% and Medium fell 13% (vs 2008 YTD).

Will Imports Harm USA Paper Producers

As of today, I know of no USA producers in discussions for building a new uncoated paper machine and increasing capacity. Meanwhile, Portucel is ramping up production in Portugal and eyeing the North American market. Also, South America is introducing new capacity and surely the USA will be in their marketing plans. Unless demand in North America increases, this new supply could yield a sloppy uncoated freesheet market for years to come.

Coupons Making a Comeback ?

Paper ‘cents off’ coupons have been around for 100 years, and although redemption peaked in 1992 at 7.9Billion coupons, by 2006 through 2008 the redemption fell to 2.6Billion a year. However, with the current recession, marketers believe coupons are growing again. Initial reports indicate redemption is up 10% during the fourth quarter of 2008 and they increased nearly 25% so far in 2009. In the past, newspapers served as the primary source for coupons, now websites such as coupons.com offer printable versions and several sites allow the end user to customize exactly which stores or items to alert end users as to what is on sale. The next frontier is thought to be mobile coupons, forwarded to the smart phone. The New York Times reported the bulk of coupons are still clipped from weekend newspapers and digital coupons accounted for less than half of one percent. Let’s hope the newspapers can hold on to this... declining coupons from newspapers means decreased newsprint consumption and one more reason for the end user to not buy a newspaper!

No Challenges to Recent Pulp Prices

Snap Report from Paper Association -
Pulp price increases announced throughout the world, effective with October shipments: Arauco of Chile to increase prices in China on 3 grades of pulp, Donghae Pulp of S. Korea to raise BHK in China, Canfor Pulp to raise NBSK in NA and Asia, Domtar to raise NBSK in NA, Sodra and Fibria to raise NBSK in Europe

China Boosts Paper Production

Chinese paper production was over 50 million tons (up 6.2%) for the first half of 2009. Several closed mills re-opened with a reviving economy yielding increased demand, and low cost raw materials. Note, China imports approximately 60% of their pulp (8.25 million tons) up 40% vs. last year.

Coy Paper and Vallely Blog on Twitter

All the news releases P. Scott Vallely reports on in the Current News on the Pulp and Paper Industry can be found with daily updates on Twitter. Click onto https://twitter.com/CoyPaper. Many of the releases are documented before they become public information. The twitter updates are convenience 140 character summers of each release and come right to your computer. The releases can also be found on the Coy Paper Web site at http://coypaper.com and click onto the industry resources tab. Also, an RSS feed is available. Happy reading. Would enjoy hearing some feedback.

Catalyst Paper in Talks to Restart Elk Falls Mill

Catalyst is in the middle of presenting a plan to restart production at the Elk Falls paper mill in British Columbia. The proposal is to start up at least 2 paper machines and begin a profit sharing system based on earnings in return for changes to wages and benefits. Elk Falls was shut in early February.

Will USA Manufacturing Ever Come Back?

Scary thought surrounding the pulp and paper industry is whether the production will return to normal times. Most think that manufacturing will see signs of life before 2012, but the industry will see more automation and more globalization of supply- good for companies – bad for employees. As the economy crawls out of recession and workers return to various factories and offices and homes begin to be brought – the forecast is for more paper (copies, invoices, acknowledgements, etc.) and more containers (more consumer units requiring corrugated container for packaging) demand. But, will China, India, Brazil and Russia fill the demand for paper?

AbitibiBowater Shutters Several Mills

The Coy Paper Company Blog continues to report on poor advertising and declining publication circulation because of the current recession.,
Like many forestry companies, AbitibiBowater has been hit hard by the slump in the North American advertising industry during the recession. Most publishers have cut the size of newspapers and magazines, reduced basis weight, switched to more economical papers, and decrease print runs in an effort to survive - all leading to less paper.

AbitibBowater just announced they will indefinitely close three Canadian mills and several paper machines involving four other mills, including one in the USA.
The company is slowly releasing details, but we understand mills effected include one of two newsprint machines in Clermont, Que.; the company will idle one of the machines at its Coosa Pines, AL paper mill indefinitely. The digital printing paper mill in Beaupre, near Quebec City, will be shut down completely; and, commercial printing operation at Fort Frances, Ont., will be closed. The industry has witnessed a 30 percent drop in demand in newsprint since the beginning of the year.

Has Newspaper Advertising Seen the Bottom?

Most advertisers on "Madison Avenue" still believe the advertising community has not seen bottom yet, but see some relief starting in Early 2010. The forecast for the third quarter of 2009 is for newspaper advertising to be down 25% from 2008, and estimates are for a poor forth quarter, but something better than the 3Q2009 decline.
The Newspaper Association of America recently reported a drop in both print and digital ad revenue of 16.6% for 2008, and 2009 will be worse. Beyond the challenges print media has for advertising dollars, retailer's sluggish sales have also hurt spending budgets. Let's hope for strong Holiday promotions!

InPlant Printers Report on Paper Usage

InPlant Graphics just published a survey conducted with nearly 400 InPlant printers.
-Most common paper orders, Colored at #1, Cover Stock, Bond, Copier, Carbonless (near the bottom of the list was Inkjet Paper)
-Generally it is the Inplant Manager or Plant Supervisor that is responsible for ordering paper
-Note: most buying is by function NOT by brand name
-When asked about 'going green', most would go green BUT not if paper is more expensive
-Most inPlants ordered LESS paper so far in 2009 vs this time in 2008
-Most Inplants purchase paper through a local merchant and spent $75,000-$200,000/year on average.

Printers Report Better Profits in Second Quarter

RR Donnelley, World Color Press, Transcontinental, Cenveo, Deluxe, Consolidated Graphics and Standard Register all reported a combined second quarter profit of $122.2 million, a significant improvement over a loss of $21.2 million for the first quarter of 2009. Although this is encouraging the results are still 43% lower than the second quarter for 2008. Every company reported lower revenue, but the pace of decline has slowed.

Wausau Paper to combine business units

Wausau Paper plans to combine its specialty products business and its printing and writing business into one strategic operating unit.
The new business will be called Wausau Paper Mills LLC and will include production plants in Rhinelander, Brokaw and Mosinee in Wisconsin and the Brainerd, Minn facility. The plants manufacture printing and writing papers and technical specialty papers.
The new unit will be led by Henry Newell as senior vice president. Newell is now the senior vice president of printing and writing business.
The firm's towel and tissue business unit (produces "away from home" towel and tissue products) will not be involved with this consolidation.
Earlier this year we reported that Wausau Paper closed a paper mill in Jay, Maine, and a converting facility in Appleton in order to cut costs; these remain shuttered.

