Friday, January 30, 2009

Printing and Writing Paper Shipments Decline

Total North American printing and writing paper shipments dropped 21.6% in December to 1.675 million tons, according to the Pulp and Paper Products Council (PPPC). Total N.A. shipments for all of 2008 were down 8.7% at 24.14 million tonnes. Coated mechanical shipments declined 3.9% in December to 280,000 tonnes, and fell 16.3% to 4.18 million tonnes for the full year. Coated freesheet shipments dropped 28.0% to 263,000 tonnes and were down 9.2% to 4.15 million tonnes in the 12-month period.

NewPage Reduces Workforce in Rumford

NewPage Corp. will permanently let go 100 hourly employees and 30 salaried people or 13%.
The Rumford mill has higher costs than other NewPage mills around the country. 

 This staffing reduction is one action among many the mill is taking as well as additional initiatives to address the recent cost inflation in raw materials, wood, chemicals and energy. In other recent news, the No. 12 machine went down for a week on Jan. 19, then went back on stream Tuesday. The No. 15 machine is down now, due to be back on stream next week. The No. 10 machine then will go down for a week. 


The central NewPage office in Miamisburg, Ohio, issued a downtime release last week that said 150,000 tons of product would be reduced during the first quarter of 2009. All 10 NewPage mills are expected to be affected by the product reduction. Other mills are located in Kentucky, Maryland, Michigan, Minnesota, Wisconsin and Nova Scotia.

Thursday, January 29, 2009

AbitibiBowater Announces 1Million Ton Capacity Reduction

We have reported on the various announcements throughout the 2H08 with AbitibiBowater curtailing production. Adding up all the actions results in nearly 830,000 tons of newsprint, 110,000 tons of specialty grades and 70,000 tons of coated publication grades – all removed from the marketplace through beginning of 2009. We note, AbitibiBowater is the largest producer of newsprint and groundwood specialties in North American.

Reader’s Digest Lay Off

Reader’s Digest Association said it would eliminate 8 percent of its overall workforce of 3,500, or approximately 280 employees. Management reported that they have no immediate plans to close any of their USA publications.

Recent Pulp Mill Closures

A few notable shuttered pulp mills
Botnia – Kaskinen, Finland – BHK/NBSK 450,000tons
Buchana Forest – Terrace Bay, Ont. Canada – BHK 125,000tons
Catalyst Paper – Elk Falls, BC, Canada – BSK 200,000tons
Borregaard – Riedholz, Switzerland – Dissolv 120,000tons
Stora Enso – Norrsundet, Sweden – NBSK 250,000tons
International Paper – Bastrop, LA – BSK 410,000tons
SSCC – Quebec – BHK 230,000tons
UPM Tervasaari, Finland - NBSK 210,000tons (sometime in 2009)
Pope Talbot - Mackenzie, BC, Canada – NBSK 200,000tons
Stora Enso – Kemijari, Finland – NBSK 250,000tons

Pulp Prices DOWN

According to FOEX, NBSK pulp index continues to trend downward, falling $7.40/ton to $608.11/ton.

Google Still King

With the advent of most paper companies introducing a website, thought I would comment on search engine platforms. Through 2008, Google accounted for 72.07% of all USA searches, according to Hitwise. Others such as Yahoo(17.79%), MSN(5.56%) , and Ask.com (3.15%) were pale in comparison. Note, the next 44 largest only accounted for 1.42%. Paper.com continues to have the most paper items on site, at nearly 40,000. The site advertises on all the major search engines, and agrees, Google is the king.

Monday, January 26, 2009

Domtar Takes Downtime

Domtar recently announced it will take a two week shutdown at its Espanola's Pulp and Paper Mill. Domtar is North America's largest producer of Uncoated WoodFree paper and sited poor market conditions as the reason to this closure.

Smurfit-Stone Files For Chapter 11

Smurfit Stone Container Corp, the largest manufacturer of containerboard and boxes in North America filed for Chapter 11 bankruptcy protection.  
This company operates 150 facilities in  North America.  Management sited the challenge of repayment of $3.5Billion in debt (nearly half the annual revenues of $7.5Billion).  The poor economy has hurt both demand for their products and created frozen credit markets to allow for restructuring its debt.  

Friday, January 23, 2009

Another Magazine Folds

Hearst announced it will fold TEEN Magazine, a magazine focused on teenage girls. Meanwhile, Garden & Gun, a regional title aimed at affluent Southerners, is threatened with folding unless it can shore up a buyer or investors in the next several days.
Teen is the smallest of and the latest in a string of teen titles to fold in recent years, following Hachette Filipacchi Media’s Elle Girl, Time Inc.’s Teen People and most recently, Hearst’s CosmoGirl!, which folded with the December issue.

