Appleton Coated Joins other Producers with Reduced Tonnage

Appleton Coated LLC announced the elimination of approximately 9,900 tons of coated and uncoated freesheet production. The company has had four temporary shutdowns since Thanksgiving. A fifth is scheduled to begin early March and last for four days. Appleton also will move to a five-day workweek from a seven-day work schedule beginning sometime in March

Box Shipments

January brought weak shipments and lower inventories for containerboard and box numbers. However, due to low operating rates, inventories declined despite a strong seasonal pattern of inventory increases. To date, the industry has done an impressive job in keeping price declines modest in an extremely challenging environment. Shipments for box volumes fell 13.7% in January from 2007.

Fraser Paper Reduces Capacity

Fraser Paper will shut down four of the mill’s six paper machines as part of a plan to balance supply with demand. The company initially said it would temporarily idle two paper machines at its Madawaska plant. A many as 600 workers will be furloughed by the closure. The Madawaska, ME mill produces uncoated freesheet, lightweight coated, supercalendered and directory paper.

AbitibiBowater Takes Downtime at Catawba

AbitibiBowater will idle the No.1 paper machine at its Catawba mill on March 1, resulting in the temporary lay off of 123 workers. The 740,000 tons/yr plant houses three paper machines. The one-month closure of PM1 will remove an estimate 14,000 tons of coated mechanical paper production. The Catawba, SC mill was opened in 1959 and employs 940 workers.

International Paper Announces more Down time

International Paper announced it will take planned uncoated freesheet downtime at its Franklin, VA mill in March. PM1 and PM5 will be shut down this week and the week of March 16, and PM1 will be closed the week of March 9. The production curtailment is estimated to be 14,000 tons. The company will also curtail two machines at its Riverdale mill in Selma, AL beginning the week of March 16 and ending the week of March 30. PM15 will be down for 21 days and PM16 will be down for 18 days. The total production loss is estimated at nearly 34,000 tons.

Update on the Paper Market

Closures, cut backs, job losses, and trying to reduce capacity to meet demand have hurt the Pulp and Paper industry. North American has cut 4millionTPA of capacity and Europe 5millionTPA.
Printing and writing paper shipments for January showed sharp declines: Uncoated white paper shipments are down -20%, coated papers are off 26.5- 31%. Of interest are uncoated white papers only witnessed price erosion of $5-10/ton in January (December decline was $5-15/ton). Coated publication grades fell$15-35/ton in January (certainly better than December price reductions of $50-70/ton) and freesheet coated prices fell $20-60/ton in January. Look for further pressure on pricing and demand throughout first half of 2009 and beyond.
Market Pulp did not fair any better, list pricing in January for NBSK declined $30 to $675/ton - a reduction of @$210 from high in August 2008. Hardwood pulp fell $30/ton, BEK now at $615/ton.
Note, actual transaction prices decreased to approximately $400s for NBSK - well below the cash cost to produce fiber!

Kruger Takes Down Time

Montreal based Kruger plans on reducing newsprint production by 25,000 tons in first half of 2009. They will spread this reduction between their three facilities – Trois-Riviers, Bompton, and Corner Brook.

Tembec Mill for Sale

Tembec continues to seek a buyer for the St Francisville mill in Louisiana. This mill was purchased from Crown Vantage in 2001.

Domtar Announces Uncoated Downtime

Domtar announced plans to shut the 293,000TPA PM5 at its Plymouth, NC mill by the end of February.

Wausau Restarts Paper Machine

In January, Wausau started back up its #11 paper machine at Otis – located in Jay, Maine. Note, the second machine (#10) remains down. The mill produces paper for the release liner market for labels.

Verso Announces cutback for 2009

Verso Paper intends to reduce production by 100,000 tons of publication Groundwood for first half of 2009.

Catalyst Continues Down Time

We covered Catalyst Paper taking down time in our November releases, and management continues to match output with demand. Curtailments at both Crofton and Elf Falls mills in BC as well as in Snowflake, AZ remain. This announcement will result in additional 55,000 tons of newsprint taken out of production.

Georgia Pacific Shuts Down Machine

Georgia Pacific plans to shut down the #3 medium machine (268,000TPA – semi-chemical medium) at the Cedar Springs, GA containerboard mill.

