Wednesday, March 28, 2007
Slow Down in Advertising for magazines slows Down Paper Sales
The number of advertising pages in all the major publications remains flat, or slightly on the decline. As a result, magazines are producing smaller magazines and thus less paper is consumed. This mainly effects the groundwood containing sheets.
Pulp Prices up yet again
Pulp prices are continuing their steady upward march this year, tightening margins for paper and paperboard producers who have been having trouble getting sales price increases for their products.
Now, a handful of North American pulp makers have told customers they want further price increases on softwood kraft and fluff grades in April. The list price boost of softwood kraft grades is $20/metric ton; the proposed hike on fluff is $30/metric ton.
So, the proposed list prices next month will be $810/metric ton for northern bleached softwood kraft. Buyer surveys show that NBSK averaged $770 in the spot market, as compared with a list of $790. The new list will be $770 for southern bleached softwood kraft; this month, SBSK has averaged $735 versus a list of $750. Meanwhile, in fluff pulp, suppliers want to bring their list price to $820/metric ton from $790. This month’s spot has averaged $780.
Now, a handful of North American pulp makers have told customers they want further price increases on softwood kraft and fluff grades in April. The list price boost of softwood kraft grades is $20/metric ton; the proposed hike on fluff is $30/metric ton.
So, the proposed list prices next month will be $810/metric ton for northern bleached softwood kraft. Buyer surveys show that NBSK averaged $770 in the spot market, as compared with a list of $790. The new list will be $770 for southern bleached softwood kraft; this month, SBSK has averaged $735 versus a list of $750. Meanwhile, in fluff pulp, suppliers want to bring their list price to $820/metric ton from $790. This month’s spot has averaged $780.
Appleton Plans Thermal Paper Capacity Increase
North America’s largest thermal paper producer recently announced plans to increase capacity. They will spend $100million on a new coater for making thermal papers. Appleton believes the growth in two-sided thermal paper will continue. This type of paper is used for casino studs, point of purchase receipts, ballot box voting and deli stickers. Appleton Paper also produces carbonless papers.
Paper.com has Appleton's complete grade offerings, including all the entire family of NCR carbonless items.
Paper.com has Appleton's complete grade offerings, including all the entire family of NCR carbonless items.
Uncoated Papers will increase in Price
Demand for uncoated Freesheet continues to strengthen and with supply curtailment, producers will surely begin to increase pricing. Cost pressure also continues with energy prices staying high and increased pricing for pulp and chemicals. The producers of Text and Cover grades have already announced increase in price – lead by Mohawk, Neenah/Fox River, and Wausau.
Paper.com is the world's largest paper website, supplying nearly every mill's uncoated text and cover grade.
Paper.com is the world's largest paper website, supplying nearly every mill's uncoated text and cover grade.
North American Newsprint Producers continue to suffer
Pricing continued its downward spiral for January, February and so far this month (March)– witnessing a price decrease of $30/ton. Pricing now on 27.7lbs newsprint (typical weight) is $665/ton. This market continues to be beaten up by the internet.
Sluggish Box Demand
USA Box shipments showed slower than normal demand so far this year. 42lbs unbleached kraft linerboard remains at $510-520list with the bigger converters paying more like $480-490. Box sales are generally an excellent barometer for the economy.
Pricing indicators – Rolls – March 2006
30lbs Newsprint ………… $625/t – List Price – larger end users pay less
27.7 Newsprint …………... $665/t
#3 60Lbs CFS……………. $890-920/t
#5 $40lbs LWC ………… $755-780/t
50lbs UFS ………………..$800-820/t
27.7 Newsprint …………... $665/t
#3 60Lbs CFS……………. $890-920/t
#5 $40lbs LWC ………… $755-780/t
50lbs UFS ………………..$800-820/t
Profile of Coated Freesheet Grades
Coated Freesheet (CFS), also called Woodfree, are coated grades at the premium end of the publication grade spectrum and are used for high end catalogues, magazines, catalogues, annual reports, and advertising. Papers are rated according to gloss levels (matte, dull, gloss, cast coated), brightness levels (85-96); basis weight ranges from 50 -100lbs. Production capacity in North America is 4,560,000 tons - 420,000tons lower than last year because of machine curtailments. Operating rates in 2005 were only 88% slight improvement was witnessed in 2006 to 93%. We also note Europe producers forecast curtailing 560,000 tons in 2007.
We believe Coated Freesheet demand will continue to be sluggish.
Top North American Coated Freesheet producers
Mill Capacity Mkt Share
SAPPI 1,400,000 28%
StoraEnso 1,340,000 27%
NewPage 730,000 14.5%
Verso 560,000 11%
Tembec 310,000 6%
We believe Coated Freesheet demand will continue to be sluggish.
