Quebecor World Continues with Parade Magazine

The bankrupt Quebecor World Company recently reached an agreement with Parade Magazine to print 100% of the USA Sunday Magazine. More than 400 Sunday newspapers carry this magazine, reaching approximately 71million weekly readers.

Container Board Market Softens

from Deutsche Bank - Equity Research

* Weak shipments, higher inventories
September containerboard & box numbers showed a sharp decline in shipment volumes and higher inventory levels. While we think that they exaggerate just how bad demand is, there is little question that conditions are weak. The $60/ton price initiative for Oct. appears to be dead. The real question is whether the industry can keep prices from falling. We think it will take aggressive action by the industry to reduce supply.

* Shipments - sharply lower
Box volumes fell 1.9% y/y in Sept., but adj. for two more shipping days this yr, they fell 11.3% y/y on an "avg. week" basis. Most observers tend to focus on the avg. week number, which would make the volumes look truly egregious. We think that the "real" number is a blend of the two, or a decline of about 6.6% y/y. Although this is by far the worst y/y blended comp this year, we think they may exaggerate the weakness in the mkt. Sept. '07 was a difficult comp,
and Aug. was a suspiciously strong month, suggesting that some business may have been pulled forward into August this year.

* Inventories - higher, again
Sept. saw inventories move higher again. Combined mill and box plant inventories rose 90K tons m/m. The last 10 yrs, inventories typically rose by an avg. of just 11K tons in Sept. meaning that inventory build relative to seasonal expectations was 89K tons. This follows a
negative variance of 72K tons in August. Total inventories now stand at 2.45MM tons. We would no longer characterize them as particularly lean on a historical basis, though they do remain below avgerage.

* Prices - $60/ton initiative a question mark
We think that it's now clear that the $60/ton price hike initiative for October is a dead issue. The big question is whether the industry will be able to retain the $55/ton price hike which was implemented in July. A number of factors are working against the industry, including soft demand, rising inventories, and a rising US$. We think that it will take aggressive action by the industry to maintain prices.

Magazine Ad Pages Down 12.9% in Q3

Advertising pages for consumer magazines plunged 12.9% in the third quarter, according to the Publishers Information Bureau’s latest report. Rate-card-reported ad revenue dropped 8.8% compared to 2007’s third quarter. Year-to-date ad pages fell 9.5% and ad revenue declined 5% compared to the same period in 2007.

Cost of Producing Paper Finally Declines

The paper industry finally catches a break with decreased raw material costs. The slowing economy has led to a decline of costs such as energy, resin, pulp, and some chemicals. This should assist the paper industry's bottom line given the recent price reductions for the commodity grades as a result of the poor market conditions.

Mark Andy Press Manufacture Sold

Mark Andy Inc. was acquired on October 8 by newly formed MAI Holdings, held by American Industrial Partners Capital Fund IV (AIP). The seller was Morganthaler Partners, which acquired the company two years ago. Mark Andy Inc. consists of the Mark Andy narrow web press manufacturer in Chesterfield, MO, USA; and Comco International, manufacturer of midweb presses based in Milford, OH, USA.

Newprint Prices Continue Downward

Both the Publishers and Newspaper producers are finding increased inventory levels of newsprint on their floors. Accordingly, although the two biggest newsprint producers are maintaining the latest price increases - all others seem to be 'giving in'. We think the 4Q08 announced increase of $40-60/ton is in big trouble. USA consumption continues to decrease (YTD down 14% to 525,000 tons).

Coated Paper Market Challenged

Publication Papers (LWC-Light weight coated groundwood used in magazines) continues to struggle as demand weakens. Many major printers report discounted prices are available. This is a surprise in that typically this time of year is generally robust. One may wonder what the producers will do in December and January, when demand historically is weak.

Pricing on heavier weights (free sheet) are doing somewhat better I would imagine there is pressure to 'give-back' at least a portion of the recent price increase. I note, many coated free sheet manufacturers can turn off the coater and produce uncoated free sheet, yielding less coated supply.

Pulp Markets Weak

Many pulp producers are beginning to announce closures, including International Paper Company in Albany, NY, and most recently, Evergreen's 200,000 ton Eureka facility. This is due to weak demand and increased worldwide inventories.
Expect more temporary market related curtailment in upcoming months.

