North America Slows World Demand Growth

It appears worldwide demand for Printing and Writing grades is experiencing slower growth. While the world demand increased 11 million tons from 2000 to 2006 (7 million from Asia alone) – North America declined 500,000 tons.
RISI, a large paper consulting company, predicted world demand will increase only 2.6% this year, and 2.3% for 2007, and 4.3% for 2008.
The slow growth is mainly attributed to the increase of the Internet and electronics – yielding less paper consumption. Also, we wonder what affect the USPS postal rate increase might have – most likely it will be a negative impact on paper.

Coated Free Sheet Market update

Coated markets are very weak; we understand prices fell $20/ton to $925.
Imports (Asian & European) and more LWC supply (Port Hawkesbury) are having a double impact. NewPage recently announced the permanent closure of a machine in Luke, Maryland and extensive downtime at Rumford, Maine. On October 31, NewPage also filed antidumping charges against Chinese, Korean and Indonesian producers. In Europe, Lechta has just announced a 5-7% price hike for January.

Newsprint Market update

The market appears headed for another shake-out. Standard newsprint (paper used for newspapers) prices fell another $5/ton in November to $665/metric ton. October consumption figures at the US daily newspapers were off an 9%. So far this year, consumption is down 7.9%. Overcapacity in Asia and publishers' desire for pricing leverage is likely to bring some Chinese tonnage to the US - the publishers don't need to bring in much paper to create a big pricing lever.

Uncoated Freesheet Market update (UFS)

The big producers are starting to respond to signs of market softening. Domtar will take market related downtime at its Woodland, Maine mill. International Paper appears to be considering an accelerated closure of the 350,000 ton Pensacola, Florida UFS machine. September offset prices were revised down $5/ton to $845/ton; October prices were reported flat from last month. We think the industry needs to cut supply by 400-500,000/tons. While pricing is around "mid-cycle" levels, high costs mean that profitability is still poor. Paper.com has over 20,000 items on site, many of which are uncoated free sheet.

Uncoated Groundwood Market Update

The story across Uncoated Groundwood grades is mixed, but the recent bias is
downward, especially in super-calendered grades (grades used for newspaper inserts). The healthiest markets are high-bright grades which compete with uncoated free sheet and were being helped by the rebound in the white paper
prices. Overall shipments are up 4.5% YTD. Stora's Port Hawkesbury mill is running at full capacity; the additional SC volume will ripple into LWC markets.

Xerox Designs an Erasable Paper – Ink that disappears!

Xerox Research Center announced a grade they developed that is an erasable paper. The goal was to produce a completely recyclable paper grade that could be used an unlimited amount of times.
A survey revealed an average of 1200 pages were printed each month by individual office workers – 44.5% of the printed sheets had a life span of one day. Most documents today are printed merely to review; the archival function is almost completely on an electric storage devise such as a server or PC.
People still really like paper – but not enough to maintain a copy of the printout. The new technology produces a low resolution, purple ink. This ink disappears in 16-20 hours and is ready to be printed again as a blank sheet. Xerox believes the sheet will be functional for at least 50 copies.
This sheet is not available for commercial use yet, when it becomes available, companies like Paper.com will market it.

Yupo Corporation Increases Capacity

The Yupo Corporation recently announced it would expand capacity, by 20 percent, both manufacturing and storage for its successful synthetic paper grades. The grade is used by commercial printers, packaging converters, and label printers. The company lunched a new grade called Accel – a high gloss fast drying grade that does not require a primer.
The Yupo grades are available at Paper.com. These grades perform well in outdoor environments.

UPS Announces Increase in Shipping Rates

The United Parcel Service (UPS) recently announced a rate increase effect beginning of January. The carrier confirmed ground shipments 4.9% and all air express by 6.9%.
Companies that distribute paper on the internet, like Paper.com, will be forced to pass this increase along to end users.

Georgia Pacific Mill Sold

The Georgia Pacific Mill in Old Town, Maine has been sold to an investment group, Red Shield. This mill had been shut down. It produced pulp and tissue grades.

Glatfelter Places Equipment in Auction

The Glatfelter Paper Company mill in Neenah, Wisconsin will auction all the equipment from the 120,000 ton/year mill it shut down earlier this year. This mill produced Text and Cover paper grades.
Paper.com marketrs all the Glatfelter grades, including it's recent introduction of Mead's Carbonless grades.

Marcal Paper Mill Declares Bankruptcy

The Marcal Paper Company, a tissue producer, declared bankruptcy protection citing 40% jump in energy costs.

Legion Paper Acquires Moab

Legion Paper recently announced that it has acquired Moab Paper Company. The acquisition will form the Moab by Legion Paper division to distribute archival digital papers, storage and display products.
Paper.com markets all the Legion Art and Exotic papers as well as a complete line of digital papers.

RR Donnelley to Acquire Banta for $1.3 Billion

R.R. Donnelley & Sons Co. has agreed to buy Banta Corp. for about $1.3 billion in cash. The deal, valued at $36.50 a share after a special dividend of $16 a share already declared by Banta, came on the same day Cenveo Inc. pulled its $50 a share offer. R.R. Donnelley’s bid was unanimously approved by the boards of both companies, and is expected to close in the first quarter of 2007. Donnelley reported sales of $8.43 billion in 2005, and Banta has annual revenue of approximately $1.5 billion.

Update on Market Pulp

Market pricing for pulp has remained strong. NBSK (bell weather grade for Pulp) export hikes to Europe appear to have gone through; prices leveled out at $720/mton-$730/mton. Hardwood and Softwood inventories dropped to their
lowest levels since June last month spurring some hardwood producers to announce hikes. New supply may In Chile, Arauco's Nueva Aldea started up last month and CMPC is expected to ramp up its Santa Fee equipment in November. Terrace Bay Pulp started up its 350k/mtpy NBSK line in Ontario and may restart a smaller (125k tpy) line. With
current pulp prices, we suspect that other Canadian mills may be looking at restarts.

