Newsprint prices boosted by $60/metric ton

by Tom Stundza
There has been an estimated 10.5% drop in U.S. newsprint consumption so far this year, yet list prices for the benchmark publication paper product are at $720/metric ton, a 12-year high. And now, the largest North American supplier, AbitibiBowater, has told customers the Montreal-based firm plans to raise prices by $20/month for the rest of the year, a move that would take newsprint prices to $780/metric ton in December.

Newsprint is used to print newspapers, other publications and advertising material. North American newsprint shipments of 624,000 metric tons in June were 12.5% lower than a year ago and in line with an overall demand drop of 12.3%, the Pulp and Paper Products Council has reported to its members. Production at midyear was down 10.7% year-over-year and 9.2% year-to-date. Overseas shipments also were reported down so that North American mill inventories of 334,000 metric tons at the end of June were 26% lower than a year earlier.

However, AbitibiBowater CEO David Paterson expects higher newsprint prices based on growth in newsprint exports. “Clearly, we'd expect the second half of 2008 to be better than the first half," Paterson tells reporters at the Reuters Paper Summit. Still, Paterson admits the company is facing resistance to price increases in North America and it is seeing an acceleration in demand declines due to its earlier pricing actions. 
Purchasingdata.com, for example, has yet to show transactions at $720 with the July average of $710 and the August average at $707.