Store Enso Announces closing several assets

StoraEnso has closed the Baienfurt folding boxboard plant (190,000TPA) and a publication paper machine (#3pm – 140,000TPA) at its Kabel plant – both in Germany.

Fraser Plans Downtime at Edmundston Mill

Fraser Papers announced plans to take market-related downtime at its pulp mill in Edmundston, New Brunswick. The two-week closure will begin February 23, 2009. The Edmundston pulp mill produces sulphite and groundwood pulp for Fraser’s integrated paper mill in Madawaska, Maine.

AbitibiBowater Closes Grand Falls-Windsor Mill

AbitibiBowater has ceased production at its newsprint mill in central Newfoundland. The closure resulted in the elimination of 800 workers. AbitibiBowater announced that it would close the 205,000 metric ton newsprint mill as part of an overall plan to remove 830,000 metric tons from the marketplace.

Top Printers by Category

Recent Survey of 2008 top North American printers by market and sales revenue
by Printing Impressions

Top 5 over all / sales in millions
RR Donnelly $11,587
Quebecor World $5.688
Cuneo $2,400
Valises $2,242
Transcontinental $2,209

Top 5 Direct mail / Segment sales in million of dollars
Visant $346
Transcontinental $331
IWCO Direct $280
Quebecor World $227
Clondalkin $195

Top 5 Book Printers / Segment sales in million of dollars
Visant $590
Quebecor World $568
Courier $294
Bertelmann $273
Transcontinental $198

Top 5 Publication Printers / Segment sales in million of dollars
Quebecor World $1,478
Quad $778
Cenveo $408
Brown $332
Transcontinental $265

Top 5 Catalog Printers / Segment sales in million of dollars
Quad $1,003
Quebecor World $910
Arandell $226
Transcontinental $220
Sheridan Group $137

Catalog Postal Rates Rise 2.3%, Periodicals rise 4%

The U.S. Postal Service released details yesterday of the next rate increase, which will take affect May 11. The postal rate for Standard Mail Flats (catalogs) will increase by 2.3%, while the average rate hike for carrier route flats is 4.3%. The postal rate for periodicals will increase 3.976%, which is more than any other class of mail. The Consumer Price Index (CPI), which is currently 3.8%, now caps postal rate increases. This year’s increase for catalogs is higher than last year’s 1%, but significantly lower than the 20%-40% rate increase in 2007.
The USPS is facing a $2.8billion deficit and total mail volume was down 9 billion in 2008.

Finnish Paper Mill Lays Off 1200 Workers

The world's largest magazine paper maker, UPM-Kymmene Corp., reported it will temporarily lay off 1,220 workers in Finland, as the economic downturn continues to hit the wood and paper industry.
The announcement follows UPM's earnings report last week confirming a fourth-quarter net loss of euro286 million ($267 million) and an 8 percent drop in sales to euro2.3 billion.
The company gave a grim outlook for the rest of the year, saying it will continue to close mills and curtail production, expecting poor demand to continue in 2009.
Last year, UPM closed mills in Finland and slashed 700 jobs. It also announced plans to cut thousands of jobs worldwide during the next few years.

Coy Paper Company Introduces new Website

The specialty paper company, Coy Paper Company LLC, recently introduced a completely revised website, www.coypaper.com . The site describes the company, featured and proprietary grades, as well as a section on industry resources, which include the popular Paper News. Paper News allows readers to stay up to date on many for the recent events occurring in the Pulp and Paper Industry.

Paper Machine Sets New Speed Record

Stora Enso’s Kvarnsveden mill in Sweden has set a new world speed record of Super Calendar paper production. The Metso supplied machine (PM12) set a new 24-hour record of 1,926 m/min on January 21. A top speed of 2,009 m/min was reached during the period. Kvarnsveden’s PM 12 was started up in November 2005. It is the largest production line in the world.

Cereal Boxes Shrink

The Kellogg Company is testing smaller boxes for its cereals. The new ‘space saving box’ allows for the same amount of cereal, but with 8% less packaging, this permits retailers more shelf space, consumers more room in the pantry, as well as less waste and less material means less cost to Kellogg. This is first change to the cereal box since the 1950”s. This translates into less packaging
and paper for Kellogg Company.

