Sappi Completes Acquisition of M-Real’s Coated Papers

Sappi Ltd. has successfully completed the acquisition of M-real’s coated graphic papers business for US $1.1 billion. M-real’s four coated graphic paper mills, the Kirkniemi and Kangas mills in Finland, the Stockstadt mill in Germany and the Biberist mill in Switzerland will now be part of the Sappi Fine Paper Europe operations.
The deal makes the Johannesburg, South Africa-based company the world's largest producer of coated fine paper with 23% of the world’s market share (15% for publication coated papers).

Printing and Writing grades Update to Market

Notes from Deutsche Bank - Equity Research
Weak economy causing low demand and high producer inventory have yielded a decline in shipments of 6.4% year to date (down 20.1% Nov07 vs. NOV 08). January and February are traditionally slow months - so not much hope forecasted for next several months.
Virtually all the major uncoated free sheet (UFS) producers are cutting production to manage inventory. International Paper's announced target is 60K tons of uncoated downtime in 4Q. Domtar (#1 player) announced 4Q downtime of 173K tons and Boise (#3 player) is idling 2 machines at International Falls and significantly downsizing its St Helens, OR mill. More
recently, Glatfelter and Mohawk Fine Papers have also announced downtime.
Coated groundwood (LWC) shipments took the sharpest hit --- down 34.2% y/y in November. However, mill inventories have jumped from 110K tons to 252K tons over the past 12 months. Verso Paper recently announced 100K tons of downtime in 09H1. Earlier, Newpage, announced 40K tons of downtime in 4Q08 in addition to the earlier announced closures of Niagara, WI and Rumford, ME mills.
The groundwood coated publication price decline accelerated in December --- down $35-70/ton.
Meanwhile, list prices for Uncoated Freeshhet have held up better --- down between $5-15/ton.

Consumers Union Grabs Gawker's Consumerist Site

Adding to its growing portfolio of print and online properties, Consumers Union, the publisher of Consumer Reports magazine, bought watchdog blog Consumerist.com from Gawker Media

What Happened to Pulp Market?

As we approached 2008 and beyond the first half of the year, pulp prices continued a steady stream of price increases. Suddenly, we entered the forth quarter, and BOOM. Pulp inventories were on the rise, manufactures were curtailing production, and inventory surged from 29 days in September of 2007 to 44 days in September of 2008. Hardwood inventory increased to unheard of levels. 2009 comes along with the worst economic downturn in modern history and a new year does not appear to be reversing these trends. USA prices for NBSK saw a high of $880/ton. Challenge today is if prices decline to below $600/ton – this will be below manufacturing cost for the less efficient mills.
FOEX provided the following chart for monthly NBSK ‘list pricing’
June $880
July $890
August $887
September $873
October $849
November $823

DIP Burrows Paper mill under the Hammer

as reported by, Paper Industry Magazine
Can-Am Machinery has been retained to sell the fixed assets of the Burrows Paper Corp. 120-ton/day market DIP mill in Little Falls, NY.
The plant was built in 1994 with mostly Voith equipment and ran successfully producing excellent yield, brightness and total efficiency.
The equipment is reported to be well maintained and in running condition, and will be sold in whole or in part.

N.A. Printing/Writing Paper Shipments Fall

Total printing and writing paper shipments to North America fell 22.8% in November compared to the year-ago period, according to the Pulp and Paper Products Council (PPPC). Total shipments to N.A. fell 7.8% year-to-date. Coated mechanical shipments plunged 32.7% compared to November 2007, while coated freesheet shipments dropped 21.8% year-over-year.