Fraser Idles Paper Machines at Madawaska

Fraser Papers temporarily shut down an uncoated freesheet paper machine at its Madawaska, ME mill. The mill’s 64,000 tons/yr PM7 was closed on Jan. 19 and will remain idled until Jan. 26. Additionally, the facilities 70,000 tons/yr PM6 groundwood machine will be shut down Jan. 26 for seven to ten days.

Verso Paper Completes Paper Machine Conversion

Verso’s newly converted #1 paper machine at the Bucksport, Maine facility is currently producing trial runs. The machine had been producing coated publication paper and will now manufacture specialty papers for packaging in the food industry.

NewPage Futura Laser FSC Certified

NewPage reports their Futura Laser paper for digital applications is now FSC certified. This grade is known as an all around functional grade that online marketing companies such as Paper.com sell to digital printers.

Wednesday, January 21, 2009

Paper Producers Continue to Struggle

Preliminary figures are in for December 2008 shipments and it appears volumes are still under pressure. Printing and writing declined over 20% from December of 2007. Production for Uncoated freesheet is estimated to be down 12%; coated free- down 25%; publication coated Groundwood – down 35%; and uncoated Groundwood – down 27%. Clearly, manufacturers must evaluate curtailing even more tonnage to prevent a flood of unwanted paper. Newspaper readership, magazine ad pages, and catalogues all declining. Major printers such as RR Donnelly and Quad are taking presses off line.
Prices are following demand with Publication Coated down $35-70/ton and Uncoated Free down $5-15/ton.

State on the Pulp Market

Deutsche Bank conference on pulp (Mark Wilde and Brian McClay)
>World demand for pulp estimated to decline 5% in 2009 (Note: 2008 and estimates for 2009 call for first decline in pulp since 1970’s)
>Decline for 2008 estimated to have been nearly 3%
>Pulp prices continue to decline; Europe new list price NBSK $605 and BEK $525 – while spot prices reported to be $500 for NBSK and $400 for Hardwood.
>Softwood may recover before hardwood given reduced supply and stabilized demand. However, no recovery for either before 1H2010.
>Many pulp mills (especially Norscan) operating below cash cost.
>Current pulp inventories are higher than normal (5.2million tons); this level, after 3milion tons of shuttered equipment.

Containerboard Market Continues its Challenges

Operating rates for producers of containerboard were at its lowest level in December of 2008 at almost 70%. Demand is undoubtedly low due to the poor economy and lack of sales on products that require boxes. Capacity announcements for reducing production will be out soon.

UPS and FEDEX look to Increase Rates

Now that DHL will exit the USA domestic market, and fewer options exist for small package shipments, United Parcel and Federal Express will increase shipping rates. These two carries will inherit one million packages per day; given the DHL withdrawal and websites, such as Paper.com, have fewer alternatives. UPS recently announced one of the highest increases in history (5.90%) for ground shipments. One bright spot is the reduction of fuel surcharges, which peaked at 34.5% in September. The current surcharge (December 2008) is 6.75%. The increase in shipping fees will hurt the Internet business somewhat, adding costs in a challenging economic time.

Friday, January 16, 2009

Publications Continue to see Decrease in Advertising Revenue

Fr Media week -By Lucia Moses
Official numbers from Publishers Information Bureau (PIB) out Jan. 13 confirmed the pain that publishers have been feeling for the past 12 months. Rate-card reported ad revenue declined more precipitously as the year went on, dropping 13.8% in the fourth quarter and 7.8% for the year. Ad pages fell 17.1% in the quarter and 11.7% for the full year.

Paging falloffs were especially severe in automotive (down 25.8% for the fourth quarter and 24.3% for the year), reflecting the auto industry’s longstanding woes and causing sharp pain to men’s magazines; and financial, insurance & real estate (down 36.5% for the quarter and 17.3% for the year), which fell off a cliff in the fourth quarter amid the markets’ meltdown, to the detriment of business titles.
Also down sharply was the home furnishings and supplies category, reflecting the soft housing market; pages there fell 22.8% in the fourth quarter and 17.9% for the year.

Challenging Markets Harm Mills

Container manufacturer Smurfit-Stone announced it is evaluating Chapter 11. Most believe mill will succeed if the company can raise DIP financing. Smurfit-Stone has about $3.5 billion in outstanding debt, and has been shuttering and restructuring operations, including layoffs, as part of a multi-year plan to improve performance.
I note, AbitibiBowater also highly leveraged, like all other paper mills and is most likely also reviewing restructuring its financing.

Evergreen Packaging Plans Temporary Layoffs

Evergreen Packaging, formerly Blue Ridge Paper, announced it would lay off 138 workers from its Canton, NC mill for one week as part of a cost-cutting plan. Employees have been given the option to either take paid vacation time or file for unemployment. The plants capacity is approximately 300,000 tons/yr of uncoated freesheet and about 300,000 tons/yr of SBS.