Coated Magazine Paper

Coated paper used for magazines and publications remains among the most competitive paper grades.
September prices were adjusted down $10/ton and October prices fell another $10/ton to $825/ton. Demand is down 2.5% YTD and the restart of UPM's Mirimichi mill has boosted supply. Experts are hopeful that capacity closures in Europe - including a just-announced 230K Myllykoski shutdowwn - will begin to help the market. The biggest move to date is the decision by UPM to close 17% of its W. European LWC capacity.

Digital Printing Continues to Increase

First nine months of 2006 illustrated a continued increase of toner based/digital printing growth versus the traditional ink on paper. This trend is forecasted to continue. Toner based/ Digital printing grew 4.5% 1Q06 and 6.1% 2Q06. Of the $170billion USA Printing industry, 70% still constitutes ink on paper and 20% is Toner based / Digital ($34biliion). PIA/GATF estimates 11,680 digital plants are currently in USA - compare to 25,300 sheetfed and 4,200 webfed printing plants.
Printing Impressions, Inc estimates 2006 printing-
Total Shipments $171Billion
Shipment Growth 3%
Ink on Paper growth 2%
Digital Print growth 4%

Top Book Printers

Top North American Book Printers are as follows-
1 -Visant Corp
2- Quebecor
3- Banta
4- Bertelsmann Arvato
5- Courier
6- Transcontinental
7 - Walsworth Publishing
8- Phoenix Color
9- Maple-Vail Book
10- Wbcrafters
11- Edwards Brothers
12- Hess Management
13- Friesens Corp
14- Webcom Ltd
15- Sheridan Group

A Seller’s Market - for printers too

Over the past several years many paper mills have been sold or shut down, also over the last three years the North American label printing industry has witnessed an unprecedented rise in acquisition activity. The ownership of companies across revenue ranges is increasingly changing hands – some acquired by strategic investors (printing and packaging conglomerates) and some by financial investors (private equity firms and financial services companies). The evolutionary foundation upon which our industry was built is shifting as the entrepreneurs who founded companies in the 1960s, ’70s and ’80s are approaching retirement age in a market where private equity capital has never been so plentiful, nor valuations so high.

Paper prices have flattened

North American merchants have seen September purchases softening and no evidence of price increases for uncoated free-sheet—despite proposals from Weyerhaeuser and Boise Cascade. After producers cut capacity, spot prices have risen by $150/ton so far this year to $850 for uncoated white bond sheets used in copiers. Note: International Paper, the No. 1 supplier, did not announce an autumn price hike. Meanwhile, RISI.com is reporting that soft demand and weak pricing have become the hallmarks of coated paper markets this month. It’s supposed to be the busiest time of year for commercial printers, but production of catalogs is down and the typical late summer/early autumn tightening of supply hasn’t happened. In fact, there’s been aggressive price discounting reported from buyers of coated papers, especially No. 4 coated mechanical.

Newsprint Pricing Stable or possibly Declining

Producers of Newsprint (the paper used in newspapers) continue to witness pricing pressure. The pricing for 30 pound - standard newsprint continues to be flat even with the announced September announcement of $40 (initially announced for August). Buyers’ strong rejection (and depressed spot market pricing) have forced producers not to enjoy ANY increase – in fact, industry rumor outlines Newsprint now is actually transacting at $655/metric ton (from the market list price of $670). Consumption has fallen nearly 8%.

Pulp & Paper Prices Are Holding Steady – For Now

Mark Wilde of Deutsche Bank presented the state of the Paper industry -
A few notes-
Pulp markets appear to be peaking. Current NBSK list prices are $770/mton in North America (up from $620/mton last September). Prices will be up q/q in Q3, but momentum is easing. The story is similar in the paper markets – Q3 prices are up sequentially, but there is growing uncertainty about the future. An uncoated free sheet September
price hike was deferred, inventories are rising and pricing on spot deals has eased. Coated paper prices are under pressure.
Containerboard demand is solid, but supply is more readily available and there is uneasiness about cyclical easing as well as the late November seasonal slowdown.

Pulp Market on the Rise ... for now

The bell weather pulp index - NBSK - is now at a list price level in USA of $770/Metric ton - up from $620/mt in September of 2005. The paper producers are now witnessing a slow down in demand (less consumption) and Pulp producers are now adding capacity and restarting curtailed equipment- for these reasons, the pulp market may have peaked.

M-Real Announces Extensive Restructuring Program

M-Real, a Finnish papermaker, announced it was launching an extensive restructuring program to cut costs and capacity. As part of the plan, the company is considering closing two paper mills and two paper machines, which would result in capacity reduction of about 485,000 tons per year of coated and uncoated woodfree paper combined. The company will take an impairment charge of approximately 200 million euros, and expects the program to be completed by the end of 2007.

Commerical Printers doing Better

RISI reported that commerical printers in North America increased both sales and earnings in the second quarter of this year compare to 2005.
Paper.com is a proud supplier of paper to this growing market; with over 20,000 kinds of paper.

Searching for Paper on the Web

Paper.com continues to grow, marketing over 20,000 unique items of paper. Top search providers based on the number of queries tallied by Nielson/NetRatings is
Google 50.2%
Yahoo 24%
MSN 10%
AOL 5.5%
Ask 2.3%
Others 8.0%

Xerox Introduces New Line of Papers

Xerox announced its new coated line grew with the addition of a new 60 pound coated sheet that is 25% lighter than competitors. This grade is 90 brightness and is designed for high volume digital printing.
Paper.com has the complete line of Xerox Papers in stock and ready for immediate shipment.