Truckers still Aggressively Compete

Transportation is a large cost component for the paper manufactures and respective end users for both inbound raw materials and out bound finished paper grades. Although, recently, signs that overall freight demand has bottomed and is picking up, the less-than-truckload market remains extremely competitive. Many of the bigger carriers continue to offer steep discounts in an effort to grab market share in the down economy.
Still, shippers think prices are going to go up over the next few months.

Struggle Continues to Sell Business Week

Bruce Wasserstein became the second bidder to depart the bidding contest for Business Week. Business Week's owner, McGraw-Hill, is concerned that the value of print media is declining.

Conde Nast Expects to Cut Costs Deeply

Conde Nast recently reported that advertising revenue at virtually every publication has decreased this year with no rebound in sight. Executives are expecting to have to cut spending by up to 25%.

Is Printed Direct Mail Dead?

The editors of Target Marketing Magazine acknowledge that the USA postal service has delivered 12billion less pieces so far in 2009, and that direct mail spending is down; and that email spending and promotions are up; and that there are environmental concerns and pressure for 'greener' promotions. BUT, they have confidence that direct mail spending will increase as the economy improves. They report that 18.8 billion promotional pieces were mailed in the second quarter of 2009 and that the spend will double by 2013. Many marketing exports argue the return on the amount invested for mailed pieces is still better than other medias, and, because the share number of emails have skyrockets, in-boxes have become difficult to manage.
There was a recent survey that revealed over 210 billion emails are sent every day, worldwide. Let’s hope direct mail returns – this is very good for paper demand.

Sonoco Stops Producing Corrugated Tubes

Sonoco has been facing significant reductions in customer orders over the past year and recently made the decision to close the Orrville, OH plant. Sonoco, founded in 1899, is a global manufacturer of consumer and industrial packaging products and provider of packaging services, with more than 300 operations in 35 countries serving customers in some 85 nations. The plant was purchased in 2007 from Caraustar Industries.

Market Pulp Price Increase Flys without Resistance

The newest pulp increase of $40/MTon from all North American NBSK producers went into effect without resistance for buyers in North America, Asia, and Europe. The industry has witnessed lower inventories, higher than expected demand, weaker dollar, and return of a strong Chinese demand. Once fully implemented, the new market list price will be $770/MTon for NBSK (a 10 month high). Note, the major buyers and large spot buyers use the list price as a bench mark for discounted levels. Spot pricing is estimated to be around $620-640/MTon.
As reported in past releases, Catalyst Paper, Domtar, Fraser Paper, Terrace Bay
and Nanaimo Forest Products have announced starting up curtailed equipment in an effort to supply the increased demand.

Magazines Review Measuring Effectiveness of Advertisiments

Mediamark Research & Intelligence (MRI) continues to penetrate the magazine industry and their advertisers to increase advertisers' confidence in the effectiveness of printed advertisements. The MRI system (called AdMeasure) assists in confirming and measuring the reach for magazines' audience.
MRI will measure consumer recall and response to an advertisement.
MRI says AdMeasure will raise print ad measurement to the level of TV and Internet ratings.

More New Paper Grades Introduced

The major paper producers are busy introducing and marketing new paper grades. Along with the Ideal and Octane product introductions we reported earlier, the NewPage mill has also offered Arbor Plus which is a #2 quality sheetfed paper containing 30% recycled fiber and many certifications. Xerox recently marketing a coat one side digital paper for direct marketing applications.
Meanwhile, Verso is now aggressively selling their Clarity Supercalendered grades to compete against the more expensive coated groundwood products. Verso is producing both Clarity A and Clarity B out of the Sartell, MN facility. The product is targeted for catalogues and offers an economic benefit to the traditional #5 groundwood coated grade.
Note, Veros earlier started to produce light weight uncoated Versobook, Versotext, and Versoblend out of the Bucksport, ME mill.

Paper Industry Pocket over $3billion in Tax Credits

The USA pulp & paper mills earned over $3billion in “black liquor” credits for the 1st half of 2009 and are expected to earn even more in 2nd half. The program is scheduled to expire at the end of the year.
A few examples include International Paper has earned $1billion, Domtar, Verso, NewPage and AbitibiBowater have each recording $100million.

Magazines Announce Management Shakeup

In an effort to generate additional revenue in this challenging market, several magazines are making many changes in management. Reader's Digest will be announcing their top management changes this week and Hearst announced several executive positions changing for both O (the Oprah Magazine) and Country Living.

Federal Reserve Reports Recession Ending

Chairman Ben Bernanke reported that the economy has started to grow once again in the current quarter. Also, many analysts predict the economy is growing in the current July-September quarter at anywhere between 3 and 4 percent.
Most of that growth should come from more spending from businesses, which had slashed investments -- often by double-digits -- during the recession.
Consumers are also beginning to spend money, as witnessed by the success from the 'cash for Clunkers' program.
Manufacturing, meanwhile, reported "modest" improvements. Residential real-estate markets, which were hurt during the downturn, also illustrating signs of improvements. But the commercial real-estate market continued to be a drag in most markets.

NewPage to Shutter Coated PM in Maine

NewPage announced they will shut a coated groundwood (publication) paper machine in Rumford, Maine for the last 2 weeks in September. The mill’s output will be reduced by 6,000 tons.

Analyst Comments of Poor Newspaper Advertising Recovery

Wells Fargo researchers recently commented on a potential advertising recovery in third quarter.
The Wells Fargo team said ad revenue has stalled in August while September appears to be starting off weak. Specific focus was on the Gannett Group, a bell weather for the Newspaper industry.

Wells Fargo reduced its Q3 newspaper advertising revenue estimate for Gannett from a decline of 25.5 percent to a decline of 28.8 percent. Local is forecast to fall 22.5 percent, national is anticipated to drop 21 percent and classified is estimated to decrease 40 percent (versus a previous -19 percent, -18 percent and -37 percent respectively).

Overall advertising revenue is expected to fall 20.2 percent in Q4, revised down from a decline of 16.9 percent.