Green Fades to Black

Eco-themed issues victim of slumping ad market
-By Lucia Moses

Two years ago, spurred on by a groundswell of interest in all things eco-friendly, green-related content was sprouting everywhere. For magazines, that meant a flurry of green-themed issues. But the economic downturn, coupled with cooling consumer interest, have some publishers pulling the plug on those products.
Among titles holding off on green issues in ’09 are Condé Nast’s Domino, Time Inc.’s Sunset, Mariah Media’s Outside and indy Discover. Active Interest Media’s Backpacker, already seeing the concept as tired, did not produce a second global-warming issue this year. “My sense is the idea of doing a green issue has been done so much it feels anachronistic,” said Backpacker editor Jonathan Dorn.
Domino’s 2008 and 2007 green issues sold below average, even though vp/publisher Beth Brenner pointed out that March is not a strong month for single-copy sales.
Not all green issues bombed. Outside sold above average on stands, while this year’s special from Condé Nast’s Vanity Fair, featuring cover subject Madonna, sold 370,000 copies at stands, only slightly below average.
Editors insist readers are still interested in green themes, although some said they are evolving coverage in response to green’s maturation. Hachette Filipacchi Media’s Elle—which made a statement by publishing its green issue on recycled paper this year—plans a water-themed issue in ’09, reminiscent of the blue issue of Rodale’s Women’s Health in 2007
Ending their green issues could serve a PR purpose for magazines, given that the very practice of publishing on paper is seen as at odds with protecting the environment. Still, some maintain that while tips for sustainable living are well-worn, readers continue to want targeted green content.

Pulp Mill Back on Line

The former Pope and Talbot pulp mill in Nanaimo, BC was restarted and under the new name of Nanaimo Forest Products. Its former employees, Pioneer Log Homes, Sampson Group, and Totzauer Holdings purchased the mill for C$13.2million. The mil secured 5 year agreements from end users for 100% of production.

Update on Packaging Market

Mark Wilde of Deutsche Bank reports on trip to packaging companies

First, Mr. Wilde considers packaging more recession-resistant than paper.
Volume drops for shipments as much as 10-15% were confirmed with Europe experiencing weaker demand than USA, also Russia and China shipments down. While pressure on prices is alive and well, raw material and energy costs have also fallen.

Mohawk Announces New Renewal Grade

Mohawk Paper Mills just introduced a renewable folding board for the luxury packaging market. The grade is made of 80% post consumer waste and is available in an 18-point board. The items are stocked in 28X40” sheets and is competitively priced.
Paper.com markets this grade for end uses such as cosmetics, jewelry, and beauty products.

The Comics are affected with fewer Newspapers

New York Times recently ran an article outlining the effects of fewer newspapers being distributed. With the trend of declining newspapers, the economic challenges effect many including comic strips. In the past, comics relied almost exclusively on newspapers to print and distribute the ‘funnies’. Syndications for comics are beginning to promote the web as a new means to read the comics. New sites such as Comics.com and the GoComics websites have become very popular.

Overall Paper Prices Continue in Free Fall

December continues to witness paper prices declining. Examples include $10-15/ton in newsprint, $5-15/ton for uncoated papers (freesheet), $25-70/ton in coated papers, and $10-20/ton in containerboard. Shipments and demand are very weak which continue to place strong downward pressure on prices. Look for additional downtime and possibly more consolidation and machine closures.

Containerboard Continues Slide

Even with our previously reported status of manufacturing curtailment, inventories were not reduced, infact, reports outline a slight increase. Obviously, demand continues to be weak. Lower volumes continue to place pressure on mills to reduce price beyond the $10-15/ton discount witnessed earlier in December.
November box shipments declined nearly 14.5% compare to November of 2007, this in spite of operating rates of only 85%. Look for more challenges as we enter 2009 and beyond.

Bonnier Acquires Scuba Diving, Accompanying Site

In a generally dormant market for magazine sales, Bonnier Corp. continues to buy. The publisher recently announced its acquisition of Scuba Diving and its companion Web site from enthusiast publisher F+W Media Inc. for undisclosed terms.

Paper Prices for Printers

PIA/GATF just reported that paper prices (although currently depressed) had increased steadily from the first quarter of 2006 to first quarter of 2008. The study confirmed average price increases as follow 4Q06 +4.35%; 1Q07 + 4.96%; 2Q07 +5.39%; 3Q07 +5.47%; 4Q07 +5.77%; 1Q08 +6.70%; 2Q08 + 8.93%.
If paper accounts for 22% of the printer's sales, these increases significantly affected overall costs.

