Kruger to Shut Down two Paper Machines

Kruger announced that it will shut down production on the two supercalendered paper machines at its Trois-Rivieres mill due to increased value of Canadian dollar and production costs. The scheduled temporary production shutdown of paper
machine No. 5 from October 31 to November 11 will be extended for an indefinite period. This interruption will affect 65 employees. Production on Paper Machine No. 6 will however resume as planned on November 12, but will be interrupted for an indefinite period as of February 4, 2008, affecting 115 employees. Annual production on these two machines is 150,000 tons.

Evergreen Packaging to cut 122 jobs

RISI reported the Rank Group's Evergreen Packaging Group will eliminate 122 jobs at its Canton, NC, bleached board and uncoated freesheet paper mill and its Waynesville, PA, finishing plant, through attrition, the
Asheville (NC) Citizen-Times said recently.
Evergreen Packaging was created after Rank Group purchased Blue Ridge Paper this summer and renamed the company. The Rank Group also purchased International Paper's liquid packaging business and mill in Pine Bluff, AR,
last year.
Evergreen's headquarters is now in Memphis, TN

Digital Printing versus Offset Printing

Paper.com often reports on the dynamics of the digital printing market. The site has all the major brands and will ship as little as a ream of paper up to multi truck loads. In a recent article in DPSMagazine, three primary factors must be considered when deciding between digital and offset. First is format or size as well as print quality. Although the quality of digital has improved, offset printing is still better and the maximum size for a digital press finished piece is 20X14”. Special paper should be used when printing digital, while offset allows for a multitude of substraights. Second consideration is how you will market the printed piece – personalized or generic. Primary strength for the digital technology is the ability to personalize every piece and customize the message. The third consideration is price, digital generally appears more expense; however, one must focus on all costs including make ready and waste – digital printing really is more competitive than perceived – especially for short runs.

Which Process to use – Digital vs. Offset
DSPMagazine goes on to summarize evaluation process –
1. Format Size
2. Run Length
3. Brand or Spot Colors
4. Finishing requirements
5. Print Quality
6. Application
7. Substraight (type of paper) demanded

Abitibi and Bowater Merger is Closer

Abitibi and Bowater have agreed to sell a 370,000/mton newsprint in Snowflake, Arizona in order to meet Department of Justice antitrust concerns and gain approval for their proposed merger.

Wausau to Close New Hampshire Mill

Groveton, New Hampshire, paper mill closure will cut 105K of Uncoated Free Sheet capacity. Wausau Paper, based in Mosinee, Wis., employs 3,200 people at 11 facilities in seven states. It announced the Groveton mill closure when it released its third-quarter report.
Wausau's printing and writing division reported an operating loss of $1.3 million. Two years ago, Groveton Paperboard, which produced corrugated material and shared space with Wausau, shut down, leaving more than 100 workers stranded. Wausau was left to operate the building on its own, which added to its costs. The company will continue to produce printing and writing grades at its Brokaw, Wisconsin and Brainerd, Minnesota mills.
In 2001, other New Hampshire paper mills were shuttered including Berlin, Gorham and Contoocook.
Paper.com has all the popular Wausau products in stock and ready for immediate shipment.

Stora Enso Reduces capacity and administrative staff Stora Enso Reduces capacity and administrati

Management just announced that Stora Enso plans to cut magazine paper, newsprint and pulp capacity and reduce its administrative staff. Stora Enso’s intention is to close down permanently Summa Paper Mill and one magazine paper machine at Anjala Mill, and the pulp mills at Kemijärvi and Norrsundet. The closures will reduce annual capacity by 505 000 tons of newsprint and magazine paper and 550 000 tons of pulp. The number of personnel affected by these planned permanent mill closures will total about 1 400 - about 1 100 in Finland and about 300 in Sweden.
Stora Enso also plans to divest its mills at Kotka in Finland. The laminating paper business and the special coated magazine paper operations at Kotka are to be divested as Stora Enso continues to focus its portfolio.

Magazine Revenue Up In 2007

As reported by MediaDailyNews - Magazine Revenues are up 5.6%in the first three quarters of 2007, compared to the same period last year--topping $17.9 billion, according to figures from the Publishers Information Bureau. At the same time, advertising pages slipped 1% to 172,622, suggesting that increased demand is driving up prices for magazine ads. However, many magazines offer unannounced discounts on their reported "rate card" prices, making it difficult to know the true extent of price inflation.
The first three quarters saw big spending increases in the drugs and remedies category, which led revenue growth, although drugs and remedies slumped in the third quarter--possibly due to the political controversy surrounding direct-to-consumer advertising by pharmaceutical companies.

Magazine Revenue Up In 2007

As reported by MediaDailyNews - Magazine Revenues are up 5.6%in the first three quarters of 2007, compared to the same period last year--topping $17.9 billion, according to figures from the Publishers Information Bureau. At the same time, advertising pages slipped 1% to 172,622, suggesting that increased demand is driving up prices for magazine ads. However, many magazines offer unannounced discounts on their reported "rate card" prices, making it difficult to know the true extent of price inflation.
The first three quarters saw big spending increases in the drugs and remedies category, which led revenue growth, although drugs and remedies slumped in the third quarter--possibly due to the political controversy surrounding direct-to-consumer advertising by pharmaceutical companies.

US Upholds Penalties on Asian Coated Free Sheet Imports

RISI reported that the US Department of Commerce (DOC) has upheld preliminary determinations in countervailing and antidumping duty investigations on coated free sheet imports from China, Indonesia, and Korea. Announcing its final determination today the DOC said it that Chinese, Indonesian, and Korean suppliers had sold coated freesheet in the USA at less than fair value -- by 21.12% to 99.65%, 8.63%, and 0.47% to 31.55% respectively. The DOC also determined that Chinese, Indonesian and Korean suppliers had received countervailable subsidies ranging from 7.40% to 44.25%, 22.48% and 0.00 to 1.46% respectively. "Subsidies in China keep out our exports and distort global trade flows.
The Administration will continue to vigorously enforce our countervailing duty and antidumping laws, and will take appropriate remedies based on the facts presented in each case," Import Administration Asst. Sec. David Spooner said in a statement.

South America BIG Supplier of Pulp

In the past several years, South America has moved into a position of being a major worldwide source of supply for pulp. The region has low cost fiber, as well as advanced research and development laboratories for plant genetics and seed development. Brazil in particular has moved into the forefront as a supplier of pulp. Projections indicate 5 of the top 10 market pulp producers will be located in South America. In 1986, Brazil produced 3.9million tons of pulp; by 2006 this figure grew to more than 11million tons.

Current State of Paper Markets

Report outlining curent state of Paper market by - Deutsche Bank - Equity Research


* NEWSPRINT
Despite more attempts to increase prices (Catalyst was out with a $25/tonne price hike for Oct. 1) newsprint prices continue to decline. SP will have another go at it, with a $30 increase slated for Nov 1. Tempec announced plans to indefinitely idle a 100K/mton machine at Kapuskasing, ON and Kruger is indefinitely idling an 80K/mtpy machine in Newfoundland. Kruger also announced plans to curtail 25,000 tonnes of newsprint capacity in Quebec next month. These are the first signs that 2nd and 3rd tier players are willing to act in front of ABY/BOW merger.

* COATED GROUNDWOOD
The cyclical sleeper? Prices rose $40/ton in October as the LWC market remains extremely tight, with customers scrambling for volume. This increase comes after a solid price increase in August, with No. 5 40-lb offset rolls prices rising $35/ton, and a $5-10/ton increase in September. Shipment volumes rose 3.6% y/y in September. Kruger's reversed its decision to shutdown two of its Quebec paper mills for two weeks in response to increased demand, but also announced a 3rd price hike of the year on LWC. We also understand that European mills are beginning to trim export volumes to the US.