Update on Pulp Markets

As noted in our past releases, the entire pulp market has increased the price of pulp - both softwood and hardwood. If this $40/ton price goes through, and we think it will, the new NBSK 'list' price will rise to $770/mton in USA and $740/mton in Europe, and $650/mton in China. Reports outline the spot transaction price in USA for NBSK will go to $585-615/mton. Producers such as : Catalyst Paper, Domtar, and Fraser Paper, have all announced pulp mill restarts.

Kraft Market Showing Improvement

The Kraft Paper producers in North America have announced a $40-50/ton price increase. The manufacturers report recent strength in order backlogs, a pop in raw materials costs,
capacity curtailments, and the recent weakening of the dollar have all strengthen the market. .

Curtis Mill Purchased

Georgia Pacific and International Paper jointly purchased the old Curtis Mill in Milford, NJ and will clean up the site. The mill produced 175TPD of waxed cereal bag liners.

Brazil's Pulp Market Shows Strength

Brazilian pulp industry is starting to recover from the weak global demand for pulp and paper products, according to Wood Resources International (WRI).
In April, pulp exports equalled 766,000 tons, up 43 percent from the previous month and 140 percent higher than shipments a year earlier, WRI said in its Wood Resource Quarterly report.
The Brazilian pulp companies have benefited from closures of pulp mills resulting in reduced production capacity in the Northern Hemisphere and an increase in demand for pulp in China
Production reached 12.8 million tons, which was up from 11.8 million tons in 2007.

More on Coated Market Pricing

Most of the major producers of both coated free sheet and coated groundwood publication papers state the rate of decline in demand has slowed over the past few months. As reported earlier, Verso and NewPage have taken this opportunity to introduce price increases of $40/ton on Coated Free grades and an attempt to reduce discounts and increase transaction prices of $20/ton is solidly in the market for the publication grades.
The mills have experienced increases in input costs such as pulp and energy, also inventories levels have declined. Our read is the industry has a good chance of increasing transaction prices for coated papers - but may require market related curtailment of capacity to control supply.

All Major Mills Increase Newsprint Price

As a follow up to our earlier report, all of the major North American producers of Newsprint have now joined in announcing a price increase of $70/metric ton. The industry has really been licking its wounds, with a low market price in August of $470/metric ton - now mills such as Kruger, White Birch, Catalyst, Norpac, and Tembec have joined AbitibiBowater with the increase.
These mills make up 9.6 million metric tons of capacity.
All are introducing the price in two increments (September / October in East; October/November in West)

Georgia Pacific and International Paper jointly purchased the old Curtis Mill

Georgia Pacific and International Paper jointly purchased the old Curtis Mill in Milford, NJ and will clean up the site. The mill produced 175TPD of waxed cereal bag liners.

Box Company to Pack Up and Leave

Smurfit-Stone Container Corp., a Missouri-based company, is planning to close its box manufacturing plant in Portland, leaving 93 people unemployed.

Coated Paper Price Hikes Attempted.

Verso announced $40/ton Coated Free Sheet price increase for shipments after September 15. NewPage followed this announcement and added a $20/ton hike on their coated publication grades. Many buyers were surprised. The market is still experiencing overcapacity. Perhaps, the shuttered equipment has created a shortage of supply to yield a tightening availability?

New Magazines to make debut

Although we generally report on the poor health of the magazine industry, a few recent magazine launches include: Afar, 944 Media Atlanta and Detroit, Port City Life as Maine, Bi-monthly UFC, Energy Efficiency & Technology, Healing Lifestyles & Spas , Vitamin Shoppe’s publications Amazing Health and Muscle & Performance. We wish them good luck in this challenging climate.

NewPage will Produce Uncoated Grades

NewPage Corporation, once 100% coated papers, will expand it's uncoated offering with two new products, Octane and High Octane.
Octane is an 80 bright, uncoated mechanical paper produced in Whiting, Wisconsin and is engineered for both heatset and coldset printing applications and has a standard offering in 35 lb., 38 lb., 40 lb. and 45 lb.
High Octane, an 84 bright, uncoated freesheet paper produced in Rumford, Maine is manufactured for heatset presses in a range of basis weights from 35 lb. to 45 lb.

UPM and Xpedx Ink Deal

UPM signed a multi-year agreement with Xpedx on distributing selected coated paper to commercial printers in the US and Canada. The paper will be available through all Xpedx distribution outlets and is ensured with PEFC or FSC standards.

Freedom Communications Becomes Statistic

Freedom Communications, who owns The Orange County Register of California and 30 other dailies, filed for bankruptcy. Under reorganization, 26 secured lenders will take over. Owners: the Hoiles family, Blackstone and Providence Equity will have equity stakes reduced to 2%.

Update on the Kraft Paper Market

The Kraft industry is witnessing increased demand in Kraft Paper and therefore the $40-50/ton price advance announced by major USA producers is gaining traction. Back logs have expanded from a few days to weeks.

Update on Market Pulp

We continue to report on the strength of the pulp markets, and this week is no different. All the major NBSK and hardwood producers announced $40/ton price increase for September. This will be the fourth consecutive price hike in North America and the fifth in Europe, and sixth in
Asia. Reports in the USA for spot transactions reveal NBSK price rose to $585-615/mton. The increases are a result of reduced inventories, continued strong demand in China, and increase in USA demand.
We also note, manufacturers such as Catalyst Paper, Domtar, and Fraser Paper have announced mill
restarts.

Update on Uncoated Woodfree Paper

It appears the recent announcement by the major North American producers for uncoated woodfree papers ( offset and commercial printing grades) for $40/ton is taking hold. This increase, effective with September shipments, excludes cutsize paper and converting grades. The primary factors supporting the higher paper prices include higher pulp prices, increased demand, and lower mill inventories from extensive curtailments and reduced imports.

Newsprint Advertising Down

According to the Newspaper Association of America, print ad sales plunged by more than 30% in the second quarter from a year ago, the worst decline on record. It's also steeper than the 29.7% drop registered in the first quarter -- which had been the worst decline on record.

A recent survey by MORI Research indicated "newspaper advertising remains the leading advertising medium cited by consumers in planning, shopping and making purchasing decisions." The research concludes that when the economy eventually begins its recovery, advertisers will return to spending, and newspapers will find themselves extremely well positioned to harness the strength of their print and digital platforms to build a brighter future. Let's hope this survey is right, for the sake the paper industry and the future of newspapers.