Katahdin Paper Mill to Take Downtime

Katahdin Paper temporarily shut down PM5 at its East Millinocket, ME mill. The 125,000TPA directory paper machine could be idled for as many as 28 days. The closure will affect approximately 140 hourly-paid workers and an unspecified number of salaried workers. The East Millinocket mill employs roughly 491 workers and is owned by Brookfield Asset Management, but is managed by Fraser Papers.

Largest InPlants

With the advent of digital printing, many universities, municipalities, and corporations have brought printing ‘inside’ rather than work with an outside printer. InPlant Graphics recently confirmed top 100 installations with printing presses ‘in plant’.
We include top 10-
USA Government Printing Office
Allstate Insurance
State of California
CVS/Caremark
State of Oregon
Stte of Washington
Principal Financial
Blue Cross/Minn
People to People
Spartan Stores

What’s Black & White and Red all over?

Newspaper’s bottom line!
2008 was not a pleasant year for newspaper companies (or paper manufactures that produce newsprint). Canada has always been the world leader in newsprint production….. and the USA #1 in consumption.
Some 2008 North American statistics-
Production 10,100,000 tons
Capacity 11,425,000 tons
Permanently shuttered in 2008 600,000 tons
Top mills
AbitibiBowater 4,775,000TPA 42% market share
White Birch 2,100,000 TPA 18.5% market share
Kruger 1,140,000 TPA 10% market share
Catalyst 890,000TPA 8% market share
North Pacific Paper (NORPAC) 55,000 TPA 5% market share

National Envelope to Close Plant

National Envelope just announced it will discontinue all operations at the Houston, TX facility effective April 6, 2009 and consolidate this facility into the Ennis, TX. plant. They will continue to operate five plants - Ennis, Tx., Lenexa, KS., Austell, GA., Smyrna, GA., and Nashville, TN.

Wall Street Analyst Surveys ‘The Street’

Mark Wilde of Deutsche Bank surveyed paper & packaging industry executives, highlights of his findings -

Main message for 2009 - ‘Volumes & Prices Will Be Lower'
For most participants, flat volumes look like the "best case" scenario. Low expectations prevailed across the industry – from timber to paper to packaging. The expectations of lower prices and weaker volumes were most pronounced in market pulp and newsprint. Most observers assumed a bottom somewhere around mid-2009. With economic news continuing to point to a deep slowdown, the case for a mid-year turnaround on most commodities is becoming tougher to envision.

Executives report on big issues in 2009-
1) Slumping demand,
2) Price erosion.
About 80% of respondents pointed to cost pressures as a key issue. A bit further down the “issues list” was the resurgent US Dollar. Several also did raise concerns about the credit worthiness of both customers and suppliers.

Finally, Wilde asked, what is required for turn around for Healthy Industry?”
"A miracle" replied one quick-witted executive. Responses focused on further industry consolidation with accompanying rationalization of marginal capacity. Many respondents argued for a greater focus on financial returns. One European player argued: "Euro needs to weaken against the US Dollar and other major currencies." Many companies tied to lumber and building materials pointed to a rebound in the housing market.

NYTimes Profits Decline

The New York Times Co. reported its fourth-quarter earnings from continuing operations fell 48 percent on write-downs on severance costs and non-cash charges on the value of the International Herald Tribune and New England papers, including its stake in the free Boston Metro daily.

Top Printers Winning bids to GPO

The USA Government Print Management revealed the following list of top printers awarded contacts during 2008.

Monarch Litho $38,100,000
NPC $35,660,000
RRDonnelly $27,475,000
Gateway Press $16,999,000
SourceLink $14,915,000
Cenvo $10,225,000
Vertis Communications $9,616,000
Signature Graphics $8,75,000

PaperBoard Output Declines 19%

U.S paper and board production declined 18.9% in December on a year-over-year basis, a decrease of nearly 1.5 million tons, according to the American Forest & Paper Association (AF&PA). Coated printing and writing paper alone plunged 29% for the month. Kraft linerboard production was down 30% in December to 1.22 million tons compared to December 2007. Uncoated freesheet and tissue production were much less harder hit, declining 13% and 4% respectively