* UNCOATED FREE SHEET
Tepid US demand has slightly hindered implementation the full $60/ton price hike. However, the full increase is expected to be fully implemented in the next few months, with $40 of the $60 offset hike already passed through this month. Trade book prices were estimated to be up $60-70/ton in September. September UFS shipments dropped 5.0% y/y, but supply reductions are keeping the market inreasonable

Top North American Uncoated Freesheet Producers

RISI just released some interesting data comparing top producers for Uncoated Woodfree papers. Notice Domtar’s rise to the top…
2007
1. Domtar 33.7% market share
2. International Paper 25.2%
3. Boise Cascade 10.5%
4. Georgia Pacific 7.2%%
5. Glatfelter 3.4%
Top 5 80.0% market Share

2001
1. International Paper 32.7% Market Share
2. Domtar 15.5%
3. Boise Cascade 10.1%
4. Willamette 9.7%
5. Weyerhaeuser 8.8%
Top 5 76.8% Market Share

1996
1. International Paper 14.9% market share
2. Georgia Pacific 14.0%
3. Champion International 7.9%
4. Boise Cascade 6.5%
5. Union Camp 6.2%
6. Willamette 6.0%
7. Weyerhaeuser 5.3%
8. Domtar 5.2%
Top 5 producers 49.5% market share

Corrugated Container Market becoming Snug

Box volumes were up in September and inventories remain lean while operating rates averaged 98.3%. Additional good news included exports rising and imports falling. The strength of these numbers along with the rapid implementation of the recent box price hike may yield an additional price increase early next year.

Environmentally-Friendly Paper for Second Printing

Fraser Papers Inc. announced today that it had been selected to provide environmentally-friendly paper for the second printing of the U.S. edition of Harry Potter and the Deathly Hallows. Fraser Papers was one of the suppliers for the first printing of the book, which was released in July. As reported earlier by Paper.com, the paper manufactured for this book was customized and contained 30% post-consumer content and pulp certified by the Forest Stewardship Council ("FSC"), an internationally recognized organization driving responsible international forest management standards.

The coated paper market could be tightening??

North American coated paper markets have tightened dramatically in recent weeks. For the first time in several years, customers are scrambling for supply. Certainly the anti-dumping charges have kept imported paper to a minimum and havereduced supply. Imports accounted for approximately 1million tons per year.

In uncoated free sheet, Domtar continues to hint it may cut further capacity. Beneficiaries would include the two big players, Domtar and International Paper. Other beneficiaries on our coverage list would
include specialty names like Glatfelter and Wausau.
From: RISI North American Global Forest Products Conference

Leading Paper Website Announces Price Increases

Paper.com, one of the largest online internet sites, exclusively markets paper products. They recently announced a price increase for all business papers and forms; text; cover; writing; as well as office and stationery grades. This includes popular items from mills such as International Paper, Mohawk, Smart, Fox River, Domtar, Boise, Neenah, Wausau, Finch Pryun, Xerox, and Monadnock. P. Scott Vallely, Managing Director, sited that all our mills increased price because they are experiencing additional costs related to pulp, chemicals, freight, energy, and labor. We tried to maintain pricing as long as possible, but now must pass these cost increases to our end users.
Paper.com has over 40,000 items in inventory and ready for immediate shipment. The company recently launched a new site, making it easier to search through the many popular items. They also introduced 888PaperGreat to call for assistance.

Environmentalists are upset at Sears Catalog

Associations that promote the greening of earth have voiced frustration at Sears and Kmart for their continuous use of paper from endangered forests in California and Canada and not using more recycled papers in their paper supplies. Sears is now the largest catalog company that has not taken steps toward environmental sustainability. Sears mails 425million catalogs annually – including 270million under its Lands End brand. One association, ForestEthics, has insisted that Sears begin to use more post consumer recycle waste in the catalogs.

NewPage’s Sterling Grade Line expanded

Paper.com recently introduced the newest Sterling Ultra grade offerings. The product is now available in 7, 8, and 9-point gloss. The grade has 10% post consumer waste. These new items are especially desirable for a reply card program.

Paper.com opens Environmentally Friendly ‘Green’ Store

One of the paper industrys' largest web marketing companiy outlined several steps for its end users to become eco-conscious and create cost effective printed material. The company believes that orders recycled papers and creates promotions that are good for the environment are also good for business. Sincere goodwill goes a long way and everyone is very interested in protecting the environment. Green minded end users and projects should plan beyond just using recycled paper. Virgin, recycled, and tree free paper are all very different papers. Virgin fibers are directly from trees, they are the cleanest and strongest, but have the most direct effect on the consumption of natural resources. The Forest Stewardship Council (FSC), Sustainable Forest Initiative (SFI), and Program for the Endorsement of Forest Certification (PEFC) traces paper components to its origins via third party certification. This assures end users that papers are from appropriate trees and forests and no old growth forests were used. Recycled papers account for approximately 37% of all the raw material used in domestic products. Recycled papers benefit include less energy consumed, lower green house emissions, reduced wastewater and less solid waste. Post consumer waste (PCW) is total recycled fiber and tree free is generally hand made – produced from kenaf, hemp, flax, cotton, or a combination.
Other environmentally friendly initiatives include using uncoated paper instead of coated papers. Coated, or glossy, has clay content, which is not good for recycling. Also, if you design a piece that is smaller in size – this uses less paper, chemicals, and ink, which are all better for the environment. Choice in inks is also important – soy or vegetable based versus the more popular Petroleum based is an excellent alternative. Lastly, noncomplex design and folding generates a more efficient product and thus less waste.
Paper.com can certainly assist with recycled and tree free papers – but consideration should also be considered for other environmentally friendly ideas.

Xerox Introduces new Copier that Promises to Cut Cost of Color Copies

Xerox recently introduced a new line of copiers that promises to cut the cost of color copies. Xerox, the world’s largest maker of high speed color printers, will start selling the Phaser 8860 which will generate color copies for 0.05 for full color page. Color accounts for 12 percent of the more than 30 million pages printed from Xerox copiers last year. Growth is in color and this new equipment will help.
Paper.com carries many of the Xerox papers as well as many other brands suitable for Xerox equipment.

Harry Potter New Book on Recycled Paper

The newest Harry Potter book, Deathly Hallows, consumed over 22million pounds of paper of which 6,700 tons was FSC certified. This is considered the largest paper purchase for a single book. The FSC certification confirms that the paper was from forestlands that are managed in a socially and environmentally responsible manner. Experts believe this purchase saved nearly 200,000 trees.
Paper.com, unfortunately, did not supply the paper for this book – but the site has many 100% recycled papers as well as FCI and FSC papers, in stock and ready for immediate delivery.

Mohawk Introduces New Papers for the Digital Presses

Mohawk Papers recently expanded its digital portfolio with additional i-tone products. They added heavier weights and new sheet sizes. The Mohawk Color Copy grade now has 110lbs cover. This grade is designed for Xerox’s iGen3 Digital press. The mill also has many new Via grades for the iGen3, Kodak NexPress2100, and HP Indigo digital presses.
Paper.com has all the newest digital grades, including all the Mohawk products

Newsprint continues its downward slide

Newsprint consumption continues its decline along with paper pricing and supply of product. Demand has fallen even greater than anticipated. In 2005 total North America demand dropped over 6% to 10.4million tons – with USA daily newspaper consumption falling 5.4% or 7.5million tons. In 2006 the decline continued, as North American demand dropped to 9.7million tons. In 2007, the demand has fallen 9 months in a row. USA newspapers continue to loose circulation, pages and have made the actual newspaper publication smaller in size – all leading to less paper.

Newsprint volumes and prices remain under pressure. Industry experts expect further pressure for the balance of the year. Prices have dropped $110/ton since last September, after declining during each of the last 12 months. We expect year end results will be brutal as lower prices and higher costs will be.
The largest dynamic in the newsprint market includes the proposed combination of Abitibi (#1) and Bowater (#2). Other producers such as Catalyst, Kruger or White Birch could emerge as additional consolidators. SP Newsprint is reportedly still on the blocks. Boise appears poised to convert one of its newsprint machines to containerboard.

COATED GROUNDWOOD PAPER UPDATE

Paper.com had experienced price increases in August, with No. 5 40-lb offset rolls prices rising $35/ton. Prices continued on the website to rise in September, up another $5-10/ton. This continues the rebound from the slow demand experienced in the first half of the year, and paper manufacturers are confirminga sudden turnaround in customer demand for coated paper. Shipments rose 15.5% in July from 2006. The market is fairly tight and enjoyed more help from last week's downtime announcement from Kruger.