RISI Reveals top Pulp and Papre Companies

The annual PPI Top 100 is the only ranking of the world's largest pulp and paper companies by net sales. This valuable report from the September issue of PPI magazine is available online at www.risiinfo.com/ppitop100.
Of note is the growth of European companies now on this list.
The website, Paper.com, markets many of the products from these producers.

Glatfelter Introduces Video on Paper Making

The Glatfelter Paper Company just introduced a new interactive mill tour that does an excellent
job of explaining the pulp and paper manufacturing process. The presentation takes the viewer through two fully integrated pulp and paper mills. The tour also outlines Glatfelter’s management of the environment.
Paper.com also has this link to Glatfelter, at www.paper.com and the site markets all the Glatfelter carbonless papers. The direct link is http://www.glatfelter.com/learning/interactive_tour.aspx

Heidelberg Posts Quarterly Loss of $28 Million

From Printing Impressions
HEIDELBERG, GERMANY—According to its preliminary results, Heidelberger Druckmaschinen AG (a manufacturer of printing presses) will post a second quarter loss of as much as $28 million on sales of about $1.1 billion, a 10 percent decrease compared to the same period last year. Its restructuring costs in the quarter could be as much as an additional $28 million.

RRD, Houghton Mifflin Harcourt Reach Accord

From Printing Impressions

CHICAGO—RR Donnelley and Houghton Mifflin Harcourt Publishing have agreed on an $875 million multiyear print management contract extension. The deal expands on the previous relationship between the printer and publisher. Houghton Mifflin Harcourt is a leading publisher of instructional materials for pre-K through grade 12 schools.

European Fine Paper Deliveries Unchanged in August

Total European coated woodfree paper deliveries were flat at 791,000 tonnes in August compared to the year-earlier period, according to CEPIFINE, the Association of European Fine Paper Manufacturers. European uncoated paper deliveries fell slightly by 0.9% to 693,000 tonnes compared to August 2007. CEPIFINE figures include Norway and Sweden in addition to the 27 countries in the European Union.

Wausau Announces FSC for Astrobrights

Based on the raising interest for sustainable paper solutions, Wausau Paper announced they achieved the Forest Stewardship Certificate (FSC) for the Astrobrights brand. Paper.com will market all the popular Astrobright colors in the Green Store.

Mohawk Paper Mill Will Hold Prices

Mohawk Fine Papers just announced it would hold current prices firm for the foreseeable future. Over the past year, mills have witnessed severe cost increases in raw materials and energy – they have answered this challenge by shuttering equipment and increasing prices. Paper.com is a large distributor for Mohawk grades and is happy to support this position of stable pricing.

Domtar, Canfor Reduce NBSK Pulp Prices

Domtar and Canfor Pulp have both informed North American customers that they will reduce prices for northern bleached softwood kraft (NBSK) pulp effective October 1. The two largest N.A. market NBSK producers will lower prices to $850/tonne, a reduction of $20/ton. The move is the result of weak demand, declining prices and increased market pulp producer inventories globally.

Domtar Announces New CEO

Domtar has announced that John D. Williams will assume the role of CEO on January 1, 2009. Williams has been President of SCA Packaging Europe for the past 3yrs.

Uncoated Mechanical (Groundwood) Papers Update

Uncoated Mechanical Papers, also known as uncoated Groundwood specialties continue to enjoy good demand. Among USA four main printing and writing segments, this area was the only one that grew. Shipments were up 14% for 3.1million tons over the past six months. These are papers that are of publication quality and have a higher brightness than standard newsprint and are smoother. Typical end uses include newspaper inserts, direct mail fliers, catalogues, Sunday Newspaper Magazines, telephone directories and commercial printing.
At a glance
2008 estimate
USA Shipments 2,100,000 tons
USA Consumption 6,200,000 tons
Canada shipments 4,300,000 tons

Top 5 producers / Capacity / Market Share
AbitibiBowater / 2,530,000 / 38.5%
Catalyst / 890,000 / 13.5%
NewPage / 890,000 / 13.5%
Fraser Paper / 500,000 / 7.5%
Irving / 440,000 / 7%