Paper Mill Purchased by Employees

The Blue Heron Paper mill employees recently purchased 100% of the stock from KPS Special Situations Funds - an investment firm that has made an equity stake in several paper mills. The mill produces 335,000 tpy of newsprint.
The only mill KPS still owns is the Blue Ridge Mill in North Carolina. This mill produces uncoated envelope and business papers as well as board. Total capacity is 578,000 tpy.

Market Pulp Still Strong

The market for pulp still appears to be strong. Many USA producers raised prises $20/ton in September and world shipments are up over 5%. Some equipment that was closed down is back in production and Latin America has introduced new capacity.

Printing and Writing Shipments Decreased in August

Total shipments of printing and writing papers fell 0.4% to 2.396 million tonnes in August, according to Canada’s Pulp and Paper Products Council. Of the four major sectors, coated mechanical was the only one to show a slight increase of 0.7%. Coated freesheet shipments fell 8.2%, uncoated freesheet dropped 2.8% and uncoated mechanical plunged 7.2% year-over-year.

Glatfelter Introduces Xcelerator Carbonless

Glatfelter announced the introduction of Xcelerator Digital Carbonless Paper. This sheet is specially coated for today's demanding digital presses. Glatfelter offers a 100% satisfaction guarantee to our customers. Paper.com will be shipping
this product as soon as it becomes available.

Printers Hint of Future Sales Growth

Heidelberg Press released a survey that indicated printers feel, on average, sales will increase 4.75% over the next 12 months.
Many continue to be concerned over cost pressures from raw materials such as Ink, Paper, energy, and Transporation.

Overall Paper Prices up

A recent report outlined the following for commonities, including paper
Since 2000 Since 2003
CPI 18% 10%
All Commodities 29% 18%
Petroleum 187% 132%
Paper 14% 14%
Truck Transportion 14% 14%

New York Times Reduces Paper to Save Money

The New York Times newspaper will reduce from 54" to 48" in width. This was done in an effort to save on paper costs and thus saving millions. This will will be complete in early 2008.

Former American Tissue Executives handed Sentences

The former chief executive of American Tissue, Mehdi Gabayzadeh, was sentenced to 15 years in prison and a fine of $65million. He was convicted of 8 criminal charges which cost banks and investors over $300million. He inflated accounts receivable and net income.

Price Increases Finally Slowing Down

We think the uncoated paper grade price increases have finally slowed down. Uncoated Woodfree commodity grades for white paper pricing appear to be static. The industry announced a price increase for September, but International Paper did not support it and therefore, the increase never went through. If the economy slows down, future price increases will also be in jeopardy.

International Paper Divests of Coated Division

International Paper completed the divesture of their coated operations to a private investment fund. The new name
is Verso with an annual capacity of 1.7million tons of magazine, Catalogue, and retail insert papers.

Recent Newsprint Price Increase in Jeopardy

Abitibi recently rolled back the announced newsprint increase of $40/ton to $20/ton. This is not a good sign for the newsprint market. Having said this, current pricing levels are nearly 50% more today than the lowest price point in 2002. North American demand for newspapers, and thus newsprint have declined. Demand was over 13million tons - is now approximately 10million tons.

Equipment Curtailment has effected Supply and Demand in Paper Industry

We have reported on the numerous pulp and paper mill and machine closures over the past several years. Although demand has not increased dramatically, fewer manufactures have allowed for higher operating rates for equipment still producing and
increased market pricing. In 2005, North American producers of pulp, paper, and board announced permanent closure of
almost 7million tons. During the first half of 2006, almost 1.2million tons were announced of which, 780,000 tons are in USA.
I outline some select mill / machine shutdowns
Badger Peshtigo, Wis 70,000TPA
Cascades Thunder Bay, Ont 165,000TPA
Domtar New Westminister,BC 120,000TPA
Domtar Cornwall, Ont 265,000TPA
Domtar Ottawa, Ont 65,000TPA
Glatfelter Neenah, Wis 125,000TPA
International Paper Pensacola, Fla 150,000TPA
International Paper Jay, Me 100,000TPA
International Paper Bastrop, LA 480,000TPA
Pasadena Pasadena, TX 190,000TPA
Riverside Appleton, Wisc 72,000TPA
SAPPI Muskegon, Mich 116,000TPA
SMART Park Falls, Wisc 120,000
Tembec St Francisville, LA 80,000TPA
Weyerhaeuser Price Albert, Sask. 280,000TPA
Weyerhaeuser Dryden, Ont 155,000TPA
Contact Paper.com for the complete list of nearly 8million tons of equipment curtailed since 2005 .

Many Mills now acquired by Private Investors

Most paper manufactures have not even earned its cost of capital and have been out of favor with 'Wall Street' for many years. In recent years, the industry has witnessed consolidation, globalization, mergers, restructuring, reduced capital spending, and curtailment of production. New buyers are surprisingly private investors. Why we ask at Paper.com ????? RISI, an independent consultant, summarized a rationale as
-These buyers have negotiated discounted purchase prices for the assets
-Cheaper, more creative, financing and private investors can carry more debt than public companies - debt is less expensive than equity.
-Fewer short term pressures vs. public companies - they can be more flexible than meeting short term expectations
-No formal costly outside auditing - No expensive requirement of reporting to the public - this eliminates expensive shareholder reports and board expenses.
-Better operators - Private investors tend to be very good, focused operators.
-Many of these new operators believe they can improve operations and market the mill at a later date for a multiple of purchase price.

We at, Paper.com, prefer to sit on the side lines and distribute paper versus produce the product.