UNCOATED FREE SHEET UPDATE

Most of September's offset hikes which Paper.com has confirmed have stuck. All the major paper producers, including Domtar, International Paper and Boise Cascade, introduced an increase on offset roll prices by $60/ton and offset folio sheets prices by $30/ton in mid September. While demand has been steady, supply reductions are keeping the market in reasonable balance.
Paper.com, a major source of supply for printing and writing grades, was experienced an increase on the majority of its commodity grade offerings.

Leading Online Paper Marketer Introduces New Site

Paper.com, one of the leading online marketers of paper products recently
released an all new website to allow for a more efficient website. The company exclusively markets over the web. Paper.com has 46 warehouses though out the USA representing over 40,000 paper items from all the major paper producers. The company was founded by John Engel, an internet marketing expert, and P. Scott Vallely, a paper industry executive, to produce the industry’s largest web site. Paper.com focuses on office, stationery, school, scrapbook, Artist, and theme papers. The company boosts of over 7000 visitors every day.

New Environmentally Friendly Digital Sheet Introduced

Galerie Art Digital is new digital grade from Paper.com and produced by the M-Real Paper mill. It is fairly new and is promoted as a very 'Green " sheet, made from recycled fibers.
M-real paper mill recently launching two new products in the Data Papers range of office papers at the Paperworld show in Frankfurt. Data Color Inkjet Photo Gloss, Digital, and Data Color Inkjet Photo Matt hit the market and offer customers a wider choice in a market where new technologies and particularly increased use of color applications put ever greater demands on high quality paper products. Available in text and cover weights from Paper.com.

Paper.com introduces new Environmentally Friendly Grade

Domtar EarthChoice Office Paper is an FSC-certified multifunction grade that offers guaranteed performance on high-speed copiers, laser printers, and inkjet printers and offset presses. The 92 GE brightness and FSC certification make it an ideal choice for customers who want to practice environmental responsibility on an everyday basis. It is acid-free for longer archival life. The grade is suitable for Copier, inkjet and laser and digital printers and is ideal for everyday desktop copying and printing.
Paper.com recently added this grade to its extensive line of environmentally friendly grade offerings.

MARKET PULP UPDATE

It's turning out to be a favorable pulp cycle. The pulp rally shows no signs of slowing down. The market saw a $20/ton price hike initiative on NBSK for September. Moreover, the prices of most hardwood grades rose $20- 25/ton in August, and with the market remaining tight, several producers have announced a $20-30 increase for October. The steep drop in the US dollar in recent weeksiwill provide the fuel for further attempts to boost prices. Despite the highest prices in over a decade, a strong Canadian dollar for high chip costs are squeezing Canadian mills.

Pulp continues to Climb

Parsons & Whittemore, Sappi Fine Paper North America and most other producers have informed customers that they will initiate a $20/metric ton price increase on northern bleached hardwood Kraft (NBHK) pulp shipped after October 1, boosting the industry’s list to $765. Fraser Paper started the price hikes last week. Transaction prices for NBHK have risen from $610/metric ton in January to $730, according to monthly surveys of buyers by Purchasingdata.com.
Parsons & Whittemore also plans a $20/metric ton price increase on southern bleached hardwood Kraft (SBHK) pulp in the U.S. to $750. The RISI.com subscription newsletter says SAPPI plans to raise prices $25/metric ton on three grades of NBHK pulp in North America. Its prices on aspen and mixed pulp now are slated at $750 and maple grade is at $760.
In addition to the SBHK and NBHK hikes, producers of bleached eucalyptus, birch, and hardwood-derived bleached pulp have came out with price increases.

Fraser Papers Announces Paper Machine Downtime

Fraser Papers Inc. announced that it would take market-related downtime on the No. 6 paper machine at its East Papers operations, effective October 6, 2007, to manage inventory levels of uncoated groundwood papers. The Company expects the temporary shutdown to be two weeks in duration, dependent on market conditions.

Kruger to curtail production at two Quebec mills

Reported by - Financial Mirror –
The global paper and forest product industry's six-year-long decline in credit quality has continued in 2007,
says Moody's Investors Service in an industry update. During the year, industry participants have faced tighter liquidity conditions, a worsening slowdown in US housing construction, and, for producers in Canada, Brazil, and Chile, the negative effects of a strengthening in their national currencies.
Overall, Moody's expects the slide in credit quality to continue, particularly for North American and European based companies.
Positive rating pressure, however, is expected for the market pulp and packaging segments as prices remain strong.

Kruger to curtail production at two Quebec mills

Kruger Inc. announced that it will reduce the production at two of its Quebec paper mills. These production curtailments will be achieved by the shutdown of the Trois-Rivières mill, from October 28 to November 10 and the Brompton (Sherbrooke) mill from
November 17 to December 1st. Total production reductions during these periods will amount to 25,000 metric tones of newsprint, 6,000 metric tons of supercalendered paper and 8,000 metric tons of coated paper.
These interruptions will affect 1,500 employees and result from the combined effects of the increase in value of the Canadian dollar and the continued increase in production costs, including manpower, fiber supplies and energy.

Boise Launches Reinvented Imaging Papers Lines

Boise Paper recently announced a complete rebranding launch for four of its primary lines of paper. This aggressive and strategic rebranding effort creates distinct market-driven personalities for each of the different lines, positioning Boise Paper as a true leader in the premium and specialty papers market. These distinct brand personalities are driven by a combination of new packaging, a sharp focus on new customer demographics and in some cases, an expanded and enhanced paper offering.
The four lines that Boise will be rolling out with new branding include: Boise ASPEN, Boise's premium line of recycled papers that work for you and the environment; Boise FIREWORX, a category-changing, vibrant color line that offers Paper With Pop; Boise HD:P High-Definition Paper for high-end digital color printing needs; and Boise X-9, the tested, proven, top-selling multi-use paper formulated for premium performance in printers, copiers and fax machines.
"Boise Paper is committed to being a leader in premium and specialty papers," said Vince Phelan, marketing director, Boise Paper. "This broad rebranding effort is a great example of how Boise Paper continues to deliver "Beyond What's Expected" to our current and prospective customers. We are making bold changes to deliver bold results that add value to our customers and invite new customers to be a part of our Boise brands. These new brands are the fruits of hours of research and trials to better connect our product offering to our customers current and future paper needs."
The rebranding launch for each line of paper will occur through the end of 2007 and into the first quarter of 2008. Below are brief overviews of how each individual paper line will be rebranded:
Boise ASPEN -- This is Boise's best-in-class line of premium recycled papers that further reinforce Boise's standing as the leading manufacturer of recycled papers. Offering an impressive breadth of line, Boise ASPEN papers provide customers with high brightness and performance that customers expect from non-recycled sheets and support any company's green initiative. Boise ASPEN offerings will now include Boise ASPEN 30, Boise ASPEN 50, Boise ASPEN 100 Multi-use, Boise ASPEN Laser (Presentation Laser 30%), Boise ASPEN Color Copy, Boise ASPEN Offset & Sheet Grades, and Boise ASPEN Forms & Envelope grades. As part of the rebranding efforts for Boise ASPEN, Boise will introduce new packaging, further reinforcing the recycling and environmental elements of the paper.
Boise FIREWORX -- This is Boise's brand new line of color papers. Under the Boise FIREWORX line, Boise offers customers with 27 distinct and vibrant color offerings, great for all printing needs. Bringing fun and function together, Boise FIREWORX is a lifestyle colored paper that adds vibrancy to creative projects and attention-getting communications at home and in the workplace. From Bottle Rocket Blue to Firecracker Fuchsia, Boise FIREWORX is truly a Paper With Pop.
Boise HD:P -- This is Boise's new family of high-definition digital papers that is ideal for delivering professional-looking, colorful print projects. Providing smooth texture, crisp edges and vibrant colors, Boise HD:P papers take digitally printed documents to the next level. The entire line of Boise HD:P High-Definition Paper is laser and/or inkjet guaranteed, acid-free and carries a GE brightness rating ranging from 92-98 in a wide variety of weights and sizes to meet today's digital printing needs. The lineup includes Boise HD: P Everyday Laser, Boise HD: P Premier Print, Boise HD:P Presentation Laser & Cover, Boise HD:P Color Copy & Cover and Boise HD:P Glossy Color Laser & Cover.
Boise X-9 -- This is Boise's #1 selling multi-purpose paper. Used by businesses of all types and sizes for their everyday imaging needs, Boise X-9 delivers consistent results for a myriad of printing and copying equipment. Boise X-9 offers excellent run-ability that is third-party tested, and is a great option for high-output business needs. Boise X-9 now features a fresh new look that is familiar to the loyal user, yet conveys a more energetic feel with easy-to-view product information for those new to the brand.
Come to Paper.com for the entire product offering of Boise. Paper.com has every major paper producers' items in stock and ready for immediate delivery.
SOURCE: Boise Paper