Wednesday, January 14, 2009

Who’s Still Recycling?

At the end of 2008, demand for recycled raw material came to a stretching halt. For years, the cry for recycled product grew and end users were somewhat wiling to even pay a premium for paper made from post consumer recycled material. If fact, End users were demanding post-consumer waste be included as part of their sustainability efforts. Even though prices for recycled commodities such as corrugated, plastics, paper, steel and aluminum were at all-time highs, they were competitive with virgin materials.

Virtually overnight, prices for these recycled materials dropped 70 to 90 percent, depending on local markets. 
Recycled-plastic bottles have gone from 25 cents per pound to 2 cents per pound. Old corrugated containers have dropped from nearly $110 per ton to $10 per ton— if it can be sold at all. Inventories are building up at recycling centers, warehouses and docks. Unfortunately, many of these materials are likely to end up in landfills, where their potential for reuse will be buried. We now wonder what will happen to paper prices that contain post consumer waste.

Monday, January 12, 2009

President-elect Obama Chooses Neenah Paper for his Big Day

Neenah Paper Inc. will have an important role in the inauguration of Mr. Obama. Classic Crest eco-friendly paper was picked for the invitation to the inauguration of Barack Obama on Jan. 20. More than 1 million inaugural invitations have been engraved and printed. Neenah has also provided the paper for the last three presidents’ inaugurations.

Containerboard Market Update

Best estimates for pricing on containerboard for December shipments reflect a decrease of $10-20/ton. January forecasted to be more pressure on pricing, in fact pressure will be constant for at least first half of 2009. 2008 ended with lower operating rates (hovering around 85%) and inventories up while shipments were down. Two big machines remain down (Missoula, MT and Ontonagon, MI).

Quad Graphics Reduces Production Capacity

Quad Graphics said it would reduce production capacity due to changes in the economy. Approximately 550 jobs, or 5.6% of its domestic workforce, will be eliminated across the company’s nine U.S. plants, five of which are in Wisconsin. The cuts include both production and administrative personnel, and will be completed by the end of this week.

U.S. Commercial Printing Shipments Fall 8%

according to WhatTheyThink’s Economics and Research Center

U.S. commercial printing shipments fell 8%, or $741 million in November to $8.4 billion year-over-year. November usually marks the end of the strongest three-month period in commercial printing, however declines in newspaper inserts, magazine ad pages and catalog circulations reduced overall print demand this year.

Publication Papers Decline

Mills such as Verso (100,000tons) and NewPage (150,000tons) continue to take production of line to correct for weak demand. In spite of these efforts, publication paper prices (LWC) continue to decline (down an estimated $30-70/ton in December) and 2009 is not showing any encouraging signs. Magazine and catalog demand is weak, imported paper producers are more aggressive, advertising dollars are down, and the economy is not improving - all leading to a poor paper market as we enter 2009.
Note: NewPage will cut production by 150,000 tons system wide in the first quarter. Its mills have a total annual production capacity of approximately 4.5 million tons of paper, including approximately 3.3 million tons of coated paper, approximately 900,000 tons of uncoated paper and approximately 300,000 tons of specialty paper, according to its Web site. It is the largest coated paper manufacturer in North America, based on production capacity, with $4.7 billion in net sales.
Verso Papers is based in Memphis, Tennessee, and is a leading North American producer of coated papers, including coated groundwood and coated freesheet, and supercalendered and specialty products. Verso’s paper products are used primarily in media and marketing applications, including magazines, catalogs and commercial printing applications such as high-end advertising brochures, annual reports and direct-mail advertising . The company operates manufacturing facilities in Jay, Maine; Bucksport, Maine; Sartell, Minn.; and Quinnesec, Mich. These mills have a combined annual capacity of approximately 1.7 million tons of paper.

Pulp Continues to Slide

List prices on NBSK are estimated to be $710-720/ton going into January 2009 (down $170/ton from August). Customers for large volume, spot orders of market pulp are reporting prices ‘well below’ list price.

Thursday, January 08, 2009

Meredith to cut 250 jobs, close magazine

Meredith Corp. will eliminate 250 jobs and close its Country Home magazine in March as it suffers from sharp declines in publishing and broadcasting advertising amid the recession. The company will announce a reorganization in the coming weeks.

Tuesday, January 06, 2009

Investor group acquires Chesapeake Corp.

Chesapeake Corporation announced that it has reached an agreement to sell all of its operating businesses to a group of investors including affiliates of Irving Place Capital Management, L.P. and Oaktree Capital Management, L.P., who intend to continue operating these businesses as a going concern.
All of the Company's operations - including all of its manufacturing and distribution facilities in the U.S. and around the world - are open and operating on normal schedules, fulfilling customer orders. The Company's non-U.S. subsidiaries were not included in the Chapter 11 filing. The proposed purchase price is $485 million.