Printing and Writing Paper Shipments Sluggish

Shipments of printing and writing grades for August were weak, especially for coated paper and newsprint. Coated Free sheet demand fell nearly 13% while publication (groundwood coated ) fell over 20%. Many producers curtailed equipment - Kruger 17,000tons; Verso 30,000tons; NewPage 200,000tons and Domtar will take down time. September pricing was stable, after a $5/ton increase in August and $20 in July (note: manufactures HAD announced a $50/ton summer increase). My previous update announced a $60/ton increase for October 1 - this remains in jeopardy.
Meanwhile, uncoated Freesheet (business papers) are witnessing competition from imports - the likes of Brazil and Europe as well as from mills that have turned off their coaters and are now producing uncoated papers. August saw a decline in shipments of nearly 8%.

Pulp Market Continues to Slide

The pulp prices are declining and producer inventories are increasing and global demand is weak. Chinese demand, which had been strong, is now all but gone. Pulp prices for both list price and spot price have fallen by $50-70/Ton and October is not forecasted for any improvement. Producers will now reduce supply in an attempt to correct for market conditions. We think the winter will not be kind to the pulp industry (note, Canada and Finland are the two big players).

Catalyst to Take Downtime at Snowflake Mill

Catalyst paper announced that it is cutting production at its Snowflake mill in Arizona for eight days beginning Oct. 20. The downtime will remove approximately 8,000 tons of recycle newsprint from the market as well as reduce old newsprint (ONP) fiber requirements by about 10,000 tons.

USPS Mail Volume Declines Further

The U.S. Postal Service expects to end the current fiscal year with a volume decease of 9 billion pieces when its financial results are released in November. Postmaster General John Potter said that a reduction in work hours will be necessary to “share up business” as a result of the loss.

Coated Publication Groundwood Market Continues to be Soft

September pricing for groundwood coated grades remained flat, after increasing in both August and July. Mill and printer inventories have been rising and consumption falling. Producers are taking down time to maintain discipline in the market.
Also, we note in the Groundwood market - trade reports suggest a private equity buyer is close to acquiring Tembec's idled St. Francisville, LA mill (300K tpy of coated capacity).

Newsprint Continues to Increase in Price

September prices for 30lb standard newsprint rose $15/ton to $750/ton, a 12
year high. This is the 2nd consecutive month that the full announced $20/ton
hike failed to take hold. Publishers report their inventories are rising
and a historical seasonal slowdown may yield more supply cuts to maintain pricing.

One Small Paper Mill does Well

The operators of Grays Harbor Paper in Washington State continue to do well because they now focus on niche business as a provider of 'green' paper products. The mill manufactures white, non-coated paper, basically the paper used in office copy machines. They are considered a national leader in sustainable manufacturing and green paper products. Grays Harbor Paper company now makes 9 percent of its paper entirely from “post-consumer materials” and 27 percent of its paper contains at least 30 percent recycled material. Grays Harbor Paper supplies all of the recycled paper sold at Staples office supply stores nationwide.

Google Receives 71 Percent of All Searches

Paper.com continues to be one of the biggest internet marketing companies for paper products on the web. Most of the end users visit the site through Google.
Google accounted for 71.01 percent of all U.S. searches in the four weeks ending August 28, 2008, Hitwise announced today. Yahoo! Search, MSN Search and Ask.com each received 18.26, 5.32 and 3.45 percent respectively. The remaining 46 search engines in the Hitwise Search Engine Analysis Tool accounted for 1.95 percent of U.S. searches.

Paper Recycling Remains High

In light of new revelations about the extent of global warming, consumers 
are putting new pressure on companies to provide environmentally friendly 
products and services. And while the shift to becoming a "green" business
is time-consuming and potentially costly, there are many advantages to 
reap.

Meanwhile, consumers are doing there part. American Forest and Paper Association (AF&PA) reported that 56% of the paper consumed in America was recovered for recycling in 2007. This statistic is ahead of schedule - and therefore AFPA set a new goal of 60% recovery by 2012.
The 54.3million tons of paper recovered in 2007 equates to 360 pounds for every American.