Legion Paper Goes Green

New York - Legion Paper, the leading supplier of fine art paper in North America, launches a comprehensive eco-friendly paper classification system as part of their website, www.legionpaper.com. This new tool is the first of its kind within the paper industry to provide a powerful 'green' search engine. The company has partnered with Paper.com to also offer all these environmentally friendly products.
"We have a very different take on green than most paper companies," says Joshua Levine, CEO Legion Paper. "The majority of the papers we supply contain an eco-friendly story so we developed a system to highlight these green characteristics, which has turned into a valuable educational tool."
Most of the 'green' discussion in relation to the paper industry has focused on wood-based and/or recycled products. This leaves out many important products including 100% cotton papers, papers made from cork, mulberry, and handmade papers -- all of which do not require the cutting down of trees in the first place. The new Legion Paper eco-friendly website organizes each paper into five categories: Alternative Energy, Chlorine-Free, Handmade Papers, Mill Certification and Tree-Free.
"Many of our customers rely on legionpaper.com for their projects and we are continually asked about the specific 'green' qualities of our papers," added Levine. "With our new "green" interface, we are able to offer this extraordinary search tool so anyone can easily find all the eco-friendly characteristics of our papers instantly."
The new Legion green site was developed in direct response to customer demand with online traffic to legionpaper.com substantially and consistently increasing over the past 24 months. Legion Paper prides itself on outstanding customer service and this new online feature demonstrates their commitment to outstanding service and education. Additionally, Legion's digital imaging division, Moab by Legion Paper, runs on 100% wind energy and is located in the heart of the west's national parks system where there is an emphasis on living green.
Paper.com is a large reseller of all the Legion products. The Paper.com web site now has a “Green Store” for easy shopping.
SOURCE: Legion Paper

NewPage / Cerberus Acquires StoraEnso USA mills

Stora Enso, one of the world's largest makers of paper products, is selling its North American paper manufacturing units for about $2.1 billion to an Ohio-based company, New Page, owned by the private equity firm Cerberus Capital.

The operations being sold include eight factories and will be combined with those of Cerberus-owned NewPage Holding, based in Dayton, Ohio, a North American coated paper producer employing more than 4,300 people.

The mills being sold were once part of Consolidated Papers, which was acquired by Stora Enso in a $4.8 billion deal in 2000.

Six of the mills are in Wisconsin, one is in Duluth, Minn., and the eighth is Port Hawkesbury, Nova Scotia, Canada.
Paper.com carries all the New Page paper products and many of the Stora Enso grades in stock and ready for immediate shipment.

Price Increase Summary

Paper.com is beginning to hear from all our major paper mills regarding several price increases.
As the specifics of each mill are confirmed, we will update our data.
Price increase summary as follows
Text/Cover/Writing increase of 4-7%
Coated increase of 5-7%
Uncoated offset and Opaque increase of 3-5%
Carbonless increase of 5%
Envelopes increase of 9-11%
Most are effective late September or early October. Paper.com still is marketing most items at currrent prices, management
will hold these prices firm as long as possible.

Ad Spending Declines 0.3% in First Half of 2007

Total U.S. advertising expenditures fell 0.3% to $72.5 billion in the first half of 2007, according to TNS Media Intelligence. It is the first time since 2001 that ad spending declined for two consecutive quarters. Nearly all media categories were weak, with the exception of Internet and magazines, which rose 17.7% and 4.6%, respectively. Newspapers were among the hardest hit, with the category falling 5.8%.

FOEX NBSK Pulp Index Climbs

FOEX, a provider of audited, trade-registered pulp and paper indexes, said the PIX northern bleached softwood kraft (NBSK) pulp index climbed $7.79/mton to $807.79 in the week ending Sept. 11. It was the first time in four weeks that the index saw movement. The price of lightweight coated (LWC) paper fell euro 0.19/mton to euro 670.73/mton and coated woodfree fell euro 4.85/mton to euro 704.98/mton.

Monthly U.S. Printing Shipments Increased in July

U.S. printing shipments increased $138 million in July compared to the same month last year, the WhatTheyThink Economics and Research Center reported. According to the latest report, the average monthly increase in printing shipments has been $196 million since last August. Adjusted for inflation, however, shipments in July of this year were actually down by –0.6% from last year. Year-to-date shipments are down –0.9% on an adjusted basis.

EKSuccess grows through recent acquisition

GTCR Golder Rauner, LLC, one of the nation’s leading private equity firms, announced today that EK Success, a leading provider of scrapbooking and paper-based crafts products, has acquired Wilton Industries, Inc. and Dimensions Holdings, LLC. EK Success is a creative consumer products company with a major market position in the scrapbooking segment of the $30 billion U.S. craft industry. EK Success was acquired by GTCR in February 2006. The combined companies will be named Wilton Products, Inc. and be headquartered in Woodridge, Illinois.

EK Success is a creative consumer products company with the leading market position in the fast- growing $3.0 billion scrapbooking segment of the U.S. craft industry. EK Success designs and markets some of the craft industry’s most respected brands of stickers, multi-dimensional embellishments, punches and writing utensils for use in scrapbooking and related paper crafts, such as card making and invitation creation. These include ZIG® Memory System®, Sticko®, Paper Shapers®, Jolee’s Boutique®, HERMA® and Cutter Bee®.
Paper.com markets all of the EKSuccess products and is one of the largest online marketers of scrapbook and craft papers.

New Announced Mill in Vietnam in trouble

After several years of construction, the Thanh Hoa Pulp and Paper mill in Vietnam is suddenly short of funds to complete the project.
The mill was originally anticipated to go on stream in 2005; the mill was expected to produce 50,000 tons of pulp and 60,000 tons of paper per year, with products to include cartons, duplex paper and packaging paper. At the end of the second stage, total production capacity would increase to an estimated 150,000 tons of pulp and 150,000 tons of paper per year.

Boise Cascade Paper Mills may be Sold

Boise Cascade in considering selling its paper, packaging and newsprint divisions for $1.63billion to Aldabra 2 Acquisition. Aldabra was formed by Nathan Leight and Jason Weiss of Terrapin Partners. They agreed to pay $1.34billion cash and the balance in shares. The company would be run by Alexander Toeldte – Boise’s current Executive Vice President.
In 2004, Madison Dearborn acquired Boise and split the corporation into manufacturing and retail (OfficeMax). Madison Dearborn has no immediate plans of spinning off the retain division nor the wood and building product divisions.

MARKET PULP Update

The strength in market pulp prices shows no signs of abating. The prices of most hardwood grades rose $20-25/ton in August, and there is yet another $20/mton price hike initiative on NBSK for September. Production curtailments caused by the woodland workers strike in BC is helping to keep the market tight. Despite the high prices, the strong Canadian Dollar and high wood chip costs are keeping margins barely positive at a number of mills.

NEWSPRINT Market Update

Despite the announcement of a $25/mton price hike initiative for September, newsprint prices have remained under pressure. Prices slipped $10/ton in August. The combination of low prices, a strong Canadian Dollar and surging chip costs in British Columbia suggest a near-term bottom may be close. Howe Sound Pulp & Paper and Catalyst have recently announced capacity
withdrawals. In other signs of financial pressure, Kruger recently announced the idling of an SC machine in Quebec

UNCOATED FREE SHEET UPDATE

It might be another cut-size (business papers) price increase in the works. Producers are attempting to raise offset rolls prices by $60/ton and offset folio sheets prices $30/ton. While demand has been sluggish, supply reductions are
keeping the market in reasonable balance. Domtar recently announced the indefinite shut of a 285,000 tpy Paper Machine at Dryden, ON. With pulp prices still rising and the market in a seasonal strong period, we wouldn't be surprised by another cut-size attempt.