Coupons Arrive to Cell Phone

The newest marketing initiative is mobile coupons. Several new companies have emerged that are forwarding relevant coupons to folks that opt in to programs to electronically (via Smart Phone) receive coupons. This is becoming a growing feature and advertisers such as Kmart, Thyrsus, and Zales confirm the redemption rate is 15-20% (versus 1% for printed/ paper coupons). Another nail in the coffin for Free Standing Inserts and Paper.......

USPS Predicts Mail Volume will return

The United States Postal Service is forecasting that once the recession ends marketers will be back mailing promotions and corporations’ will be mailing invoices. The service has been in trouble, current 2009 estimate is for deficit for USPS of $7Billion and mail has been trending down – 2006 – 213billion pieces, 2008-202billion pieces and 2009 estimate is 175billion pieces. The Postal Service believes the biggest culprits include 70% of households with computers now pay bills on line; electronic mailing of tax returns; and a big campaign for ‘less paper is greener for America’. Also, recently, marketing for direct mail including credit card offers and bulk advertising is way down. Another challenge is the increase of communication through smart phones and not mail.
With knowledge of all these challenges, USPS feels printed advertising is more powerful than electronic communication and marketers will return once the economy improves. Less mail means a lot less paper!

AbitibiBowater Raises Newsprint Prices

AbitibiBowater is beginning to inform end users that they will implement a $70/ton newspaper price increase in two stages. The first is a $35/ton hike on Sept. 1; followed by another on Oct. 1.

The pulp market Continue to Increase thanks to China

2009 has yielded many challenges for the Paper producers; summarized by limited success in holding, much less increasing prices. Newsprint producers have seen their prices drop to cash costs -mainly due to pressure from poor demand. While demand has not been stellar, the uncoated freesheet and packaging producers have maintained significantly better margins and are now looking at price increases for the Fall.
Pulp pricing, the basic raw material for all paper, has recently witnessed price increases and extended backlogs. The Chinese market has really assisted improved pulp demand.

Packaging Companies Downsizing

In a recent survey by PFFC, distributors for unprinted rolls and sheets reduced their workforce as well as converters of Tags, labels, and tapes as well as paperboard packaging and will not rehire until several months on increased orders are actually on the books.

AbitibiBowater Plans to Restart Paper Machine

AbitibiBowater Plans to restart the #6 paper machine in Fort Frances, Ontario for 3 weeks. If more orders are received, they may run it longer.

International Paper and Glatfelter Announce Paper Price Increases

IP and Glatfelter announced a $40/ton ($2/cwt) price increase on uncoated freesheet offset and commercial printing papers, effective with September shipments.

Printer's Sales Remain Down

Printing Industries of America states 1Q2009 printer sales down average of 9.4%. BUT, digital segment up 8.8%; Inkjet up 7.1%.

Update on Kruger's Coated Production

Kruger will permanently shut down coated production at its Trios River Mill in October. 3 paper machines and 2 coaters are included in the shut down.

Wausau Announces Price Increases

Wausau will increase the transaction price by $2.00/cwt. on the following products:
Exact® Index
Vellum® Bristol
Exact® Tag
Exact® Opaque Colors
This is effective with late September shipments.

Neenah and Cranes Announce a Partnership

Neenah Paper Company and Crane & Co. Inc. announced they have signed an exclusive partnership agreement for Neenah to manufacture, market and distribute Crane's fine business paper brands: CRANE'S CREST®, CRANE'S BOND®, CRANE'S LETTRA®, CRANE'S PALETTE(TM) and CRANE'S® Choice Papers.

Doubledown Unable to Sell Magazine Assets

We reported on Doubledown (a publisher of magazines aimed at the Wall Street elite) going out of business in February and filing for Chapter 7 bankruptcy. Updating that release,
an auction was recently held for Doubledown Media assets and most minimum bids were not met.
Examples include; the minimum bid for Doubledown’s Dealmaker was $100,000. For Corporate Leader and Trader magazines the lowest acceptable bid was $50,000. The minimum bid for Cigar Report was $25,000.
The minimum bid for all five titles was $300,000.
None of the auctions were successful – all bids too low!

A Few Optimistic Positions on Paper ....

It appears the Pulp, Containerboard, and Uncoated Wood Free papers may see some relief and gradual improvement. In the past few weeks all three markets have stabilized, and in fact, Pulp and uncoated papers has actually witnessed price increases.
Although Containerboard has not enjoyed increased demand, the price levels appears to have stabilized. This has been largest assisted by massive curtailment of supply (see my past reports on Smirfit and International Paper downtime).
Pricing for uncoated papers are enjoying modest increases in transaction prices. In fact, the major producers have formally announced a September price increase of $40/ton for Offset, Opaque and Bristol grades. Many in the industry are forecasting the deep discounts will go away and the true effect of the September increase will really be $60/ton.

SAPPI Closes Paper Mill ' forever'

One of the largest producers of paper for magazines, books and high-end advertising, Sappi, North America, will permanently close the Muskegon, Mich., paper mill. I reported in March that this mill will be idled for an undetermined amount of time. This coated fine paper mill had an annual production capacity of 170,000 TPA.
The global economic downturn and reduction in demand of 32% this year has resulted in very weak demand for coated fine paper worldwide.
Products previously made at Muskegon have been and will continue to be produced at the other Sappi mills in Skowhegan, Maine, and Cloquet, Minn.

Portugal Paper Mill Studying New Machine

Portugal’s largest pulp and paper company, Portucelis, is considering expanding in the paper market at a time when larger rivals are cutting production.
The machine will have a capacity of 500,000 tons a year, making it the world’s biggest for the production of office and graphic paper. It will increase the company’s total paper production capacity to 1.5 million tons a year.

Big 3 Paper Producers in Europe Speak about Consolidation

From Reuters Wire Service
At Reuters Paper & Packaging Summit, Chief Executives from UPM, M-Real and Norske Skog spoke about the need for consolidation in the paper industry. UPM stated that they would be an active player, focusing on costs and balancing demand-supply.

Vibe Magazine to Return

As we reported in May/June, Vibe Media Group closed their doors, blaming the poor economy and a decline in ad spending. Vibe and Vibe.com recently announced that InterMedia Partners, a private equity firm founded by Leo Hindery, Jr., purchased the publication.
InterMedia is combining Vibe with the operations of another urban lifestyle magazine it owns, Uptown.

Catalyst Paper to Restart Pulp Mill

Catalyst will restart pulp production at its Crofton NBSK kraft mill on Vancouver Island, BC in October if market conditions continue to improve. The line will add 210,000 TPA.