Top North American Coated Freesheet producers
Mill Capacity Mkt Share
SAPPI 1,400,000 28%
StoraEnso 1,340,000 27%
NewPage 730,000 14.5%
Verso 560,000 11%
Tembec 310,000 6%
Sunday, March 11, 2007
AF&PA survey says paper/board capacity declined in 2006
The American Forest & Paper Association (AF&PA) released its 47th Annual Survey of Paper, Paperboard, and Pulp Capacity.
According to the survey, U.S. paper and paperboard capacity continued to edge lower in 2006, declining 1.6% to 97.7 million short tons. U.S. paper and paperboard capacity contracted 4.7% in the period from 2000 through 2006 or at an average annual rate of 0.7%.
Looking forward, the survey indicates that paper and paperboard capacity will decline another 0.7% in 2007 and then re-expand nearly one percent during the subsequent two years—rising 0.7% in 2008 and 0.2% in 2009.
According to the survey, U.S. paper and paperboard capacity continued to edge lower in 2006, declining 1.6% to 97.7 million short tons. U.S. paper and paperboard capacity contracted 4.7% in the period from 2000 through 2006 or at an average annual rate of 0.7%.
Looking forward, the survey indicates that paper and paperboard capacity will decline another 0.7% in 2007 and then re-expand nearly one percent during the subsequent two years—rising 0.7% in 2008 and 0.2% in 2009.
Wednesday, March 07, 2007
Summary of UNCOATED FREE SHEET
As reported, Uncoated free sheet prices were flat in February. The market for UFS is reasonably tight, with pricing on the margin starting to trend upward. The issue over the next few months will be supply reductions - paper manufacturers reducing capacity. It is expected that some fall-out from the Domtar/Weyerhaeuser combination. In addition, during the second quarter of this year, International Paper will idle its 350,000 Pensacola, FL UFS machine in preparation for a conversion to containerboard. In total, 500-600,000/tons of capacity could be idled. European & Japanese producers have both announced pricing initiatives in the past 2 weeks. European UFS prices are reportedly well above US prices.
Update of COATED FREE SHEET
Most producers have announced $50-$60/ton hikes on lower grade coated free sheet for March. APP "led"
the increase, while other offshore producers like Lecta, Sappi, and Stora quickly followed. Rising pulp costs and capacity reductions are both helping to firm the market. However, the biggest issue is the potential for 70-100% duties on Asian imports. Preliminary finding from the Commerce Dept is due out in early April. Domestic shipments rose 3% in January.
the increase, while other offshore producers like Lecta, Sappi, and Stora quickly followed. Rising pulp costs and capacity reductions are both helping to firm the market. However, the biggest issue is the potential for 70-100% duties on Asian imports. Preliminary finding from the Commerce Dept is due out in early April. Domestic shipments rose 3% in January.
Neenah Paper Closes Paper Plant
Neenah Paper, a maker and distributor of specialty paper, said Wednesday it will close a plant it acquired when it bought Fox Valley Corp., parent of paper maker Fox River Paper Co.
The plant is located near Great Barrington, Mass. Last month the Atlanta-area company said it would buy Fox River, which has a total of 750 employees and four manufacturing plants, including 140 at the plant that is closing.
Neenah Paper will take a one-time cash charge of about $3 million for severance and other costs related to the closure.
The company said it expects ongoing annual savings of about $5 million from the deal, but that will not be realized immediately due to product transition costs in 2007.
"Closing the mill allows us to eliminate costs and improve margins while still serving the needs of key customers," said Sean Erwin, company chairman and chief executive. "Selected products made at Housatonic will be produced at our other sites, where we have available capacity and the ability to make these grades at a lower cost."
The plant is located near Great Barrington, Mass. Last month the Atlanta-area company said it would buy Fox River, which has a total of 750 employees and four manufacturing plants, including 140 at the plant that is closing.
Neenah Paper will take a one-time cash charge of about $3 million for severance and other costs related to the closure.
The company said it expects ongoing annual savings of about $5 million from the deal, but that will not be realized immediately due to product transition costs in 2007.
"Closing the mill allows us to eliminate costs and improve margins while still serving the needs of key customers," said Sean Erwin, company chairman and chief executive. "Selected products made at Housatonic will be produced at our other sites, where we have available capacity and the ability to make these grades at a lower cost."
Saturday, March 03, 2007
State of the Paper Industry
Notes on conference call held by Mark Wilde - Deutsche Bank - Equity Research
Mr. Wilde firmly believes markets for commodity grades are tightening. Three primary causes 1- supply side reduction in both North America and Europe; 2 – cost pressure such as gradual increases of fiber, chemicals, and transportation as well as recycled pulp; 3 – Demand in both Europe and Asia improving (not the case in North America). Market that is experiencing best recovery is containerboard - the January price increase of $40/ton is firmly in place; producers have adjusted production downward to maintain a tight market; and demand actually trending up.