Canada Paper Producers feel increased currency pinch

The currency increase versus USDollar is tightening around Canada's forest sector. This week, White Birch Paper, Catalyst Paper
announced more staff cuts, and both Domtar & Kruger announced more machine shuts.

Coated Grades See Price Increase

Verso Paper announced price. Verso Paper (previously owed by International Paper) is increasing the price of all coated mechanical products by $3.25/cwt ($65.00/ ton).
This increase applies to all coated mechanical (groundwood) grades including, but not
limited to, the following brands:
Liberty - All grades, basis weights and finishes
Liberty G - All grades, basis weights and finishes
Advocate Offset - All grades, basis weights and finishes
Advocate Roto - All grades, basis weights and finishes
This increase is in addition to the previously announced increase that took
effect for shipments as of July 1, 2007.

Stora Enso also announce price increase for their coated grades appling to:
NovaPress ,PolarisPress ,SolarisPress, StellaPress, TerraPress, CapriPress , ConsoPress, MagniPress , SuperiorPress, PubliPress, and ExoPress
The 7% increase applies to all gloss finish products.

xpedx Acquires Central Lewmar Companies

Paper and graphics supplies distributor xpedx will acquire the Central Lewmar companies based in Newark, NJ, from Philadelphia-based private equity firm Chrysalis Capital Partners for roughly $185 million.
Central Lewmar, which distributes printing and publishing papers, recorded more than $900 million in revenues for 2006.

International Paper announces $60/ton price hike for uncoated Freesheet

International Paper (IP) has announced to customers a price increase for its 50-lb offset rolls and opaques of US$60/ton
effective with shipments Sept. 10. A $30/ton increase for offset sheets was also announced.
This is the first increase for uncoated Freesheet 50-lb offset grades since mid-2006.
Paper.com will has all the International Paper grades and will ship as little as one ream.

Update on Paper Industry

In the past several years, we have witnessed a closer match of supply to demand – given the shuttering of paper machines and plants. Also, the global markets are alive and well – with China quickly catching up to USA capacity. In 2006 North America capacity witnessed its biggest one year drop – shedding nearly 3.9million tons – with the biggest effects on Containerboard and Uncoated Writing papers. The only new capacity announced is in Brazil, China, and Russia – not the USA. The curtailment of capacity, coupled with increased raw material costs yielded many price increases in most grade sectors. Some of the bigger stories of production changes include Boise converting 440,000 tons from uncoated to pressure sensitive label; International Paper conversion of 350,000 tons from uncoated to linerboard; UPM lightweight coated machine no longer producing 495,000 tons, Verso shutting down 505,000 of coated paper, and Domtar and Georgia Pacific shuttering over 200,000 of uncoated writing papers. Most likely, prices will remain firm for balance of year.

Not all Digital Papers are created Equal

Customized printing for effective communications is increasing and therefore so are Digital printers. In the past, paper mills have attempted to produce one universal paper grade for all the different digital printers, only to now conclude that each printer requires different paper attributes for the highest reproduction. Printers are demanding more of the paper. Hewlett-Packard (HP) is the leading digital printer, commanding nearly 42% market share. This printer has always demanded very different specifications than Kodak, Xerox, and Xeikon. Typically, the HP printer requires a special coating.
Paper.com has nearly every Digital Paper for all the various printers. Mills include Mohawk, International Paper, StoraEnso, NewPage, Finch, Smart, Domtar and Wausau. They have an experienced team ready to answer questions about the different paper characteristics of each grade.

Sappi introduces new multicoated woodfree paper for regular print

Press Release - Sappi is introducing Quatro, a multicoated woodfree brand providing a straightforward selection of papers for regular day-to-day print applications. The new brand, which supports Sappi's existing coated fine paper range, is available in sheets and in reels for sheeting, both in gloss and silk surfaces. Basis weights are from 115 - 250g/m2 for Quatro Gloss and from 90 - 250g/m2 for Quatro Silk.
Paper.com has many of the SAPPI grades ready for immediate shipment.

Wausau Paper adds higher caliper and more bulk to Astropaque Cover

Press Release from Wausau - Responding to customer demand for a stronger Astropaque® Cover, Wausau Paper announces an additional cover line that boasts a higher caliper and more bulk. Perfect for heavy-duty applications, such as business cards, brochures and presentation folders, the new offering is a complementary addition to the existing Astropaque Cover and text weights.
"The new Astropaque extension now offers customers a choice of an extremely smooth, superior printing surface product or a higher caliper, stronger product for those end use applications that require bulk and stiffness," said Jeff Fox, director of marketing for Wausau Paper's Printing & Writing Sector. "Both provide the attention-getting brightness and signature
reliability, paired with Astropaque text weights, these two selections are ideal for creating professional, cohesive images."
The high caliper Astropaque Cover is available in three Cover basis weights with the following calipers: 9.1 for 65 lb., 11.0 for 80 lb., and 13.7 for 100 lb Cover. With 98 Brightness, Astropaque provides a great printing surface, providing a sharper image reproduction and feel. The entire Astropaque line, including the new high caliper Cover is FSC Certified. Both the smooth and high caliper Astropaque Covers can be paired with Astropaque text weights, which range from 50 lb. to 100 lb.
Paper.com is a proud distributor of Wausau has all the paper grades in stock and ready for immediate delivery.

Papers Battling to Gain Traction

From Mark Wilde
Paper companies are battling to gain pricing (and earnings) traction. While prices have moved upward in many categories, margins remain anemic in most markets. Dogged by sluggish domestic demand, producers simply haven't made
much incremental headway in getting past higher costs.The good news revolves around supply reductions as well as
long-awaited benefits from the weaker US Dollar. Capacity continues to exit many markets. On the trade front, imports are falling and exports are rising. The bad news is that domestic demand continues to lag. Domestic volumes in virtually all categories are down during the first half of 2007. The net effect? While reported operating rates look constructive in many categories, underlying domestic markets have not been as tight, and pricing gains have been hard-fought in most cases

Recovered Paper Rate Increased

The United States recovered paper rate in 2006 reached a record 53.4% of paper and paperboard (including OCC) consumed in the U.S. (53.5 million tons), the American Forest & Paper Assn. (AF&PA) reports. This is the second year in a row that the paper recovery rate has increased. The 53.5 million tons represent an increase in recovery of 83.7% since 1990, when the paper industry undertook its first serious commitment to advance recycling in the U.S. Currently Americans recover nearly 360 lb of paper and paperboard for every person in the U.S., up from 233 lb per person in 1990.

Cost to Produce Recycled Papers Increases

The demand for environmentally friendly papers has been so successful that the growth is chewing away at sources of supply. The primary fibers include Old Corragated Containers (OCC), Old Newspapers (ONP), and Sorted Office Papers (SOP). With a finite supply and robust demand, the cost continues to increase and markets like China (export 11million tons) and India (export 866,000 tons) compete for USA paper mills for fiber. Fiber prices have aggressively increased.
Paper.com recently introduced an environmentally friendly green store on the website featuring thousands of items.

Many Pulp Grades hit 11 year high

As previously reported, Chemical Market Pulp Grades are at their highest price in 11 years and no relief is seen for buyers. Note: Pulp grades are based several attributes
-Origin – Northern, Southern
-Wood Type – Softwood, Hardwood
-Process – kraft sulfate, sulfite
-Bleach – bleached, semi bleached, unbleached
Northern Bleached Softwood Kraft (NBSK) is considered the benchmark and is has a current list price of $830/Metric Ton.
Worldwide shipments in 2006 were 38.9million tons. Strong current demand is witnessed from China. Given mill closures, increased demand from Asia, and good USA demand – we forecast pricing to remain firm throughout the balance of year.
Recent mill closures, which supplied market pulp, include Bowater, Neenah, Tembec, and Weyerhaeuser.