Palm Paper's Newsprint Machine Starts up

The industry’s newest paper machine started up three weeks ahead of schedule. Palm Paper’s facility, on the River Great Ouse in the UK, will produce up to 400,000 tons of newsprint paper each year.

Reader's Digest Officially Files

As we reported late last week, Reader's Digest was evaluating a move to file for bankruptcy. This just became official. The filing will assist in reducing the $2.2billion in debt to $550million.

Another Reason for Fewer Newspapers

Just reading a piece from Jeff Jarvis (past editor of NY Daily News) and he outlines the fact that coupons are now available on line for free and listings for movies are now easily attainable online - this has hurt newspaper demand. He believes there was a large population that purchased newspapers for only the coupons. Many would also purchase a newspaper for the local movie listings – all now available online – for free. Certainly, two more factors leading to fewer newspapers is less disposable income for purchases such as a newspaper and electronic news seems to be picking up readers.

Pulp Shipments continue to Increase

Perhaps the only shinning star in the industry is market pulp; whereby, reports for July shipments confirm an increase of nearly 4% from July of 2008. China continues to buy pulp and is certainly assisting the demand.
Worldwide inventories have decreased and we hear pulp is now under 30 days (versus 36 days at this time in 2008). Pulp prices are witnessing increases as a result from companies such as Canfor Pulp, Domtar, Aracruz, Suzano, Arauco, Botnia, Donghae Pulp, Mercer Intl, Tembec, VCP, Sodra, West Fraser and Winstone (price inceases ranging from $30-50/ton).

Is Digital Better?

I just saw an interesting report on the International Paper website comparing the ‘green’ factor of digital / electronic media and traditional paper. The document confirms paper being more environmentally friendly.
A few highlights
-Sustainability – Paper industry plants 3 trees for every one forested – trees are renewable. Computers are made from environmentally unfriendly materials that cannot be recycled.
Energy – Most paper producers today have power supplied from carbon neutral resources. Powering up a PC comes from electricity, which is produced from nonrenewal fossil fuel.
Recyclability – Paper is completely biodegradable and the paper industry recycles and reuses nearly 60% of paper that has been returned from the market. Computers, servers, cables, and monitors continue to end up in landfill......and are not recyclable.

Update on Newsprint Market

Difficult for me to report an optimistic future for the Newsprint Market. I suppose one glimmer of bright light is that the balance of the world has not experienced as deep nor as fast a decline in Newsprint demand. Newspaper advertising in the USA continues to fall, and the trend does not appear to be stopping (FYI, advertising down 30% in the first quarter alone!).
USA newsprint demand for 2009 is forecast to be 5.3million tons. Production for North American producers was 10.4million tons in 2008 - the forecast 2009 is 7.6million tons.
Individual companies are particularly hurt; AbitibiBowater (world's largest producer of newsprint) lost $100/ton on its current shipments. Mr. Mark Wilde reported average selling price was $581/mton, while AbitibiBowater's average cost of manufacture was $688/mton. Note, larger buyers are reported to actually be purchasing paper at less than $400/mton. Again, not a rosy picture!

Market Pulp Prices Continue to Increase

Pulp prices in North America continue to increase with the latest announcements for NBSK list price in August heading north for the third month in a row, up $30/ton to $730/ton.
Currently, this market is witnessing reduced inventories - given strong demand from China and shuttered equipment reducing over all capacity.
Note, SBSK list price also increased $30/ton to $680/ton

More College Students Using Digital Texts

Notes from a report by Jim Milliot of Publishers Weekly

Many anticipate that 40,000 college students at over 400 colleges will use open source digital textbooks from Flat World Knowledge this fall. Flat World went live in spring 2009 with 1,000 students from 30 colleges using its offering.
The Flat World’s pricing/business model students allows access entire textbooks for free online; pay $19.95 for a PDF download; pay $29.95 for a black and white printed version or $59.95 for a color version, or pay $39.95 for an audio version. Books are available by the book or by the chapter. Study aids or also available for purchase.
Eric Frank, a cofounder of Flat World believes a quantum leap will occur for fall 2010 when he thinks the number of students could be between 120,000 to 200,000.
If more books are read digitally, this means less text paper sold ..... another challenge for the paper industry.

Hewlett Packard Concerned less People Printing

Hewlett Packard just reported a significant decline in ink cartridge sales. The challenging economy has resulted in massive layoffs and therefore fewer office workers producing printed copies. HP is evaluating a new environment upon which corporations are reducing costs and asking workers not to print unnecessary documents. This could be long lasting as the world is becoming increasingly more comfortable with digital documents.
Note, HP printing group accounts for nearly 25% of the total corporate revenue.

Several Shuttered Reed Publications back to the Presses!

Recall that Reed Business Information closed 13 publications in April and this week, John White announced his company will acquire these titles White will re-launch all by September, published under Associated Construction Publications Group (ACP), expecting collective revenue of $5 million in 2010.

Recycled PaperBoard Pricing 'on the move'

The industry just announced price increases for September shipments of $40/ton for all grades of coated and uncoated recycled paperboard by nearly all major North American producers to offset raw material cost increases. These producers include Strathcona Paper, Graphic Packaging, RockTenn, Sonoco, PaperWorks Industries, Caraustar, Newark Group and Ox Paperboard. Challenge is two fold - demand remains poor and most end users can not pass an increase through to their respective end users. Lots of resistence here .......

New Paper Mill in South Korea

Moorim announced a new Voith Paper paper machine to their DongHae site to manufacture woodfree coated, woodfree uncoated and machine finished coated paper with an annual capacity of 450,000 tons. This will be the 1st integrated pulp & paper mill in South Korea and is scheduled for start-up in spring 2011. It will be environmentally friendly, using the steam incurred during pulp production instead of fossil fuels.

Stora Enso to Shrink Workforce

In past releases, we had reported that Nordic paper companies experienced losses at the end of last year given slow demand from customers for newspapers and magazines. This year has not proven to yield any improvement and total production in the forest sector has slumped by some 30 percent.
On Finnish company, Stora Enso, will now lay off off up to 1,100 workers, cut production and close mills in Finland as the paper maker continues to struggle with dwindling revenue.
Stora Enso is one of the world's largest forest product companies making magazine paper, newsprint, fine paper, pulp and packaging boards.

Many Pulp, Paper and Board Companies Show Improvement

The Pulp & Paper Week publication just reported most US pulp and paper companies had higher earnings in the second quarter vs. first 3 months of this year. Lower input costs certainly assisted, but a major factor was from alternative energy black liquor credits (+$1.6 billion), which offset losses.