Box Makers Demand Decreases

As reported from Purchasing Magazine
Corrugated box demand is down so linerboard sales—and prices—are down and producers are reducing production. In fact, North American containerboard downtime is now expected to be nearly 13% of industry capacity—or around 1.25 million tons— in the fourth quarter. Producers already have responded to unusually weak demand for corrugated by cutting unbleached kraft linerboard production by 2.5% through October this year.

Since more than two thirds of the downtime is expected to take place in December, the latest production tally by the PPI Pulp & Paper Week subscription newsletter suggests that containerboard mill operating rates for December could drop to the mid-70% range. Yet, that’s still somewhat of a moving target because more mills are expected to take curtailments over the period between Christmas and yearend.

KromeKote now available in FSC Certification

From Smart Paper Release
Smart Papers, manufacturers of Kromekote True-Photo, delivers outstanding photo and image reproduction, creating visuals that pop off the page. A brilliant 92-bright white shade also produces intense colors and maximum image resolution. The ultra-glossy, recycled-content digital papers are unmatched in the global marketplace. They combine the quality and feel of traditional photo paper with the unsurpassed printability of triple cast-coated Kromekote.

This new line of new archival and acid-free papers enable digital press owners to profitably meet the growing demand for custom short-run photos and photo applications like greeting cards, direct mail, personalized calendars and much more. The papers are guaranteed on HP Indigo, Xerox iGen, Kodak NexPress, Canon, Konica-Minolta and all production-rated laser printers. The papers are FSC certified and feature 30% post-consumer fiber.
SMART Papers is the only North American premium papermaker now in the process of becoming 100% fossil-fuel free, converting all of its energy production to 100% carbon-neutral waste wood biomass.

The website, Paper.com, markets papers such as Kromekote that are RIT-certified and available in 8- and 10-point caliper, 18x12 size and are sealed in 250 sheet packs, 1000 sheets per carton. All Kromekote True-Photo sheets are acid free, archival, process and elemental chlorine free.
Other applications include photo books, advertising materials, brochures and business cards.

International Paper to Reduce Work Force

International Paper Co. announced its plans to eliminate 1,000 to 1,500 salaried jobs by the end of next year. The company said the cuts are part of a cost-cutting measure that would result in savings of $150 million to $200 million. International Paper has just over 50,000 employees worldwide.

Tribune Company Files for Bankruptcy

The Tribune Company, a struggling television and newspaper operator and owner of Los Angeles Times and Chicago Tribune, filed for bankruptcy. The owner Sam Zell sited the recession as well as a shift of advertising dollars and readers to the internet as prime reasons for the company's recent trouble.

Market Downtime Hits Paper Companies Hard

It appears the literally every producer of paper products is taking significant market downtime in the forth quarter of this year in an attempt to control inventories. In many cases, downtime could amount to 10-15% of capacity. Although this downtime is expensive, if it avoids a sharp drop in industry prices, it looks like the right trade-off.

Newsprint Pricing Officially Reduced

The largest producer of newsprint, AbitibiBowater, rescinded $20/ton price increase originally announced for December due to poor demand. Consumption continues to decline with the increase of the internet and less advertising.

Market Pulp Continues Downward Trend in Price

List price for NBSK market pulp fell $45/ton this month to $750/ton. This yields a total reduction of $135/ton since the peak in August. Further discounts are reported for large spot orders. Producer inventories continue to increase (now at 47 days).

UPM Signs 10-Year Deal with Baltimore Port

UPM has signed a contract with the Maryland Port Administration, which guarantees that they will ship at least 320,000 tons of forest products into the port of Baltimore over the next 10 years. The agreement will result in 120 jobs and $2.7 million in tax revenue, according to the state. The contract signing took place in a $32 million portside warehouse that Maryland built for UPM.