Marcal Paper Mill Finds Buyer

The bankrupt Marcal Paper Mills, located in New Jersey, secured $60billion in funding from Apollo Group. Note Apollo Group recently purchased the International Paper coated mills. Marcal produces 160,000 tons / yr of tissue. Original challenge included high Energy rates.

Dirigo Paper Still Down

Dirigo Paper’s facility in Gilman, VT continues to not operate due to soft commodity markets. The mill management recently announced it would be back manufacturing paper by mid September.

Brookfield acquires another Paper Mill

Brookfield recently purchased all the assets of Longview Fibre for $2.15billion. Although Brookfield’s primary interest was the 600,000 acres of timber in the Pacific Northwest, they also purchased 10 paper machines producing 763,000 tons/yr of linerboard and 387,000 tons/yr of Kraft. These papermaking facilities are considered high cost.

Top 30 Book Manufactures

Company Book Sales / Revenue
Visant Corp $632million
Quebecor World $628million
Bertelsmann $263million
Courier $221million
Transcontinental $142million
Phoenix Color $109million
Walsworth $102million
Maple-Vale $81million
Webcrafters $70million
Edwards Brothers $68million

Xerox Introduces new Digital Sheet

Xerox recently induced a high yield sheet for Digital Printers.
The pulp used for Xerox’s new uncoated 45 lb. text (17.7 lb. bond/67 gsm) sheet is produced by mechanically grinding wood into papermaking pulp instead of using the chemical pulping process traditional for producing digital business papers. The mechanical process converts more than 90 percent of wood weight to papermaking fiber, double the 45 percent yield from chemical pulping.

Xerox High Yield Business Paper has 10 percent more sheets per pound yet performs like 50 lb. text (20 lb. bond/75 gsm) made by a chemical pulping process, which is the most widely used type of paper for digital printing and copying. This reduces the cost per roll or 500-sheet ream, helping print providers increase profit margins.

With opacity - show-through resistance - equal to that of traditional 60 lb. text (24 lb. bond/90 gsm), the result is high quality, two-side printing where images and text on one side are barely visible from the other side of the paper.


High Yield Business Paper has a level of 84 brightness, common brightness is 92 brightness.
Paper.com has many of the Xerox items available and ready for immediate shipment.

Indications for Strong Uncoated Paper Market

Xerox recently issued a study for the USA paper market
US Shipments were strong in April and May
-No expectation of traditional seasonal lull in June and July
-Shipments down YTD 2.2%
-Apparent consumption was down 3.3% through May that is better than numbers earlier in the year of 5-6%
Operating rates continue to be strong
-Average 91% through May
-Xerographic market remains tight
Mills continue to announce capacity reduction
-Domtar 125K tons in Maine
More announcements expected
-Dirigo 70K tons Vermont
-Neenah 39K tons Ohio
The RISI index indicates that transactional prices overachieved the expected increase level by 2.5%
-This hasn’t happened in the last 10 years
-RISI index looks 30 days in the rear
These average prices were achieved in June
-The major mills have been successful in eliminating significant discounts to the market to achieve price increases more quickly

RISI is not predicting pricing to decline during the balance of 2007
-10% price increase over the 2006 full year average YTD
-Predicting sustained increases over time
Uncoated free Imports down 5% from March to April
-European market experiencing similar conditions to the US

US swing tons utilized for coated freesheet due to the current dynamics in the coated industry

What’s the Best Way to Print Digital Photos?

AARP recently researched several methods of printing Digital Photos. They compared Photo Labs, Online Services, Home Printers, and Kiosks. The results illustrated that Photo Labs produced the best quality and uploading photos to a web service (online) that mails prints is a breeze. When speed counts, the home printer is best. When it comes to price Kodakgallery.com makes 4x6 prints for 15 cents and Shutterfly.com are as low as 12 cents apiece. Most lab prints cost 12 to 20 cents apiece. Home prints, if many are printed, are also reasonably priced.
Paper.com has all the major photo papers for home printing of digital prints.

Freedonia Group Releases new study on USA Commercial Printers

Study Highlights:
-Revenues for the US commercial printing industry, which includes pre-press and printing services on a job order basis, are expected to increase 1.3 percent per year to $82 billion in 2011.

-Growth in commercial printing revenues will be driven by ongoing technological changes that make it easier to create higher quality and more customized prints at a faster rate. Gains will also be aided by ongoing adjustments in print production in response to changing consumer preferences, particularly in terms of cost, timing and sizes of print runs.

-Digital printing is projected to achieve the strongest gains through 2011 because of the process' lower cost, quick turnaround and ease of customization for short printing runs.

FiberMark acquired another Paper Producer

The specialty paper market recently witnessed a consolidation when FiberMark purchased Permalin Products and PermaFiber. Permalin produces more than 30 product lines for book publishing and tag / label markets. PermaFiber provides wet strength products to the laundry and drycleaner markets• The specialty paper market recently witnessed a consolidation when FiberMark purchased Permalin Products and PermaFiber. Permalin produces more than 30 product lines for book publishing and tag / label markets. PermaFiber provides wet strength products to the laundry and drycleaner markets.

New York Times Newspaper reduces size … again

Effective with August 6 printing, the New York Times Newspaper will reduce the width of its pages by an inch and a half. The newspaper will be 12” – which is becoming the new standard for the industry. The move will reduce expenses.

International Paper Company Orders new Paper Machine

International Paper ordered a new Voith Paper machine for it’s plant in Brazil. The machine will be operational in 2009 and will produce 200,000 tons of uncoated Woodfree paper.

Bowater to Curtail Paper Machine

Bowater will indefinitely shut down a paper machine that produces 88,000 tons of book paper. The machine was in Dolbeau, QC.

Neenah Paper introduces new Products

The Renew grade line called Classic Linen introduced new finishes that have a textured finish. The company also released a Solar White, double thick cover weight for the Eames Grade line.
Paper.com has the entire line of Eames and Classic Linen.

Domtar Announced permanent Equipment curtailment

Domtar will permanently close its mill in Gatineau, Quebec as well as the converting center in Ottawa, Ontario. Domtar also announced it will shutter two paper making machines at its Woodland mill in Baileyville, Maine and another machine in Port Edwards, Wisconsin. Total closures amount to 284,000 tons of annual capacity.
Paper.com, one on the largest online paper marketers, has all the Domtar items available for shipment.

Office paper prices near $1000/ton

From Purchasing Magazine
Cut-size office paper prices have increased by 9% since April to an average $998/ton this month, the highest monthly price in 11 years. Its last peak was $1000, in January 1996.

Paper market data resource RISI.com says the $60/ton increase in copier paper began with shipments in early May and was implemented over time by the largest four North American producers: Domtar, International Paper, Boise Cascade and Georgia-Pacific. There still are some sales at discount, causing the marketplace average to miss the mills’ goal.

The price hike supports a recent Purchasing survey of office products buyers, more than 90% of whom said they were either "very concerned" or "somewhat concerned" about paper prices this year. And more than three-quarters of those polled reported paper price increases in the past year.
Statistics from the Pulp and Paper Products Council shows that North American uncoated Freesheet paper demand is down 5.1% through May (latest available data) at 4.99 million metric tons. So, whether any additional cut-size office paper price hikes will be attempted to offset pulp cost pressures in paper production is unclear, suggests Merrill Lynch analyst Ross Gilardi. He points out that “the U.S. paper industry continues to feel pressure from lower cost Southern hemisphere competition.”


Bowater Stockholders Overwhelmingly Approve Merger With Abitibi-ConsolidatedBowater Incorporated announced that its stockholders have approved the pro

Bowater Incorporated announced that its stockholders have approved the proposed merger with Abitibi-Consolidated Inc. Approximately 70% of Bowater's outstanding shares were cast in favor of the merger.
Abitibi-Consolidated Inc. also announced that its shareholders have voted in favor of the combination of Abitibi-Consolidated and Bowater Incorporated.