Recent examples of New Owners include-
-Madison Dearborn -- Packaging Corp of America; Boise Cascade
-CMP Holding -- International Paper Coated Division
-Cerberus -- MeadWestvaco coated Div.
-Kohlberg -- International Paper Specialty Div
-Koch -- Georgia-Pacific
-Texas Pacific -- Smurfit-Stone

Market Pulp hits 5 Year High

Market Pulp grades have witnessed numerous price increases. Worldwide shipments in 2005 totaled nearly 40million tons - growing for the 4th consecutive year. 2006, so far, has illustrated continued growth in shipments. Despite significant capacity reductions in the printing and writing sectors of the fine paper market - the primary consumers of pulp - and reduction of pulp capacity of nearly 2.5million tons of market pulp production - worldwide shipments of pulp have increased. Global shipments to China and South Korea have grown dynamically to more than make up for these decreases .
Benchmark NBSK (Northern Bleached Softwood Kraft) has reached a 10-year high in price given the solid demand from Asia. The USA price for NBSK was $750 in July - up 19% from the same time last year. Prices are expected to continue to increase.

Prices up, Profits Still Down

Prices on literally all pulp and paper items continue to experience price increases and, sadly, profits continue to lag. Many mills and paper machines have closed down - allowing for tight supply and reduced inventories, this has yielded better productivity and allowed for price increases. However, the cost increases of chemicals, fiber, energy, labor, and transportation have exceeded paper prices for finished product.

Printers Voice Concerns for 2006

A recent report confirmed that the #1 concern USA printers face for 2006 was raising paper costs. The cost of paper now seats at 22% as a percent of total sales and once all material are factored in, this equates to 35% of sales. Paper has increased over 5% so far this year, while prepress consumables, plates and ink have all gone up 4%. Other concerns cited include competition & pricing; labor & staffing; energy costs; and health insurance.
Paper.com has over 15,000 paper items for commercial printers, available for immediate shipment.

SC market remains Firm

Supercalendar Paper (SC) – the type used in Newspaper advertising supplements and several low-end magazines and catalogues, remains snug. The industry was successful in introducing a price increase – increasing the bell weather grade from $700 to $780 per ton. Although demand is off, supply has been curtained – Port Hawkesbury, Nova Scotia – StoraEnso had labor shutdown – resulting in over 380,000 tons and cost pressure coupled with low advertising demand have forced publishers to substitute coated paper for the more economical SC grade.
Total 2006YTD North America demand is 2,200,000 tons.

International Paper Sells another Division

International Paper has signed a definitive agreement to sell its Brazilian coated papers business to Stora Enso for approximately $415 million, subject to certain post-closing adjustments. The business includes a coated paper mill and lumber mill in Arapoti, Parana State, Brazil

More Paper price Increases

Weyerhaeuser and Boise have recently confirmed a price increase for September shipments. Most uncoated paper producers will follow. This increase will affect printing and office papers as well as opaque grades. While demand has been relatively steady, 1.7million tons of North American capacity has been shut down and therefore, supply has become tight. Imports are rising, but are less than 3% of our demands.

Weyerhaeuser Paper to Merge with Domtar Paper

Weyerhaeuser Paper agreed to merge with Domtar in a $3.3billion transaction. Weyerhaeuser shareholders will enjoy a 55% stake in the new company and Weyerhaeuser will also receive $1.35billion cash payment as part of the deal. Weyerhaeuser will transfer all 10 pulp and paper mills. Domtar’s Raymond Royer will act as CEO.
Paper.com has both Weyerhaeuser and Domtar grades readily available. Please visit www.paper.com

SMART Papers finally Obtains Financing

SMART Papers, located in Hamilton, Ohio, was successful in confirming a new round of financing. The mill has been under bankruptcy protection, citing poor cash flow due to
high energy, fiber, and chemical costs. Plainfield Asset Management will take control
of SMART Papers and assume the $40million of debt. The VC will provide an additional $10million for interim financing.
Paper.com has all the SMART Paper grades, including Kromekote, in stock and ready for immediate shipment.

Brighter, Whiter Trend for White Papers

All the leading companies are now marketing their white papers as ‘brighter and whiter’. If fact nearly all office papers are now boosting a brightness level of 92 -- up from 84.
The addition of fluorescent whitener greatly assisted (much like what laundry detergents do to make cloths ‘look’ whiter). Brightness has been measured on a scale of 1-100 – the higher the number the brighter the sheet. However, there are two units of measurement – in USA – The TAPPI system is used while in Europe the ISO system is reported AND these two systems are NOT interchangeable because of different instruments used.
Whiteness (as apposed to Brightness) is now the specification of choice. Both USA and Europe use the CIE whiteness scale. The results are often expressed with 3 results – L; a; and b - and reflect the color or whiteness scale from red to blue to green (which matches what the human perceives).
Although consumers will nearly always pick the brighter, whiter sheet – it comes with a cost – both economically and ecologically. Clearly, it costs more to produce a whiter, brighter sheet and many of these added chemicals degrade both strength of the sheet and cost more.
Paper.com has a complete line of bright-white sheets and ecologically friendly grades. www.paper.com has nearly 20,000 items of paper.

RR Donnelly May be in Buy Out Discussions

RR Donnelly, North America’s largest printer, has been offered buy out proposals from two different suitors. This, according to Bloomberg News.

Will the Paperless Office ever Happen?

Office copy paper has been declining in demand since its high of 1999. While the paper used in a ‘white collar’ office has steadily declined – consumption for the home use / home office steadily increases. Office Paper growth increased approximately 6-7% per year in the 1970s, 1980s and 1990s. Then, suddenly, it stopped growing and remains at 5.5million tons per year. The household consumption of office papers is slightly less than 20% of the total demand. Reports indicate that household consumption remained steady – at 5 pound per household from 1975 through 1995. Since 1995 the average household demand is nearly 18 pounds per year or about 3 reams (500 sheets of 8 1/2x11”). Therefore, with 115million households in USA – we estimate SOHO at 1million tons. By way of comparison, average office worker consumes about 125 pounds/year or 4.5million tons. We forecast that office papers will begin to decline because of computer technology, higher cost, less employment, younger people simply using less paper, and changes in cultural habits.
More offices and households are purchasing office supplies, including paper, from the Internet. Paper.com has nearly 20,000 paper items on site – many for the office environment.