It's Chapter 11 for Reader's Digest

Household publication, Reader’s Digest, will restructure to reduce it's debt under a voluntary Chapter 11 filing. This will only affect their US businesses. The senior lenders will exchange much of their debt for equity.

Financial Times will charge per online Article

Financial Times, which has charged a fee for online news since 2002, announces model to accept 'micropayments' for individual articles. Many of the major newspapers are now reviewing models to generate revenue beyond online advertising as reported in past releases. Currently, most newspapers do not charge for online news.

July Paper Shipments look Promising

The American Forest & Paper Assn.just published the preliminary report for printing and writing paper shipments in July. The report outlined 1.464 million tons, down 15% vs. July of 2008, but up 5% vs. June 2009.
Results as follows-
Coated mechanical: 258,939 tons, down 19.1% vs. 7/08 and down 3.7% vs. last month.
Coated freesheet: 281.964 tons, down 16.2% vs. 7/08 and up 13.6% vs. last month.
Uncoated mechanical: 142.418 tons, down 25.1% vs. 7/08 and up 15.5% vs. last month.
Uncoated freesheet: 780.238 tons, down 11.2% vs. 7/08 and up 3.2% vs. last month.

Online Spending declined

Like printed advertising spending, online retail spending is starting to decrease. On line spending totaled $30.2 billion in the second quarter, a 1% decrease from $30.5 billion in the prior year. All advertising dollars are effected by the nearly 10% unemployment rate, rising gas prices, and consumers attempt to increase savings, - all contribute to reducing consumers’ discretionary spending.

Newspapers to soon charge for News on their websites

The Boston Globe and Herald as well as News Corporations’ New York Post and Times of London has announced it will start to charge end users to access their websites for news. All newspapers are aggressively seeking additional revenue.

Is the Economy bottoming out?

It is said the paper industry still follows the economic indicators, so it was good news to hear the Federal Reserve stated that the US recession was ending, due to consumer spending, financial markets and corporate inventory building stabilizing. The Fed cautioned that it would be a slow recovery and that they will keep short-term interest rates at virtually zero. Many economists believe we will not see any continuous signs until beginning of 2010.

Fraser Papers Will re-Open Pulp Mill

Reversing a news release we published earlier, Fraser and their union forged an agreement, which will allow Fraser to reopen the pulp mill in Edmundston, New Brunswick, Canada by the end of August.

In-Plant Printers Report on Recession

The MindFireInc just reported on results from a survey which included many of the In-Plant printers. During these difficult economic times, survey results reported-
-Two biggest challenges for the printers included reduced budgets and difficultly attracting new business.
-Most believe that ‘things will get worse before they improve’
-All agreed that to grow revenue requires new services, self promotional marketing, adding new equipment and visiting end users.
-When asked about reducing costs, all reported they would renegociate prices with suppliers, cut internal staff, and change suppliers

Paper Companies are beginning to Report Results

The USA paper producers are beginning to report results for the second half of 2009, and most are announcing losses.
-Cenveo reported quarterly net sales of $397.6 million, down from $524.5 million for the same period last year. Cenveo recorded a net loss of $18.3 million
-NewPage, USA largest producer of coated papers, net loss of $6 million in 2Q was an improvement over the $21 million loss in 2008,
-AbitibiBowater reported a net loss of $510 million in 2Q, double 2008. Sales only $1.04billion.
-Domtar Inc. turned a net profit in its second quarter
-UPM-Kymmene Corp. , the world's largest magazine paper maker, reported a second-quarter net loss of euro8 million

Time Magazine closes Southern Accents Magazine

The Southern Accents magazine issue will print the final issue with the September/October edition. Time Inc., publisher of the magazine, announced advertising pages had declined by 37.4% in the first half of 2009. This magazine was a bimonthly with a circulation of 400,000.

AbibtiBowater Shutters 2 more machines

AbitibiBowater will shut down 2 more machines, both at the Thunder Bay, Ontario mill. Paper machine #4, which produces 146,000TPA of uncoated mechanical paper (publication), and #5Paper Machine , a 250,000TPA newsprint machine. Both will remain down until the markets improve.

Update on Market Pulp

Notes from report by Deutsche Bank
North American NBSK list price rose for the second month in a row by $40/ton to $700/ton. This increase resulting from worldwide inventories for market pulp having declined, producer downtime and closures, as well as strong demand in China .
Local producers that have announced increases so far include
Canfor, Domtar, Northern Pulp, Tembec, and West Fraser slated domestic NBSK prices at $730/ton.
Other North American producers that have announced a $20-25/mton price hike on key hardwood grades include Alberta-Pacific, CENIBRA, Sappi NA, and VCP.
Meanwhile, in Europe, Botnia, Mercer Intl., Stora Enso, and Sodra have announced a $30/mton price hike on NBSK and hardwood grades.
Note, even spot price levels are expected to increase from the $560-590/ton net delivered from the July prices.

Market update on Containerboard

Containerboard prices, assisted with good demand, remain steady after falling $70/ton since its peak, last fall.
Note, it has been reported that spot prices for 42-lb linerboard range from $450-470/ton in Central US, and $410-440/ton in the Northeast region. Recycled spot prices are below $400/ton. US kraftliner export prices are still around the $320/ton FAS level.
I think these spot prices have remained constant for last 60 days, as well. (I welcome comments here)
Additional comments
-June box shipments down 6.5% from 2008
-Producers continue to streamline inventories and operating rates
-International Paper took 580,000 tons (21% of capacity) containerboard out during second quarter.
-Renew will restart 500TPD linerboard in St Francisville, LA

AbibitiBowater cuts Staff and Sells Timberlands

AbibitiBowater, North America's largest newsprint supplier and operating under chapter 11, reported it will eliminate 25% of its employees in its headquarters as well as sell $25.7million worth of timberland These are part of the $100million cost reduction plan we announced in previous release on this blog.
Meanwhile, Smurfit - Stone Container - another bankrupt company, will sell 1million acres of timberland.

More Downtime for Kruger

Kruger will reduce production at both its Trois-Rivières and Wayagamack mills for balance of this summer. Trois-Rivières will reduce coated paper production by approximately 7,500 tons and Supercalender Paper will be reduced 4,500 tons. Directory paper will be cut 2,000 tons at Wayagamack; note, coated manufacture at Wayagamack will not be affected.