Uncoated Freesheet grades have witnessed a 5-6% decline in capacity – look for more shuttered equipment for nonintegrated mills (mills that do not produce pulp) – thus tightening supply. Also, two big events – International l Paper transferring 350,000 tons of uncoated paper to now make packaging grades; and merger of Weyerhaeuser and Domtar they WILL rationalize equipment with closures. Also, Canadian dollar continues to be week and inventories in USA are historically low.
Accordingly, Mark Wilde forecasts slight tightening and a price increase in March / April for uncoated Freesheet.
He was not as bullish of coated papers. Although Europe has decreased imports into USA – Asia has increased. The publication-coated grades (LWC – groundwood) will continue to experience poor demand given the softness in end user markets – magazine, inserts, direct mail, and catalogues.
Mr. Wilde firmly believes markets for commodity grades are tightening. Three primary causes 1- supply side reduction in both North America and Europe; 2 – cost pressure such as gradual increases of fiber, chemicals, and transportation as well as recycled pulp; 3 – Demand in both Europe and Asia improving (not the case in North America). Market that is experiencing best recovery is containerboard - the January price increase of $40/ton is firmly in place; producers have adjusted production downward to maintain a tight market; and demand actually trending up.
Uncoated Freesheet grades have witnessed a 5-6% decline in capacity – look for more shuttered equipment for nonintegrated mills (mills that do not produce pulp) – thus tightening supply. Also, two big events – International l Paper transferring 350,000 tons of uncoated paper to now make packaging grades; and merger of Weyerhaeuser and Domtar they WILL rationalize equipment with closures. Also, Canadian dollar continues to be week and inventories in USA are historically low.
Accordingly, Mark Wilde forecasts slight tightening and a price increase in March / April for uncoated Freesheet.
He was not as bullish of coated papers. Although Europe has decreased imports into USA – Asia has increased. The publication-coated grades (LWC – groundwood) will continue to experience poor demand given the softness in end user markets – magazine, inserts, direct mail, and catalogues.
Newsprint market
The official newsprint price fell an additional $10/ton, after falling $35/ton over the last few months. Without more capacity
rationalization, prices could fall even further. The market is sloppy and needs a fix; it may come by a "merger of equals" between Bowater and Abitibi. However, we think an even better catalyst would be consolidation among 2nd & 3rd tier players. One other issue to watch: ONP (Old Newspaper =recycle fiber) costs. While the trades are showing prices up only about
$5/ton in February, our brokerage contacts are pointing to increases as large as $40/ton. This would have big implications for many producers, especially recycled-heavy producers.
rationalization, prices could fall even further. The market is sloppy and needs a fix; it may come by a "merger of equals" between Bowater and Abitibi. However, we think an even better catalyst would be consolidation among 2nd & 3rd tier players. One other issue to watch: ONP (Old Newspaper =recycle fiber) costs. While the trades are showing prices up only about
$5/ton in February, our brokerage contacts are pointing to increases as large as $40/ton. This would have big implications for many producers, especially recycled-heavy producers.
U.S. Cut Size Paper Market Forecast and Distribution Channels: 2005-2010
InfoTrends’ new forecast on U.S. cut size (copy paper) paper distribution channels indicates that while paper merchants, office superstores, and contract stationer divisions will remain power houses for moving paper, the Internet, computer superstores, and mass merchandisers are expected to gain more presence as a source for paper
General merchandise stores and mass merchandisers will increase the amount of paper that they sell due to the sheer number of stores and the convenience of being able to purchase paper along with other goods.
The Internet and companies such as Paper.com, however, is the only channel expected to show double-digit growth in terms of cut size tons distribution between 2005 and 2010. In 2010, 73% of all cut size tons will be sold through non-retail channels. This is largely because supply chain management is an area of proficiency for non-retail channels, especially when it comes to delivering truckloads and pallets of paper.
Quick printers have also emerged as a source of cut size paper. As a complement to their traditional business, quick printers including FedEx/Kinkos are emphasizing their ability to capture supplies business at retail and on-line due to their number of store locations and access to product. Staples is also opening stand-alone quick printer locations that stock a limited number of office products SKUs including paper.
Cut size paper is a low margin, high volume market that is very competitive and price sensitive. Heavy cartons of paper can be expensive to move efficiently, and this has forced channels such as office machine dealers, forms distributors and manufacturers, and small storefronts to reconsider their roles in selling paper.
General merchandise stores and mass merchandisers will increase the amount of paper that they sell due to the sheer number of stores and the convenience of being able to purchase paper along with other goods.