Mohawk Paper reintroduces Strathmore Line

Mohawk Fine Papers, now the largest producer of premium printing and imaging papers in the USA, over hauled the Strathmore paper line. The line enjoys a broad range of attributes - Smooth to wove finish -available with fibers, strips, white or colors - Watermarked or not - cotton fiber or recycled - offset or digital -- Mohawk's Strathmore has it all. The mill has also redesigned the ream wrapper. Paper.com has the complete line of Mohawk Papers - in stock and ready for immediate delivery.

Mohawk Paper reintroduces Strathmore Line

Mohawk Fine Papers, now the largest producer of premium printing and imaging papers in the USA, over hauled the Strathmore paper line. The line enjoys a broad range of attributes - Smooth to wove finish -available with fibers, strips, white or colors - Watermarked or not - cotton fiber or recycled - offset or digital -- Mohawk's Strathmore has it all. The mill has also redesigned the ream wrapper. Paper.com has the complete line of Mohawk Papers - in stock and ready for immediate delivery.

International Paper Completes HQ move

International Paper recently completed its relocation of the corporate Headquarters from Stamford, CT to Memphis, TN. The company will employ approximately 3000 in Memphis.

2006 Top Tag and Label Converters

Top Tag and label Converters were announced as
1- RRDonneeny
2-Avery Dennison (Fasson)
3-CCL Industries
4-WS Packaging Group
5-Multi-Color Corp
6-Fort Dearborn Co
7-Standard Register
8-Alcan Packaging Label Group
9-Nashua Corp
10-Spear Mason
11-MPI Label Systems
12-Hammer Packaging
13-Weber Marking Systems
Paper.com has Tags and Labels and nearly 20,000 other paper items on site.

Loparex acquires Douglas-Hanson

Two large coaters will combine forces, according to a news release.
Loparex Group, a manufacturer of release coated papers and films, has acquired the Douglas-Hanson Company of Hammond, WI, USA. Douglas-Hanson, established in 1973, manufactures silicone-coated release papers and films, and extrudes polycoated papers for the packaging industry. The Douglas-Hanson facility will operate under the name Loparex Inc., whose headquarters is in Willowbrook, IL.

Nashua Buys Tec Print

Nashua Corporation, a manufacturer of labels and thermal and specialty papers based in Nashua, NH, USA, has announced its acquisition of 35 percent of the shares of Tec Print LLC, a minority-owned business enterprise located in Memphis, TN.

Tec Print is a minority owned printer of lottery tickets and labels. The company also has the capability of printing paper rolls, tickets, brochures, business cards, posters, and signs.

Paper.com has tags, tickets, and labels, in stock and ready for immediate delivery.

Pulp Price Still Increasing....again

Producers of market pulp appear to remain aggressive with price increases. All producers implemented a $30/mton price increase for NBSK for July yielding a 'list' price of $750/mton. The cost pressure on nonintegrated paper mills (mills that do not produce their own pulp) continues to mount. Stand by for yet another increase in the Fall.

Coated Free Prices firming up

Prices increased $50.00/ton on #3 - 60lbs rolls of coated paper in July. This grade is used for high-end magazines and catalogues for luxury items. Demand has been steady thus far in 2006, and supply has decreased due to equipment closures.
International Paper completed the sale of their coated division to Apollo Management Group.
Paper.com has coated paper in both rolls and sheets, available and ready for shipment.

Uncoated Offset Prices - Increase .... again

Cut size - Paper used for copiers and desk top printers; witnessed yet another price increase in June and one is in the 'air' for September - of $60.00/ton. Supply reductions and somewhat better demand yielded an increase in shipments of 2.5%. To further a tightening in market - Brazil is not exporting as much to USA - neither is Europe.
Weyerhaeuser just announced price increase for Offset and Opaque grades - effective with August shipment - $60.00/ton.
BTW. Strong rumor that either Boise or Domtar will merge with Weyerhaeuser.
Paper.com has all of Weyerhaeuser's paper grades in both rolls and sheets, available and ready for shipment.

Uncoated Woodfree Market

The North American Wood Free Market, paper used for copy paper, books, and desk top printers, witnessed a decline in demand of 12.8% from a peak of 14.8million tons in 1999. Demand last year was 12.9million tons. The main reason sited was electronic communication and the sudden spike in price for this grade of paper. Many producers shuttered equipment - most notable Weyerhaeuser in 2 mills 280,000 tpy Prince Albert, Sask and 155,000 tpy in Dryden, ON; Also, Domtar, Glatfelter, and SMART all closed down production.
Top 5 North American Producers
International Paper 3,570M tpy 24.6% mkt shr
Weyerhaeuser 2,650M tpy 18.3% mkt shr
Domtar 2,210M tpy 14.6% mkt shr
Boise Cascade 1,550M tpy 10.7% mkt shr
Glatfelter 755M tpy 5.2% mkt shr

Coated Free Sheet Market

The Coated Free Sheet Market, paper used for annual reports and high-end publications, is still suffering with poor demand, although the industry did announce a price increase earlier this year. The North American production capacity declined this year with many machines shuttered; such as 115,000 tons /Muskegon, MI (SAPPI); 170,000 tons /Pasadena, TX (Pasadena
Paper); 30,000 tons/Thunder Bay, ON (Cascade); 155,000 tons-Ottawa & Cornwall, ON (Domtar). To boot, several European manufactures also shut equipment down and USA ran at only 88% operating rate.
Top 5 North American Producers-
SAPPI 1,400M tpy 22.3% mkt shr
NewPage 1,280M tpy 20.4% mkt shr
International Paper 1,100M tpy 17.4% mkt shr
Stora Enso 915M tpy 14.5% mkt shr
Domtar 390M tpy 6.2% mkt shr