Scrapbook Papers continue to Grow

Paper.com, a pioneer in marketing scrapbook and craft papers on the internet, continues to add to their line of papers for this important market. A recent survey was conducted by Alcone Marketing on this segment
-32million people scrapbook in the United States
-2004 confirmed over $2.55billion was spent on scrapbook materials
-At least 1person scrapbooks in 25% of North American families
-The hobby is most popular in Western States – 25-30% of all households
-Most scrapbookers are college educated women, 30-50 years old
-Most work - over half work full time
-39% has been scrapbooking for at least 5 years
-75% spends at least $25/month
-Average scrapbooker has $1853 worth of gear
-75% of the scrapbookers have a dedicated room in the house for this hobby
Also noted in research
-32.2 million mom’s were on line in 2005 – forecasted to be 36.6million by 2010
-This is 18.7% of all Internet users
Contact Paper.com customer service department for a copy of a survey that Paper.com conducted with 2500 of our end users for most popular paper’s used.

Digital Printing Continues to Grow

Digital printing has enjoyed continued growth as end users are beginning to demand personalized promotions and fast turn around. Offset continues to be the most popular choice for longer runs, and does offer better reprographics. In a recent article published by Digital Publishing Solutions, Paper.com's co-founder P. Scott Vallely reported on the importance of picking the correct paper for the intended use. Offset and desktop copy papers generally are not acceptable for Digital Printers. Vallely confirmed several sheets, all marketing by www.paper.com. Some papers mentioned included Xerox’s Digital Color, NewPage’s Sterling, Finch, Prynn’s Digital Opaque, Mohawk’s Color Copy, Neenah’s Classic Crest, and SMART’s Kromekote laser. Paper.com has over 40,000 papers in stock and ready for immediate shipment.

Forest Industry Forecasted to continue to Consolidate

In 2006, the forest industry witnessed nearly 300 mergers and acquisitions worth almost $26billion. Most notable was Domtar’s acquisition of Weyerhaeuser for $3.3billion – creating the largest uncoated paper producer in North America. Other large consolidations included Cascades 50% ownership of Norampac ($476million) and West Fraser’s purchase of timberlands from International Paper for $325million. The average deal size grew from $90million in 2003 to $169millin in 2006. Industry experts believe this will continue as the industry faces both increased pressure from imports and digital communication, as well as advanced energy, transportation, fiber, and chemical costs. Thus far in 2007, $9billion worth of deals have been reported.

UNCOATED FREE SHEET UPDATE

Cut-size(business papers) prices rose $40/ton in May; and another $20 in June. Spot prices appear to be up by a slightly greater amount - merchants report continued customer resistance to hikes. Our conversations suggests a market which is balanced, but certainly not tight. While cut-size remains healthy (driven by supply cuts), substitution from Uncoated Groundwood Grades are keeping pressure on offset rolls. Paper.com has a large selection of cutsize papers available for immedaite shipment.

Market pulp Update

We believe more Canadian capacity closures will be announced . With the most recent uptick in the Canadian Dollar, it will force another round of capacity closures - we think there are at least 5-6 mills "on the bubble". Despite the highest US$ prices in over a decade for pulp, we believe that a number of Canadian mills are at/below cash cost. Wood supply issues in Europe appear to be starting to narrow the softwood/hardwood spread. Aracruz has recently announced a worldwide $20/ton hike on eucalyptus hardwood.

Paper Industry Employment Decreases

Paper mill employment fell from 17,200 in 1990 to 10,200 in 2003, according to a study done for the Maine Future Forest Economy Project.
The drop has continued in the past four years, with the work force now standing at an estimated 7,000 workers.

North American printing and writing paper shipments fall in May

Overall printing and writing paper shipments in North America at 2.24 million tons in May were 60,000 tons or 3.1% lower than
a year ago, according to data from the Pulp and Paper Products Council. The year-to-date reduction was 189,000 tons or 1.7%.
Mill operating rates declined in three of the four major grade segments, the exception being coated paper, which gained four percentage points to 92% on a shipments-to-capacity basis.
The decline in North American printing and writing paper demand at 5.6% was more than three times the 1.4% decline in production in May. However a 16.4% drop in imports and a 24.1% rise in offshore exports offset the imbalance. Overall mill inventories at the end of May were 2,000 tons lower than at the end of April and 296,000 tons higher than a year ago.

Corrugated Medium Supply Tight

Corrugated Medium is the wavy, middle fluting material in containers. Typical basis weights are 16, 18, 22, 26, 31, 33, 36, and 40, although the standard, and most popular, is 26 pound (pounds/1000square feet) The capacity has shrunk in recent years yielding a relatively tight supply to the market. Many of the higher cost mill locations have closed. The first round of closures started in 2005, totaling 790,000 tons (total market is 10,400,000 tons). Mill locations held by International paper, Smurfit, Menasha, Groveton, and Longview have been affected. Production for 2007 is expected to raise only 1% for 2007. Prices have remained stable. Again, market tightness is a result of curtained supply side NOT demand.

Corrugated Demand is Low

Corrugated box shipments at midyear remain almost 2% lower than a year ago and, even though they appear to have improved by 0.9% in June over May, they still aren’t strong enough yet to provide any traction for the proposed $40/ton price increase on 42-lb linerboard in the East and a $50/ton increase in the West. Statistics show that U.S. containerboard production was flat in June at 2.919 million tons. But, containerboard inventories dropped below 2.4 million tons, according to Fiber Box Association and American Forest and Paper Association .

Box plant inventories reached their lowest level since June 2006 (equal to 3.2 weeks of supply) and that “may be enough to give some teeth to producers' price hike,” writes analyst Claudia Shank of J.P. Morgan Securities in New York. However, other analysts say that that box demand needs to demonstrate positive momentum before a linerboard price hike can gain traction, and demand in June wasn’t robust enough.

Newsprint Market Update

July prices were reportedly down another $5/ton. With the Canadian Dollar at 30+yr highs, a growing percentage of mills are below "cash cost". With pressure from inputs costs and the rising Canadian Dollar, we do not think the current prices can be sustained at current low levels. Most North American producers will support the $25/ton September price hike.

European Fine Paper deliveries fall in May

Total woodfree paper shipments decreased in April, according to the Association of European Fine Paper Manufacturers,
CEPIFINE.
Total coated woodfree deliveries fell by 1% to 783,000 tons compared tothe year-earlier period. Shipments to Europe move up by 1.2% to 607,000 tons, while exports dropped by 7.4% to 176,000 tons. On the uncoated
side, total deliveries decreased by 2.5% to 738,000 tons. Shipments to Europe slipped by 1.6% to 662,000 tons, while those outside the region fell by 10.6% to 76,000 tons.
CEPIFINE statistics include information from the 27 countries in the European Union plus Norway and Switzerland.

US label market tighten as others feel weakness continue

Positive business feedback from narrow web converter segment rose through 2006 and early 2007. “Best April on record” and “best first quarter we ever had” were among comments registered by narrow web label printers. But the economic picture in one influential part of the globe, the United States, is shifting. It is a general tightening whose main contributors are rising interest rates, lower consumer spending, declining real estate prices, and difficulty in generating future organic growth.

The label industry, according to observers, will undergo considerable contraction in North America and to a lesser degree in Europe starting later this year. This has been long predicted and is now expected near term.

Overall GDP growth and near-record low unemployment notwithstanding, the American manufacturing sector is under attack. Consumerism, in the form of demanding shoppers and even more demanding shareholders, continues to pressure retailers to pursue lower costs, better products, and additional services from their vendors, who, in turn insist on similar contributions from their own supply chains. As a result, a great deal of high volume manufacturing, along with its packaging requirements, has departed for lower cost shores, never to return. The effect on the narrow web industry has been a continued reduction in the overall market of products requiring domestically printed labels.

Today’s label printing industry is characterized by price wars, rising print standards and a tightening labor market for skilled press operators. Industry-wide, organic growth has become more and more difficult to achieve, stalling top line growth, making consolidation inevitable. This is precisely what we have been witnessing over the past several years, particularly at the large company level, where acquisitions have spearheaded the growth initiative of industry notables Multi-Color, WS Packaging, Fort Dearborn, York Label, among others. Even at the smaller and midsize company levels, the industry has seen a flurry of ownership turnover, including acquisitions by companies in related industries such as packaging equipment, folding cartons, cans, and bottles.