Websites such as Paper.com market recycled papers. The thousands of Green Papers stocked for immediate shipment range from 30 to 100% produced from recycled fibers.

Quebecor World Creditors Seek Lawsuit

From Printing Impressions Magazine

MONTREAL—Some creditors of bankruptcy-protected Quebecor World have asked the court for permission to file suit against the printer, seeking $376 million they claim was paid to 14 private lenders prior to bankruptcy to buy back its debt.

According to a Bloomberg report, creditors asked Judge James Peck for permission to sue, contending Quebecor World paid the amount to Barclays Bank, Deutsche Bank and other parties that redeemed notes for the company on October 29, 2007, less than 90 days before the bankruptcy filing. Bloomberg quoted the creditors as saying the payments were made on account of antecedent debt owed by Quebecor World in private notes and exceeded what the parties would have received under a liquidation.

Magazine Ad Spending Down 1.4%

The Nielsen Company’s Monitor-Plus services report released today showed that advertising spending decreased 1.4% for the first half of 2008 compared to the same period last year. Advertising spending for business to business magazines fell 8% and spending for national magazines were down 3.1%. Nielson’s figures vary slightly from the Publishers Information Bureau’s, which showed a 2.8% drop in ad revenue for the same period.

Fun Facts on Recycling

Americans create 4.5 pounds of waste each day between work and home. This means by the time you are 70, 50 tons of trash has been created. The good news is now, 30% is recycled - the rest goes to landfill. It is estimated, that by the time you are 70, you will have recycled 8,100 pounds of Newspapers, books, and magazines. Note: first curb side collection of newspapers started in Missouri in 1974.

US paper mills struggle with sour economy, cheap imports and rise of digital communication

Notes from article By Dinesh Ramde, Associated Press Writer

It's a scene that has played out in small paper towns from California to Maine. The number of jobs in the domestic paper industry has shrunk about 20 percent in recent years as costs rise and imports become cheaper. Demand all around has been dampened by the slow economy as well as the shift of eyeballs away from the printed page toward the screens of PCs and cell phones.

The state of Wisconsin still has more jobs in the paper industry than any other state, mainly because of its proximity to vast rivers that supply millions of gallons of water for the treatment of wood pulp. The state had about 35,500 paper-industry jobs in 2007, down 26 percent from the 48,000 jobs it had six years earlier. Nationwide about 117,000 jobs have vanished in that span, according to data from the U.S. Bureau of Labor Statistics.
After Wisconsin, the next largest paper employers are California and Pennsylvania with about 28,000 jobs each in 2007, followed by Illinois and Ohio with about 24,000 each. Each figure represents a decline of about 20 percent from 2001.

Magazine Ad Pages Down

The consumer magazine business is a disaster!
Total magazine ad pages measured by the Publishers Information Bureau are down 9.2% through August, compared to the same period last year. Virtually all the major publishers are feeling the pinch. Of 37 big publishing groups measured by TNS Media Intelligence, 32 or 86% have seen ad pages fall. For the 32 publishers that are experiencing declines, the average decline was 14% for the year-to-date.

UPM continues restructuring measures

UPM continues actions to secure its profitability in a business environment of slow growth and rising costs. UPM plans to close its least competitive paper and pulp capacity in Finland as well as to streamline operations in all business groups.
The planned actions to close capacity would improve UPM's cost competitiveness

Verso Paper Machine at Bucksport to Lightweight Paper

Verso Paper Corp.
announced that it will begin transitioning the No. 1 paper machine at its Bucksport Mill, in Maine, to manufacture specialty papers starting on September 22. With this move Verso will begin supplying value-added specialty papers to customers, which leverage Verso's core coating and
lightweight paper production techniques. Once fully transitioned, this change will reduce Verso's coated groundwood production capacity by 84,000 tons per year.

Hewlett Packard Announces Green Policy

Hewlett Packard announced a new policy for vendors that supply the more than 300,000 tons of paper HP purchases for retail. The suppliers must now market only certified papers with recycle content.