International Paper to "Indefinitely" Close Pulp Mill in Bastrop

International Paper announced the indefinite closure of its pulp mill in Bastrop, LA. The decision to idle the 100 percent pulp mill operation is because of the continuing decline in pulp demand from its customers worldwide coupled with a weak economy across the globe. The shutdown process will begin immediately. The mill is currently taking downtime due to a lack of pulp orders.

Market Pulp

NBSK market pulp prices fell $45-50/ton to $795/ton in November. The list price is now down $90/ton since peaking in August. Even so, the gap with spot prices has widened significantly. Spot prices are reportedly $550/ton in the US and $500/ton & below in China.
Demand has been off sharply over the past 3-4 months - especially in Asia. As a result, producer stocks have piled up - rising to 44 days of supply from 29 days a year earlier.

U.S. Paper Production Down 9.3% in October

The latest statistics from the American Forest and Paper Association (AF&PA) shows that total paper production in the U.S. fell 9.3% in October from a year ago. Total U.S. paper production is down 3.5% year-to-date. Total U.S. printing and writing paper shipments were down 12.4% in October from a year earlier and down 5.0% year-to-date.

AbitibiBowater to Curtail Production

AbitibiBowater Inc. said it plans to idle or permanently close at least four paper mills and lay off approximately 1,100 employees as a result of the closures. The company will permanently close the Grand Falls, Newfoundland and Labrador newsprint mill by the end of the first quarter of 2009, removing 205,000 tons from the marketplace. AbitibiBowater will also permanently close the Covington, Tennessee paper converting center by the end of 2008, representing 70,000 tons of coated grades. The production curtailment includes the immediate idling of the Alabama River newsprint mill in Alabama and two paper machines in Calhoun, Tennessee. In all, the capacity reductions include approximately 830,000 tons of newsprint, 110,000 tons of specialty grades and 70,000 tonnes of coated grades.

Kraft Paper Market

The Kraft Paper market has been in a steady decline, mainly due to competition from plastics. The market has declined from a peak of 5million tons in the early 1970s to current demand of approximately 1.6million tons. The manufacturers have responded by shuttering equipment. Although, near term, experts believe this market could increase somewhat, given recent bad publicity on inability to recycle plastics; however, the trend for demand is still estimated to decline.
Top North American Producers by name, capacity and market share as follows
Longview Fiber 333,000 13.5%
KapStone 310,000 12.5%
Georgia Pacific 260,000 11%
Smurfit Stone 180,000 7.5%
Delta Kraft 180,000 7.5%
Tolko Indust. 180,000 7.5%
Canfor 155,000 6.5%
West Fraser 135,000 5.5%
Cascades 100,000 4.5%
Intern'l Paper 60,000 2.5%

Wausau Mill in New Hampshire Sold

Strong industry talk that the Wausau Paper mill in Groveton, NH was sold for $100,000. The mill will NOT reopen as a paper mill.

Book Publishers feel the Pressure

Many of the big publishers in the book business are trimming costs and reducing staff because of poor book sales. The New York Times reported such companies as Simon and Schuster, Houghton Mifflin Harcourt, Bertesmann, Doubleday and Bantam Dell all making difficult choices and stating it is the worst retailing environment in memory. Although book sales through September were actually up slightly, October and November witnessed deterioration in sales.

Fun Facts on Paper and Recycling

-More forests exist today than 100 years ago
-SFI (Sustainable Forestry Initiative reports that it has 153million acres certified which represents 13% of all world forests
-Only 25% of forested trees are destined for a pulp and paper mill.
Every year, the paper industry becomes more efficient with energy consumption, forest management, and Carbon neutrality.
-Paper Industry is four largest consumer of energy of all industries in USA
-Mills have all engaged in logistical software for most efficient routing of trucks
-Many mills consume at least a portion of their energy from alternative sources.

USA Post Office Reports Loss

The USPS has reported a net loss of $2.8billion for fiscal year ending September. The service blamed this loss on the economic slow down, additional costs, and the gradual popularity of the Internet. 202.7billion pieces were mailed, this represents a decline of 9.5billion pieces or 4.5% from 2007. In that the majority of mail consists on paper in some form, also translates into less paper demanded.