Go Green

Paper.com recently introduced a new website and included a section for Environmentally Friendly papers. The site has over 40,000 items, many have recycled fiber. The “Green Store” contains Environmentally Preferred Papers (EPP). Most are supplied by vendors that have third party certificates such as Forest Stewardship Council (FSC), Sustainable Forest Initiative (SFI), American Forest and Paper Association (AF&PA), and Chlorine Free Products Association (CFPA). Accordingly, the paper grades are certified to carry Post Consumer Waste (PCW).

Container Board Producers announce Price Increase

From - Deutsche Bank - Equity Research


Smurfit-Stone, the world's largest containerboard producer, began notifying customers on Monday of a $40/ton hike on all
containerboard grades (kraft linerboard, corrugating medium, and white-top linerboard). The hike is effective on August 1. The initiative essentially mirrors an earlier announcement by Weyerhaeuser (NA's #2 producer). The only difference is that Weyerhaeuser is proposing an extra $10/ton on the West Coast, presumably to offset higher wood costs. Weyerhaeuser and Smurfit control nearly 40% of North American containerboard supply. We expect other producers to follow.
Producers in Europe are also announcing price hikes. Over the past few business days, both Smurfit-Kappa (Europe's largest player) and PowerFlute have announced Euro50/mton (equivalent to about $61/ton) price hike on semi-chemical corrugating medium. PowerFlute's hike is scheduled for July 1, Smurfit-Kappa's for August 1.
Price hikes earlier this year fell flat in the face of weak downstream demand for corrugated boxes. The current initiative may
get more traction if the recent rebound in the ISM's manufacturing index translates to stronger industrial production and a corresponding uptick in box volumes. June's 56.0 reading is up sharply from January's 49.3 low. Historically, an ISM reading in the mid-50's is indicative of healthy box markets. Other critical variables include the state of global demand (currently, this appears healthy) and pressure from input costs. On the latter count, after some Q2 easing, global wastepaper markets are again surging. An increase in costs for old corrugated containers (OCC) and other wastepaper grades will boost variable production costs for recycled containerboard mills around the world.

USA Paper and Paperboard Capacity continue to decline

As previously reported by Paper.com, the US paper industry capacity has decreased to less than 100 million tons or 1.6% reduction from 2005. Two primary reasons sited include competition from imports and electronic substitution.
NEWSPRINT
US capacity has been on a steady decline – falling from an all time high of 7.5million tons in 2000 to 5.5milion tons in 2006 (down 26%). This trend is estimated to continue.
UNCOATED MECHANICAL (Value added newsprint)
Capacity has increased to 2.26million tons and slated to slightly increase for next several years.
COATED MECHANICAL PAPER (used for catalogues and publications)
Capacity is down to 4.7million tons. It is believed this level should remain steady for next 2 years.
COATED FREESHEET (upscale magazines and reference)
Capacity for this grade has expanded and many machines that were making mechanical coated grades have upgraded equipment to now produce Coated Free Sheet. Total capacity for 2006 was 5.31million tons.
UNCOATED FREESHEET
Capacity for this grade has trended down since 2000 high of 15.2million tons. 2006 capacity was 13.4million tons. Many of the older machines were shuttered.
Forecasts are for additional decline of 2.5% in 2007 and 1.5% in 2008.

Coated Free Sheet End Users Feel Price Pressure

The USPS postage increases, raising energy, and now increased paper prices for Coated Free Sheet grades have challenged printers that use this grade. Hardest hit, are the West Coast printers where the vast majority of paper was from Asia – a source that recently met with a new USA Tariff. Papers from China and Indonesia were hardest hit, this made up 360,000 tons in 2006.

Paper Profits Down

Although the paper industry enjoyed positive momentum in the 4Q2006, the recent cost increases and lower demand have offset gains from recent price increases. RISI, a paper association researcher, recently reported that most paper producers were successful in raising prices; however, costs also increased for such components as fiber, chemicals, energy, transportation and labor. The survey revealed 19 companies reported positive quarterly earnings; five companies reported lower income, and, eight companies reported a net loss.

MARKET PULP

Hardwood pulp prices rose "across the board" in June, narrowing its very wide spread compared to softwood. The price differential between the two grades is now $100/ton. The spread has been as low as $15/ton in recent history. The interesting question is whether this will force another round of capacity closures. Some producers have announced $20/mton July NBSK price hikes.

Neenah Paper to Further Consolidate Fine Paper Operations

Neenah Paper announced plans to permanently close its fine paper mill located in Urbana, Ohio. The mill, with capacity
of approximately 39,000 tons per year, was acquired by the company with the purchase of Fox River Paper in March 2007. With the shutdown of the Urbana mill and the previous closure of the Housatonic, Massachusetts mill, the company is maximizing cost efficiencies by shifting fine paper manufacturing to utilize existing available capacity at the other mills. Paper.com has all the Neenah and Fox River popular grades in stock and ready for immediate delivery.

NEWSPRINT market

Newsprint prices continue to slide. June ' prices down $15/mton to $585. April consumption at US dailies remained weak, falling 9.8% this year, together with weak advertising revenues. The Canadian dollar at a 30 year high is hurting imports from Canada into USA. Catalyst Paper Mill announced that it’s shutting a 134,000-tpy directory machine at
Port Alberni, BC. Even more striking, Kruger has announced plans for market downtime at several mills. Most players appear to waiting for Abitibi and Bowater deal to resolve before making capacity decisions.

Consolidated Graphics to Acquire Cyril Scott Co.

Consolidated Graphics has signed a memorandum to acquire The Cyril Scott Co. of Lancaster, OH.
Cyril Scott is a commercial printing company that produces multi-featured print products for the direct mail market, including pop-up/ pop-out, nested designs and kiss-cut sticker options, as well as specialty laser labels and clean-release cards.

Domtar schedules downtime

Domtar Paper facility in Dryden, ON producing 285,000 tons/yr of uncoated Freesheet mill announced two weeks of downtime. The converting operation at the mill also will shut down.

Abitibi and Bowater hike North American SC prices

Momentum behind the price increase for publication paper grades in North America have gathered pace.
Abitibi-Consolidated announced today that it will hike the price of supercalendered (SC) grades $60/ton ($3/cwt) next month.
Bowater, Verso and Stora Enso have also told customers their SCA and SCB products will cost $60/ton more next month, in line with increases on coated paper grades announced by many North American manufacturers last week. SC is the grade that many Sunday newspaper inserts outlining large store sales are printed on.

Magazine Revenue Will Grow -- but Slowly

Magazines can expect relatively steady revenue growth over the next four years or so, but not by big margins and
not without some struggle, according to the latest annual Global Entertainment and Media Outlook from PricewaterhouseCoopers. Consumer magazine revenue in the U.S. will expand by 1.5% this year, 2.3% next year,
3.1% in 2009, 3.3% in 2010 and 3.2% in 2011, according to the report. Advertising revenue will grow more quickly than circulation revenue, with 2.8% growth expected in 2007, for example, while circulation revenue slips 0.2%. In
2011, the forecast predicts magazine ad revenue will jump 4.2% but circulation revenue will increase only 1.8%.

No Reprieve on Postal Rate Hike

Catalog mailers can kiss any dreams of a postal rake hike reprieve goodbye. The U.S. Postal Service’s Board of
Governors (BOG) on June 19 rejected the Postal Regulatory Commission’s temporary rate reduction. That means catalogers, who were hit hardest when the new pricing structure took effect May 14, will have to live with the postage increases of 20%-25%, and as high as 40%. The PRC had less than one month ago recommended to the BOG a temporary rate reduction of $0.03 in its reconsideration of rates for Standard Mail flats--the category affecting most catalogers. The PRC recommended the temporary lower rates last through Sept. 29, before fiscal year 2008 begins for the USPS on Oct. 1.

How about those postal hikes?

On average, first class rates are going up by seven percent, periodical hikes range from 20 to 25 percent, and rates for standard mail, depending on shape, will increase by up to 40 percent. The new rates took effect May 14, except those for periodicals (magazines and newspapers), which become effective July 15.