Web Passes Papers as a News Source

The New York Times reported that in 2008 40 percent of Americans received most of their news from the internet; 35 percent received most of their news from a newspaper.

NYT Web Traffic Up, Ad Revenue Down

In what can be taken as another clear sign that online advertising is not immune to the slumping economy, traffic for The New York Times Web properties continued to climb in November, while advertising revenue slipped.

Internet advertising revenues for the Times collection of Web sites (NYTimes.com, About.com, Boston.com, etc.) dipped 3.8 percent last month. That decline represents a marked difference from earlier in the year, as overall online ad revenue for the Times properties has increased by 11.6 percent year to date.

Magazines Frustrated with Economy

Facing a brutal economy in 2008, big magazine chains closed some titles deemed to have a smaller chance of survival. This translated into significantly less publication paper consumed.

At Time Inc., shelter magazine Cottage Living went by the wayside. Condé Nast folded Golf for Women and took Men’s Vogue to a twice-annual supplement of Vogue from a standalone title. Hearst Magazines shut down CosmoGirl!, Quick & Simple and O at Home.

“They’re going to have more difficulty than the multi-title companies because they don’t have [the resources] to do all the integrated and added-value programs for advertisers, and they don’t have as much ability to cut costs,” said Martin Walker, a longtime magazine consultant. Already gone: pop-culture mag Radar; Jewish Living; Harvard grad-aimed 02138; and the New York Sun.

In flusher times, publishing chains or private-equity money could toss a lifeline to struggling independents. But with the credit markets dried up, M&A activity has slowed to a crawl. For the first nine months of 2008, consumer magazine deals fell 95 percent in dollar value while newspaper deals fell 93 percent, per the Jordan, Edmiston Group investment bank, which tracks media deal-making. And with the unsettled outlook for print, publishers have been focused on digital buys, not collecting more magazines.

New York Times Sells Front Page Ads

The New York Times has begun offering display ad placements below the fold on its front page. The move is a first for the paper, who has been struggling with declining ad revenue. The Times has previously sold small-classified liners on its front page, but never display ads. The company reported that ad revenue declined nearly 21% in November.

Neenah Announces new Digital Grade

Neenah Paper introduced an improved version of its Classic Crest Digital and Classic Linen Digital Papers are now HP Indigo certified. Paper.com markets these grades in three colors, four weights, and four digital sizes.

Chicago Papers See Troubled Future

Today, only two major dailies remain in this city of 3 million, and both are in serious trouble from declining circulation, plummeting advertising revenue and a new kind of competition that threatens to make newsprint itself obsolete (the internet!).
How long can the smaller Sun-Times survive as its parent, Sun-Times Media Group Inc., loses money every quarter? And what of the dominant Tribune, whose parent Tribune Co. sought bankruptcy protection this month because of its crushing $13 billion debt? The tabloid-size Sun-Times' average weekday circulation has fallen 3.9 percent from last year, to 313,176, and its Sunday circulation has declined 4.5 percent, to 255,905. hose declines actually were better than the industry average and not as steep as the Tribune's 7.8 percent drop. But the broadsheet Tribune, with a higher proportion of sales from outside the city, still sold about 203,000 more newspapers than its rival on weekdays and 609,000 more on Sundays, despite a higher newsstand price.

Sunday, January 04, 2009

Newprint Consumption Down, Down, Down

Consumption at US dailies fell -20.4% in November (-15.6% YTD). Total
US Consumption, a somewhat broader measure, fell -18.0% in November
(-13.3% YTD).
The competition from other media channels (internet) continues to plaque circulation and decline for the newspaper industry.

Most of the producers have announced downtime through the balance of the last quarter of 2008 and for 2009 ---
AbitibiBowater (#1 player) has announced 830,000 tons of production
cutbacks for 2009 (17% of its capacity) with 590,000tons for beginning of 2009. Also, additional downtime of 21,000 tons at its Grenada, MS mill for January. White Birch (#2 producer in North America) has announced 50,000 tons of downtime for first quarter of 2009.

Miraculously, newsprint manufacturers have managed to keep inventories in reasonable balance. Measured in terms of "days of supply", newsprint inventories at the US dailies stand at
47 days of supply (627,000 tons). (Note: normal inventory for now is 40-44 days).

Recall that newsprint has increased $215/ton from $560/ton in October of 2007 to $775/ton this November. Although, newsprint prices slipped $10/ton to $765/ton in December. Producers were blessed with decline in key input costs (fiber, energy, and transportation costs).

Xerox Markets Erasable Paper

We previously reported on the research and development of a new paper that Xerox for working on late last year. Recently, the company showed an experimental sample of this ‘erasable grade’ to the public. The paper is designed to be printed on repeatedly – with the objective of reducing paper use in the office. The sheet contains a chemical the erases itself and can be reused in 24 hours.