Magazines Report less Sales at the Newsstand

Single copy sales for magazines sold at newsstands are predicted to be down for first half of 2009 (ABC audit not confirmed until late August). While some of this decline is a result of our poor economy, the majority resulted from publishers’ refusal to pay the increase for ‘per copy’ fees the distributors’ demanded. Statistics on specific magazines will be announced in coming weeks.

Coated Paper Prices Still in the Basement

Buyers and mills alike wonder when the decrease in coated paper prices will stop. For the mills, the black liquor credit, reallocating production to uncoated grades, and taking equipment out of production are all assisting; BUT, demand continues to shrink and buyers continue to deplete inventory already on floor. Unless magazine advertising increases, postal fees stabilize, and retailers boost catalogs – not much short term hope remains. One would assume the manufacturers are close to cash cost and, therefore, for survival ‘ have found the floor’.

StoraEnso Makes Loan to NewPage

NewPage is negotiating for a loan of $575million from StoraEnso. Note, StoraEnso already owns nearly 20% of NewPage (Cerberus Capital Management owns the balance). Recall, in 2007, NewPage purchased StoraEnso’s facilities in Wisconsin Rapids, Biron, Whiting and Stevens Point.

Black Liquor Credit Helps End User

The black liquor tax credit (a result of the Obama administration energy package) is driving down paper prices, according to NewPage, North America’s largest maker of coated paper. They claim the average selling price for coated paper probably declined by $40 to $50 per ton.

Fraser Paper Announces Changes

Jeff Dutton, Fraser Papers's president and COO has appointed Jim Gehrman to the position of vice president, Sales with responsibility for all of the company's paper product sales.

More Paper Mills May Close

from RISI report
Beyond announced shuttered machines, John Maine of RISI forecasts additional 3.6M tons of closures are likely around the world. John Maine, VP - Pulp and Paper at RISI, Inc and Project Team Leader, noted, "The market for uncoated freesheet in North America has been in decline since 1999, falling 5% and 8% for the past two years, and the drop is certain to accelerate in 2009.

USA Post Office Continues to Loose Money

As we reported in past, the USPS forecasts mailing approximately 175 billion less pieces and will loose as much as $7billion for 2009. USPS continues to review cost cutting measures such as only delivering mail 5 days/week; closing offices; and future payments for retirees.

Bigger trucks requested by International Paper

In order to cut costs and become more efficient delivering more goods in fewer trips, International Paper Company is pushing to allow bigger trucks on U.S. highways over the objections of road-safety groups. This would keep shipping costs down for all companies that ship full truck loads, such as Coy Paper Company.

Paper Distributor Xpedex to buy Gould Paper

Gould Paper (Canada), Ltd., a subsidiary of privately held Gould Paper Corporation, headquartered in New York City was sold to xpedx, a business of International Paper. Gould Paper (Canada) is distributor serving western Canada .

After 174-Year Run Michigan Newspaper Closes

The last edition of The Ann Arbor News will be printed this week, ending its 174-year history of delivering the news to Michigan's fifth-largest city.
The Ann Arbor News will be replaced with a website, AnnArbor.com, which will also produce a print edition twice a week.

Gannett Shuts Down Plant

Gannett Media is closing a printing and production plant by September in Wisconsin. The plant currently prints the Fond du Lac Reporter. Production of that paper will be shifted to Gannett's Appleton, WI, facility.

NY Times Reports Profit

After all the depressed news we report on the newspaper market, the New York Times reported a profit of $39.1million for the quarter (up from $21.1 million last year - and up from a loss of nearly $75million 1Q09). Although advertising revenue continues to trend down, the company has been successful in aggressive cost cutting. The company reported a 31.9% decline in ad dollars last quarter, while circulation rose 1.5% (due to increase in price). One important note, even the NYT internet ad dollars fell last quarter (down 4.3%).

Coy Paper now on Twitter

If you enjoy reading these current releases, Coy Paper Company LLC in now updating the company's Twitter account daily with all the current trends on the Pulp and Paper Industry. You may wish to follow the very latest at http://twitter.com/CoyPaper.

Stora Enso Announcing it will Close Mills

Stora Enso, largest papermaker in Europe, will stop production at unprofitable mills as demand and pricing for paper remains weak. In a related announcement, UPM-Kymmene Europe’s second- largest papermaker, is also reducing capacity in Finland for the same reasons.

Advertising Forecast to Fall for September Publications

September issue magazine ad pages totals are beginning to be revealed. Most numbers are down versus September of 2008.
Conde Nast ad pages in W declined 53% Allure fell by 52%, Self by 51%, Glamour by 42%, Vogue by 37%, Details by 35%, GQ by 32% and Teen Vogue by 32%.
Hachette Filipacchi announced Elle’s ad pages down 21%.
Hearst reported Harper’s Bazaar advertising pages fell 23-26% and Cosmopolitan 18%.
Time Inc.’s Essence ad pages decreased by 16%.

Another Large Coated Woodfree Paper Machine for Asia

Moorim Paper in Ulsan, South Korea ordered a 430,000-450,000 ton per year coated woodfree paper machine. The unit will be supplied by Voith Paper and is scheduled to start in June of 2011. Half of the production will be sold domestically and half exported to the U.S., Europe and to other countries in Asia.
Just last week, Shandong Huatai ordered a 500,000TPA coated and uncoated woodfree machine, which the company plans to install in Shandong, China and start in the first quarter of 2011.

Pulp Prices Increase

Tembec announced to all its customers that they will be paying an additional $30/ton ($730/ton) for its Northern Bleached Softwood pulp. This is effective immediately. The increase includes exports. Many of Tembec's competitors are forecast to follow this increase.

Canadian Printer Exists Bankruptcy

After one year operating under Chapter 11, Quebecor World announced it will exit bankruptcy protection. The company secured $800million in financing. The new name of the printer will be World Color Press.

2009 Mid-Year Economic Report for Tag & Label Industry

notes from a report by Jack Kenny
Label & Narrow Width Association staff conducted a survey, converters reported a mixed bag of results. While most commented on sales declines as deep as 30 percent a few boosted increases as high as 50 percent. Profits were down for most, but up for others. Printers vented strongly against price increases by material's suppliers. The majority of them said they were unable to pass along those increases to customers, instead focusing on internal changes to reduce operating costs.
Yet the companies that buy labels still must buy labels, and they have been keeping the industry pumping along. Competition, by all accounts, is more fierce than ever. Clearly, converters directly tied to industries such as the automobile market continue to be hurt the most.