The Internet and companies such as Paper.com, however, is the only channel expected to show double-digit growth in terms of cut size tons distribution between 2005 and 2010. In 2010, 73% of all cut size tons will be sold through non-retail channels. This is largely because supply chain management is an area of proficiency for non-retail channels, especially when it comes to delivering truckloads and pallets of paper.
Quick printers have also emerged as a source of cut size paper. As a complement to their traditional business, quick printers including FedEx/Kinkos are emphasizing their ability to capture supplies business at retail and on-line due to their number of store locations and access to product. Staples is also opening stand-alone quick printer locations that stock a limited number of office products SKUs including paper.
Cut size paper is a low margin, high volume market that is very competitive and price sensitive. Heavy cartons of paper can be expensive to move efficiently, and this has forced channels such as office machine dealers, forms distributors and manufacturers, and small storefronts to reconsider their roles in selling paper.
Pulp and Paper Prices not in Sync
Wood pulp producers want to boost prices but paper makers are skeptical. That’s because overall demand for printing and writing papers in North America fell 3.2% in January compared with January 2006, according to Canada's Pulp and Paper Products Council. Total shipment levels were down 3.4% year-over-year at 2.26 million metric tons.
Pope & Talbot this week announced a $30/metric ton price increase for northern bleached softwood (NBSK) grades of market pulp—but pushed the effective date to April. The new North American list price would be $820/metric ton. Earlier, competitor Weyerhaeuser announced plans to hike NBSK by $20 in March to $810.Despite a $790 list price in February, buyers report NBSK sold for $745.
Meanwhile, International Paper, Georgia-Pacific and Weyerhaeuser separately informed U.S. paper-making customers they plan to raise their southern bleached softwood Kraft pulp prices by $20/metric ton in March. The current list price of SBSK is $750 but it sold on average for $720 in February.
Pope & Talbot this week announced a $30/metric ton price increase for northern bleached softwood (NBSK) grades of market pulp—but pushed the effective date to April. The new North American list price would be $820/metric ton. Earlier, competitor Weyerhaeuser announced plans to hike NBSK by $20 in March to $810.Despite a $790 list price in February, buyers report NBSK sold for $745.
Meanwhile, International Paper, Georgia-Pacific and Weyerhaeuser separately informed U.S. paper-making customers they plan to raise their southern bleached softwood Kraft pulp prices by $20/metric ton in March. The current list price of SBSK is $750 but it sold on average for $720 in February.
Abitibi and Bowater Merge
As reported in past, the two newsprint producing giants, Abitibi and Bowater have agreed to combine in an all stock merger of equals. The new company will be called AbitibiBowater and will have revenues of nearly $8billion. This new company will be the largest newsprint and publication paper producer in North America.
PIA/GATF report on Survey of Printing Industry
According to printing companies recently surveyed, the most significant issue currently challenging the company was labor and staffing. This was followed by competitor’s pricing, raising cost of paper, health insurance, and declining demand.
The survey also revealed printers that focused on specialty printing grew the most(+8.6%) in 2006 followed by Business Forms (+5.7%), General Commercial Printers(+4%), Greeting Card Printers(+4%), and Newspaper (+2%).
Last comment survey reported included traditional ‘ink based’ printers hold @75% of the market but is decreasing due to an increase in demand for digital printing.
The survey also revealed printers that focused on specialty printing grew the most(+8.6%) in 2006 followed by Business Forms (+5.7%), General Commercial Printers(+4%), Greeting Card Printers(+4%), and Newspaper (+2%).
Last comment survey reported included traditional ‘ink based’ printers hold @75% of the market but is decreasing due to an increase in demand for digital printing.
News on Tissue Paper
You may recall that Kruger purchased all the tissue assets of Scott Paper in 1997 and this included a 10 year licensing agreement for very popular consumer trademarks such as Scott, Cottenelle, and ScotTowels. Accordingly, Kruger has announced names changes for these best selling tissue brands; Cottonelle will become Cashmere; ScotTowels will become SpongeTowels; Scotties, and Purex, and Viva will all become White Swan.
Domtar Shelving Maine Paper Machine for March
Domtar’s Woodland Paper mill will be idling a paper machine during the entire month of March, a move that could impact as many as 90 employees, according to the Bangor Daily News.
Company officials told the paper that the action is being prompted by market-related conditions. The machine is slated to be refired on March 29.
Company officials told the paper that the action is being prompted by market-related conditions. The machine is slated to be refired on March 29.
Pulp Prices Increase …. Again
Domtar became the fourth major NA producer to announce a $20/ton price hike for Pulp for March. The hike would make NBSK $810/ton and SBSK $770/ton. Higher pulp prices may lead printing & writing paper producers to charge higher prices.
Subscribe to:
Posts (Atom)