United States Postal Service talks about Environmentally Friendly Initiatives

The USPS recently issued a promotional brochure, Environmailism, which offers helpful insight to producing environmentally friendly direct mail pieces.
-Ask for the highest recycled content available for the grade of paper you are interested in
-Many grades are available from 30 all the way to 100% recycled, or even tree free.
-Print on lightest paper possible
-Ask for papers made of alternative fiber – tree free, cotton, etc vs. trees
-Design piece smaller to use less paper
-Seek inks that are not petroleum based – such as Soy based
-Opt for less ink coverage on printed promotion
-Print on both sides and use less paper
-Reduce run to exact match of material you need – watch for waste
-Be sure size of promotion matches paper sheet size and press size
-Merge and purge mailing list – remove invalid names
-Provide for opportunity for customer to opt out
-Maintain ‘do not mail’ list
Remember, you can always visit or call the paper expert at Paper.com for suggestions of paper from their new Green Store

Pulp Market Update

Notes from session with Mark Wilde of Deutsche Bank and Brian McClay of TerraChioce

-Pulp buying and thus demand lowered considerably in last several weeks, especially in China, and as market pulp output and producers’ stockpiles continued to rise, particularly for hardwood grades.

-Pulp demand was also considerably lower in most other world markets rejecting increased paper mill market-related downtime

-Global pulp demand will continue to be weaker than normal through year-end, well below pulp supply, as papermakers in virtually all regions curtail production on a temporary basis to better match supply with slowing demand, and as more permanent paper mill closures in the US and Europe take effect.

- Pulp prices will continue to fall until enough capacity is removed to re-establish market balance early in 2009 for softwood and later next year for hardwood grades.

- Another 1.6 million tons of capacity to come on stream around the world in 2009 followed by more than 2 million tons each in 2010 and 2011, virtually all of it hardwood

-These declining price levels should trigger significant closures in North America, particularly in Canada, perhaps approaching 2 million tons over the next 6-9 months,
with most of that softwood pulp. Possibly 2 million tons taken out of European pulp production as well. High cost facilities will be first to go.

- A slowing economy combined with permanent market share losses to online and other lower-cost alternative media pushed US print activity to a 21-year low in North America

--Non-national metro dailies, will start going out of the print business altogether.

Capital Spending by Paper Industry expected to Drop

Lack of demand and pressure on profitability has forced paper companies to limited spending on capital expenses. Most mills will only spend on projects which reduce energy consumption, restructure equipment to product more value added grades, or modify equipment to manufacture a different product mix

Deluxe to Close Three Plants, Cut 570 Jobs

Deluxe Corp., a printer of bank checks, is closing three manufacturing facilities and a call center, resulting in the loss of 570 jobs. The company said it will close its North Wales, PA manufacturing plant and its Thorofare, N.J. manufacturing plant and call center in the first quarter of 2009. The Greensboro, NC manufacturing plant will be shuttered by the end of next year.

Print Catalogs Remain Primary Sales Channel

A survey conducted by the Direct Marketing Association revealed that the print catalog remains the largest revenue generator amongst all channels, accounting for nearly 50% of total sales in both 2007 and 2008. Results of the 106 multichannel merchants polled showed that 62% consider catalogs their primary sales channel. Only 20% of those polled cited the Web as their primary channel and just 6% said retail was. Of those respondents surveyed, 59% indicated that they have increased circulation, while 15% reported no change. Additionally, 44% of the merchants reported increasing page counts and 42% reported no changes at all in pages.

New York Times Saves on Paper

New York Times just announced it will begin to combine sections of the paper to save on costs. As an example, the paper's metro section will become part of the paper's A section - which is National and International. The sports section will be combined with the business section, during the week days. These combined sections will start in early October. Like so many newspapers, the New York Times finances have worsened and they must reduce costs in various ways, including reduce page sizes and number of pages, as well as shrinking their staff.
The paper will save several million dollars with this recent move.

Wausau Papers Modifies Ice Line

The Exact Ice paper line has added a 100pound cover and is now available in 7 text and cover weights, including 50, 60, 70, 80 and 65, 80, and now 100 pound cover.
Paper.com will be marketing this grade once inventory levels are satisfied.

Many Newspapers Reduce Paper Consumption

In an effort to survive and save money, newspapers are now transitioning their paper from the standard 30pound (48.8gsm). As many as 70% of the newspapers are now ordering 45gsm. Large publisher, Gannett confirmed it saved $7.5million by reducing basis weight and they are now evaluating 42.5gsm. Many forecast that within 24 months, everyone will consume 45gsm and this will now be the standard.