Coated Groundwood Market

The coated Groundwood paper grade - the paper used in magazines and catalogues, is still very depressed and deep discounts are often offered to buyers. North American production capacity for 2005 was 6.55million tpy and capacity is forecasted to decline to 6.25million this year. The USPS forecasted price increase for January will further hurt this market.
Top 5 producers in North American-
International Paper 1,160M tpy 18.9% mkt shr
NewPage 880M tpy 15.3% mkt shr
UPM 880M tpy 15.3% mkt shr
Bowater 865M tpy 14.0% mkt shr
Stora Enso 860M tpy 12.5% mkt shr

Smart Paper Still Operating as Bankrupt

SMART paper continues to operate under a chapter 11 status as we previously reported. Although the Ohio mill remains open, the Wisconsin mill has been shut down, hoping that CellMark will purchase and reopen. Fraser Paper, the operator that originally sold the Park Falls, Wisconsin mill to SMART is worried. They own a 40% stake in SMART ($75million) and $14million due them on pulp sales and asset rental. Fraser also made certain financial guarantees amounting to $8million when it sold the mill to SMART in 2005.

Shuttered Flambeau Paper Mill finds Buyer

The management group of CellMark recently announced their intent to purchase the Flambeau Paper mill in Wisconsin. This mill was shut down in March as a result of the current owner, SMART Paper, chapter 11 financial status. CellMark, together with Johnson Timber Company will buy the mill and CellMark would market the output. New mill will be called Flambeau River Papers. If successful, the mill would start back up in late this summer.

Uncoated Paper Producers looking at September Increase

The uncoated paper manufacturers are beginning to introduce to their end users the potential of a September price increase. The industry confirmed a price increase of $3.00/cwt - $60.00/ton for June and are forecasted to increase another $60.00/ton in September. The increase is justified due to increased pulp-energy-chemical costs; all important components to paper production. The market continues to be tight in supply and operating rates are in excess of 95%. Mills most likely
to benefit with increased prices include - International Paper; Weyerhaeuser, and Domtar.

Finch Paper up for Sale

The Board of Directors for Finch Paper has announced the decision to solicit offers to find a buyer for the mill. The board feels this is in the best interests of the shareholders to begin to evaluate potential offers for purchase of its paper mill and associated facilities.

International Paper sells Kraft Mill

International Paper announced the sale of its kraft paper business to Stone Arcade. The division was sold for $155million.

Pulp Pricce Still Increasing

NBSK market pulp pricing is now $725/ton in USA. This price has risen very aggressively since September when list price was $620/ton. Many producers are beginning to announce yet another increased of $20-30/ton for July shipments. Over 2million tons of market pulp production was curtailed during 2005. Clearly, this is a seller's market! Uncoated paper producers will most likely also announce an increase given this new cost pressure.

Typical Internet Buyer

Stats per Internet Retailer Magazine-
-2001-05 internet growth in sales 26%/year
-typical internet buyer 44yrs/female/$68,000household income/college edu/$360 ave order
-Over 100million USA adults have broadband at home
-2006F 175million USA adults will buy 'something' on line (up from 164million 2005A)
-This equates to 77% of adults
Paper.com has grown to include nearly 20,000 paper items. The site is available for paper purchases 24/7.

Top USA Paper Mills

Top North American Paper Mills, by total 2005 revenue are as follows-
1-International Paper $24.1billion 15,900,000 tpa
2-Weyerhaeuser Paper $22,630billion 13,900,000tpa
3-Georgia-Pacific $18,700billion 8,600,000tpa
4-Smurfit-Stone $8,400billion 8,190,000tpa
5-MeadWestvaco $6,170billion 3,560,000tpa
6-Boise Cascade $5,907billion 2,627,000tpa
7-Temple Inland $4,888billion 3,202,000tpa
8-Abitibi-Consolidated $4,568billion 6,100,000tpa
9-Domtar $4,249billion 3,144,000tpa
10-Sonoco $3,529billion 2,000,000tpa

National Envelope Acquires another Converter

National Envelope Company recently acquired Atlantic Envelope. This transaction gives National Envelope 6 more plants and end users such as FEDEX and Netflix. National Envelope now operates 22 USA plants.

Smart Paper Still in Chapter 11

The Smart Paper Mill, located in Hamilton, Ohio continues to run its operations under chapter 11. They recently announced the shut down of the Park Falls, WI mill (Smart purchased from Fraser FEB 2005). Smart Paper will be producing many of the grades manufactured in Wisconsin at its Ohio site.
Paper.com has the complete line of Smart Paper grades available and ready for immediate shipment.

Domtar Mill is Shut Down

The Domtar mill in Vangouver, BC has officially been shuttered. This mill produced 120,000 tpy of coated free sheet.

Magazine Ad Revenue Holds Steady in May 2006

Total magazine advertising revenue for the month of May increased 0.9%, closing at $2.2 billion, according to the Publishers Information Bureau. Ad pages fell 2.3% for the month, totaling 22,607. Year-to-date revenue for the category grew 3.6% over the same period in 2005, to $9.2 billion, while ad pages remained flat against the prior year at 94,358.
As goes magazine advertising pages ..... goes page count ... goes paper consumption.

Coated Paper Producers announce Price Increase

International Paper informed their customers that its coated and SC (Supercalendered) publications papers will increase by $2.00/cwt or $40/ton. To date, no other mill has matched this announcement on publication grades.
Other mills that announced a price increase on free sheet coated papers include SAPPI, Domtar, Appleton, and Stora Enso- all told their end users coated free sheet text and cover grades will increase by $2.00/cwt or $40/ton.
Paper.com has papers from all of these mills.