Containerboard Market sees Some Hopeful signs

Deutsche Bank reported stabilized pricing and recovering volume trends
prices have dropped $70-80/ton off last autumn's cyclical peak. However, prices were reported stable in June and appear stable again in July. Moreover, most industry players remain reasonably profitable at current price levels, despite a sharp drop in volumes. Industry consolidation, a proactive approach in managing supply & avoiding inventory overhang, and a weak US Dollar have all played a role in this performance. Additionally, domestic and export volume trends are recovering. June box numbers represented a first real sign of domestic volumes starting to improve.

Magazine Mergers Slow Down

There were only 129 media transactions reported for the first quarter of 2009, down 36 percent from the first quarter of 2008; values, meanwhile, plummeted 91 percent to a combined $1.3 billion.
The second quarter did not fare much better and most transactions were a result of distressed situations. Market valuations have been under pressure due to the lack of debt capital and a general perception of the M&A market as being a ‘buyer’s market’. The largest issue facing magazine M&A is the lack of senior bank financing.

Cox Enterprise Sells Three Newspapers

Cox Enterprises has sold three of its papers in Texas and Colorado. The Waco Tribune-Herald went to the Robinson Media Co. The Daily Sentinel and The Nickel went to Grand Junction Media (owned by Seaton Publishing). Cox is still seeking buyers for its newspapers in North Carolina and Texas including the Austin American-Statesman. Review other releases by Coy Paper for additional market information on the News Paper industry.

Fraser Closing Pulp Mill

Fraser will close its pulp mill in Edmundston, New Brunswick. The company must now buy pulp for its 475,0000 ton per year uncoated freesheet and mechanical specialty paper mill in Madawaska, Maine. Fraser filed for bankruptcy on June 18 as reported by Coy Paper earlier..

Forecast for Printing Industry

The forecast is for print advertising to fall 22.8 percent to $9.8 billion between 2008 and 2010 but will rise 14.3 percent to $11.2 billion by 2013, according to PricewaterhouseCoopers. However, circulation spending will continue to fall to $8.4 billion in 2013, down from $9.7 billion in 2008.
But a number of individual segments, including b-to-b publishing (-3.3 percent) and consumer magazine publishing (-1.7 percent) are expected to decline.
The current economic slowdown has acceleration digital migration. The report went on to comment on digital spending continuing to be the industry’s main source of growth, with revenues accounting for 25 percent of total sales in 2013—up from 17 percent in 2008.

Obama administration Reviewing Tax Credits

The Obama administration continues to review the enormous tax credits the pulp and paper industry is enjoying. The new found money (which is badly needed) was discovered when executives in the industry learned that by adding diesel fuel to the black liquor already recovered and reused in the paper making process – the industry is entitled to the alternative fuel tax credit.

RISI names top 50 Paper Executives

The annual RISI ‘power’ list of paper executives was recently published. Many from Asia make the list.
Top 10 include
1 Jose Luciano Penido / Votorantim Celulose e Papel (VCP)
2 Chen Hongguo / Shandong Chenming Paper
3 John Faraci / International Paper
4 A J Devanesan / ARIL
5 Jose Honorio / Portucel Soporcel
6 Dr Wolfgang Palm / Palm
7 RR Verderah / BILT
8 Teguh Ganda Wijaya / APP
9 Duncan Pollard / WWF
10 Cheung Yan / Nine Dragons Paper
Notable mention at #50 was the Christian Church – the bible is the best selling book of all time. An estimated 100 million copies are sold every year.

June Figures Out for Paper Industry

The American Forest & Paper Association reported early estimates for June paper shipments in the U.S. as follows: coated mechanical shipments fell 17.7% in June, as compared to June 2008, and declined 33.5% year-to-date, as compared to the same period last year. Coated freesheet (woodfree) shipments were down 23.9% in June and 29.3% year-to-date. Uncoated mechanical shipments decreased 30.3% for the month, 29.7% year-to-date. Uncoated freesheet (woodfree) shipments dropped 16.7% in June and 15.6% year-to-date.

CEPIFINE Reports Decline in May Woodfree Paper Shipments

report from CEPIFINE
The Association of European Fine Paper Manufacturers announced a 24.3% decrease in European coated woodfree paper shipments in May, as compared to the same month in 2008. Year-to-date shipments fell 26.6%. Exports declined 43.1% in May, 46.8% year-to-date. CEPIFINE reported uncoated woodfree paper shipments were down 16.1% in May, 17.4% year-to-date. Exports, however, were up 3.5% for the month, but fell 15.8% year-to-date.

Magna Forecasts 2009 Ad Revenue Decline

Another reference on the advertising revenue for 2009-
Interpublic Group’s Magna Global, the second largest owner of advertising agencies in the U.S., has predicted that ad expenditures will fall 14% in 2009 and not recover until late 2010. (Competitor ZenithOptimedia Group, a division of Publicis Group, forecast a decrease of 10.6% for the U.S. in 2009.) Magazine advertising revenue was projected to decline 18% this year, continuing to fall at a compounded annual basis of 3.3% per year from 2009 through 2014. Magna forecast growth in direct mail, however. Though the sector is predicted to loose 11.2% in 2009, it is seen as increasing 2% annually between 2009 and 2010.

More Bad News for Coated Papers

Shipments and pricing remain depressed for publication coated papers. Most buyers report prices fell $15/cwt in June (note, May also saw $15 decline - April down too). Printers report reduction in orders BUT, also they trimmed of inventory - this should help - but year to date demand is down approximately 35%. The catalog season should help.

Magazine Ad Revenue Falls 21% in First Half

As reported by MediaWeek July 10,2009
Magazine ad revenue tumbled in the first half of 2009 as the recession continued to take its toll on marketing spending, according to new figures from Publishers Information Bureau, a service of Magazine Publishers of America.

Rate-card reported ad revenue declined 21.2 percent to $9 billion on a 27.9 percent decline in pages in the first half, reflecting declines across the 12 categories that make up more than 85 percent of total magazine ad spending.

Categories seeing the sharpest declines were finance (down 48.8 percent), auto (off 47.8 percent) and retail (down 34.2 percent).

The scant good news: within the broader ad categories, there were upticks in ad spending for certain food products; soaps and hair products, which benefited titles with a focus on lifestyle, fitness and celebrities.