Greenpeace Evaluates Recycled Papers

Greenpeace released the results of their current survey on environmentally friendly papers. They polled people in both the USA and Canada-
-80% of Canadians and 75% of Americans are likely to purchase papers that are recycled
-71% of Canadians and 66% of Americans state they are less likely to buy from companies that cut down 'old forests' for there
source of wood fiber.
-86% of Canadians and 77% of Americans will buy recycled papers, if given the choice.
-7 of 10 Canadians and 66% of Americans would be willing to pay 5% more for recycled paper.
Paper.com has over 18,000 papers - many are recycled.

Paper.com is one of the World’s Largest Paper Websites ranks in top 500 on largest USA websites

Paper.com is in its third year of operations and has witnessed robust growth in sales. Paper.com has nearly 20,000 paper products – representing paper grades for the office, scrapbookers, schools, restaurants, weddings, and printers. The website has over 30 vendor warehouses throughout the United States and ships within 24 hours after receipt of order – from a single sheet of paper to multi truckloads. The site now enjoys nearly 8000 unique visitors every day clicking onto www.paper.com

The company has recently made the list of top 500 internet sites as confirmed in the 2006 survey by Internet Retail Magazine. The company was also ranked #60 for Specialty Retailers in USA.

Paper.com moves into new headquarters and hires a Marketing Manager

P. Scott Vallely, a paper industry executive; and John Engel, an expert in web design and internet marketing teamed up to form Paper.com three years ago. The company has been growing and recently moved into newly renovated corporate headquarters located in New Canaan, Connecticut. To support this growth, they have hired Mr. Edward F. Lane Jr. to Market Manager. Mr. Lane has a deep history in internet marketing, having recently been with Colangelo and Suresource.com.

Weyerhaeuser Improves Cougar Opaque grade

Cougar's brilliant 98 brightness and 10 percent recycled content in a stunning blue-white shade makes the Cougar grade one of the finest opaques on the market.
The mill has now offers this grade with a smoother surface for better ink holdout and cleaner print uniformity, Cougar's high opacity and steadfast print quality is an excellent alternative to the higher priced Text and Cover sheets.

THE FUTURE OF LUNA - Domtar Mill in BC

Domtar has signed a non-binding letter of intent to sell their New Westminster, BC, coated paper mill to Belgravia Paper Company, which is associated with West Linn Paper Company.
The agreement has not been finalized yet, but under the terms of the letter of intent, the transaction would close in mid-June. As a result, Domtar will continue its plan to shut down the Vancouver mill
completely by June 16; coated paper production was discontinued on May 12th. Domtar Luna will continue to be sold until inventory is depleted.
Paper.com carries many of the popular Domtar paper items.

Some Coated Manufactures try for Increase

International Paper and Fraser Paper announced a $50/ton increases on coated magazine papers in North America for June shipments.
However, no other coated paper producers joined in on this increase announcement. Most buyers do not think this increase will go into effect.

Summary of Uncoated Wood Free Market

Summary from Analist at Deutsche Bank-
* Another round of uncoated free sheet price hikes-
Over the last week, virtually all producers of cut-size uncoated free sheet paper have announced the third round of price increases in 2006. If successful, these increases will take the list price of 20lb cut-size paper (“copier paper”) to $940/ton. This is an increase of $145/ton from the $795/ton average price back in December, and we think prices could move even higher.

* The biggest issue has been supply reductions in the US and Canada.-
Over the past 18 months, producers have closed mills with a combined capacity of 1,355,000 tons, just under 9% of the North American supply base. Even with prices rallying, the closure process does not appear complete. IP & Boise are converting another 540,000 tons away from UFS within the next year. Moreover, the pending sale or merger of Weyerhaeuser's white paper business may result in further capacity rationalization.

* Other issues include rising costs and foreign exchange. -
All white paper mills are vulnerable to higher chemical, energy and transportation costs. However, for nonintegrated white paper mills, the cost pressure is especially acute. Nonintegrated mills rely on purchased pulp and are much more reliant on purchased energy, both of which are up sharply in the last few years. Finally, a weak US$ is now working against an increase in white paper imports from abroad.

Uncoated Papers remain in Demand

All the major producers have announced $60/ton price increase on copy papers for June. Cut-sized (8 1/2x11) pricing has lagged behind the rebound in roll stock pricing. USA supply reductions (mills taking production out of the market) and modestly better demand have helped dynamics. Also, Brazilian suppliers remain focused on improved local demand, not on raising exports to US.
Weyerhaeuser continues to look for a buyer - maybe International Paper, Boise or Domtar. This will add further confusion
to the market.
Come to Paper.com for all your uncoated requirments.

Pulp Price increases might be Slowing

The market pulp producers announced a $30/ton increase for NBSK and it now appears many buyers are resisting this increase. The average price now paid for the NBSK is $705/ton - which is the highest level in 5 years.

Coated Paper still remains weak

The coated market (glossy magazine paper) continues to be in weak demand. The industry needs manufactures to curtail production just as the uncoated market has successfully done. Discounting is available for coated grades sold in rolls. Paper.com has over 18,000 items - many are coated papers.

Cascades sells its Merchant Group

Cascades, a large Canadian paper company, sold its merchant group known as Cascades Resources. This division was sold to Coast Paper which is a subsidiary of PaperlinX Ltd.

Newspaper Ciculation still on the Decline

The majority of USA newspapers report a decline in readership. The most recent period outlined a decline of 2.6%. Web companies such as Yahoo and Google are providing the information at a growing number -and - it's free. A residual effect includes a decline in paper demanded for the printing of newspapers. Many of these paper manufacturers are curtailing production or rebuilding machines to produce grades that are in demand. Most experts do not believe newspapers will see positive grow in the near term. Paper.com has newsprint available.

Wausau Paper Introduces new Digital Line

Wausau recently introduced a new line of Digital Papers called Exact Digital. The vendors, Kodak - NexPress 2100 and HP Indigo highly endorse this new sheet. Paper.com has Exact Digital available and ready for immediate shipment.

Wausau Paper Introduces new Digital Line

Wausau recently introduced a new line of Digital Papers called Exact Digital. The vendors, Kodak - NexPress 2100 and HP Indigo highly endorse this new sheet. Paper.com has Exact Digital available and ready for immediate shipment.

International Paper sells its Coated Division

International Paper announced it sold its coated paper division to Apollo Management for $1.4billion. The division had four mill locations - two in Maine, Michigan, and Minnesota. The mills produced 2 million tons of magazine and catalogue paper a year and 2005 revenue of $1.6billion.

Uncoated Price Increase .... again

Most of the industry is bracing for yet another price increase in June for Uncoated Woodfree papers. Many believe the copy papers will increase $60/ton ($3.00/cwt) and the roll and folio sheets will increase $40.00/ton ($2.00/cwt). The market demand appears to maintain a strong backlog and producer’s inventories have declined. The Weyerhaeuser announcement has created some fear; however, continued consolidation in the industry is needed

Market Pulp

Following from Deutsche Bank Market Research on Pulp-
MARKET PULP
Domestic pulp producers have announced $30-40/tonne price hikes for
May and June on NBSK; if implemented, list prices would go to
$720/tonne, the highest level in 10 years. Hardwood producers, led
by Lat. Am eucalyptus producers, are separately pursuing $20/tonne
hikes this month. BSK and BHK days/supply inventory both fell one
day in March to 28 and 35 days respectively. World shipments were
up 3.6% y/y in March, led by a surge in shipments outside of North
America, particularly on hardwood grades. GP has reportedly run-
down its NBHK inventories at Old Town, Maine, and Fraser Papers is
scheduled to close its NBHK mill May 6th. Tembec is the latest NBSK
producer to announce a mill closure; its 200K tpy Smooth Rock Falls
mill will close at the end of July.

Coated Board continues to Shrink

MeadWestvaco was the latest to announce removing production of 310,000 tpy of SBS capacity. Between Tembec, MeadWestvaco, and Domtar, almost 500,000 tons of capacity for this grade have been removed. Industry experts predict this grade will be in tight supply as a result and prices will increase.

Paper Industry continues to Plant Trees

The Paper Industry has planted more than three times the amount of trees it had harvested for the pulp and paper manufacture. Forests are growing - not disappearing. Today, there are more than 10 million more acres of forests is the USA than there were 15 years ago. Since 1965, the number of trees growing in USA has increased 39%.

Weyerhaeuser Reports alternatives to Fine Paper Business

The management team at Weyerhaeuser has announced it is considering alternatives to its fine paper business segment. The choices include a complete divesture of the uncoated paper assets. This is big news considering the dominant market position of this paper company.

Smart still operating as Chapter 11

Smart Paper continues to operate under the protection of chapter 11. The company closed the Wisconsin plant but continues to make paper in Hamilton, Ohio. Wachovia Capital Finance and CIT are assisting with the financing. Paper.com has all of Smart's paper products including cast coat / Kromekote, matte coated, and uncoated text and cover - in stock and ready for immediate delivery.

Pulp Prices contiue to Increase

The pulp producers have once again announced a price increase for market pulp. The recent announcement of $30/ton will advance the list price of NBSK to $690/ton. The markets are expected to stay tight with the announced closure of the pulp mills at Bowater and Weyerhaeuser and also the recent closure at Georgia Pacific and Fraser.

Internationa Paper shutters another machine

International Paper announced it will shut down a coated paper mill in Courtland, AL. The facility produced 922,000 tons per year of coated free sheet.

Paper Industry Experts Forecast US Paper Capacity Decline

Although many sectors within the paper industry appear to be doing very well in today’s climate, must agree that long-term trends will continue a downward capacity.
-Downward capacity trend begin in 2001 with many mills announcing manufacturing equipment curtailments
-2005 overall capacity reductions estimated at a negative 760,000tons - representing 45 machines permanently removed.
note, almost 7million tons was taken out of production at some point during year.
-2005 capacity 99.5million tons
-2005 US Newsprint (used in newspapers) declined by 865,000 tons - 13% - total of 5.76million tons
-2005 US printing and writing gained 0.7% to nearly 26million tons
-Capacity forecast to decline nearly 600,000tons over next 2 years
-2005 mechanical (groundwood) capacity grew 8% to 2.25million tons - most of increase came from conversion from newsprint machines
-2005 Coated Mechanical (magazine paper) capacity rose to over 5million tons or 2.3% increase.
Capacity will decline with the recent announcement of 2 machines shutting own.
-2005 uncoated free sheet declined to 13.5million tons. This sector is predicted to continue declining capacity.
-Tissue paper and Kraft paper continue to witness declining capacity

Annual Paper Meeting Held in New York City

The American Forest and paper Association (AF&PA) held their annual meeting April 9-13; following observations-
-First time in since 1995 that total paper and pulp production has dipped below 100million tons of capacity.
Basic concerns of industry continue to be
-Global competition; limited capacity spending on equipment (aging technology); high energy and labor (benefit) costs; capacity rationalization; and demands for short-term results for shareholders.
-Coated and uncoated free sheet markets continue to be strong ..... for now.
-Many older mills have 'shut down' equipment and thus capacity has been reduced
-Many of the off shore producers have curtailed shipments to USA
-Demand appears good - although the long-term trend is declining 2% per year.
-The Premium Text and Cover markets continue to suffer
-Market demand has continued to decline 10% per year
-No forecast for demand to shift to neutral nor increase
-High manufacturing costs continue to plague this sector
-Newsprint suppliers are doing well
-Demand has NOT increased, however, large trend to converting equipment over to high bright or coated; accordingly,
Newsprint capacity is decreased
-Board capacity continues to decline
-Linerboard will continue to decline, as well as recycled linerboard with several closures
-Containerboard capacity is stable due to capacity outages AND efficiencies on operating machines
-Corrugating Medium capacity will continue decline (forecast is down 2% 2006)