Hazen Paper Purchases old Neenah Mill

Hazen Paper of Springfield, MA reached an agreement to purchase the Housatonic, MA plant from Neenah (this mil was acquired by Neenah as part of the Fox River purchase). Hazen specializes in film and foil laminations, gravure printing, embossing, and coating as well as security tickets, tags, and labels. No mention of status on the one paper machine at location.

Unisource Implements Fuel Surcharge

Paper, packaging and facilities supplies distributor Unisource Worldwide will institute a fuel surcharge due to the rising cost of diesel fuel. The company had been able to offset the fuel increase by maximizing delivery routing and truck fleet utilization.

Unisource will now institute a fuel surcharge per line item to all orders shipped from its warehouses and orders received through Unisource’s Website will receive a flat surcharge per order.

With gas prices increasing costs to every vendor that delivers, Paper.com firmly believes that paper sales on the internet will grow at an even faster pace. The site has over 40,000 items and ships the majority of orders within 24 hours.

SMART Papers' Super-Luxury Kromekote Brand Achieves Important Environmental Milestone - Full FSC Certification

SMART Papers' premium cast-coated Kromekote is now fully Forest Stewardship Council (FSC) certified, giving corporations and graphics professionals immediate access to the most luxurious and environmentally responsible printing and packaging papers in the world.
Kromekote is the first triple cast-coated brand to achieve full FSC certification. The achievement represents another important advance for SMART Papers and its commitment to supply the widest range of FSC premium coated and uncoated printing and packaging papers in North America.

SMART Papers is North America's largest independent manufacturer and marketer of premium coated and uncoated printing papers. The company is currently building a new energy facility at its manufacturing center that will be fossil fuel free by late 2009, enabling all of the company's papers to be fully carbon neutral. "SMART Papers' carbon-neutral future will give customers total confidence they are getting the most environmentally responsible printing papers available from any U.S. paper manufacturer," said SMART Papers President Dan Maheu.

Ultra-glossy Kromekote is widely regarded by printers and designers as the "gold standard" in printing papers. Now, the brand sets a new "green standard" for premium environmentally preferable coated papers, with both FSC certification as well as papers with 30% post-consumer waste (PCW) fibers.
SMART Papers recently announced FSC-certification for its Kromekote Recycled products. Today's announcement expands the certification to encompass the rest of the brand including Kromekote Text and Cover, Folding Board, Colors and Metallics, Foils, Textures and Digital products.

SOURCE: SMART Papers

Printer Survey on Environmental Programs

The Printing Impressions Magazine just published a survey with results of many questions for environmental programs that printers are interested in. Of particular note,
we outline, in order of popularity, which environmentally friendly steps USA the printers actually implemented –
Purchasing paper containing post consumer (waste paper)
Purchasing FSC paper
Using environmentally friendly inks
Developing internal recycling programs
Recycling solvents
Purchasing more energy efficient equipment
Planting trees
Direct-to-press processless plates

Digital Printing Still Growing

Overall print sales for 2008 are expected to grow over 2%, with both toner based and inkjet leading the way. PIA/GATF released the following growth projections
-Overall growth. ..............2.2%
-Ink Based Printing ……...0.8%
-Toner/Digital Printing .….6.2%
-InkJet ……….....……………..6.0%
Most printers, although frustrated with increased paper prices, are generally optimistic about 2008 sales.

Market Pulp Demand is Questioned

Although worldwide market pulp shipments for 2007 represented its sixth consecutive month of growth (40.4million tons), balance of 2008 may witness a steady or slight decline in demand. North American pulp mills shuttered 2.4million tons since 2005, and Pope and Talbot recently announced bankruptcy and will curtail 3 mills as well as Catalyst will close 200,000 facility.
NBSK, the benchmark grade, saw little change in price since the first half of 2008, with list price staying at $880/ton. Because many more paper making plants will continue to close due to poor economics and declining demand, this will result in less demand demand for pulp.
Top market pulp producers for North America include
Weyerhaeuser 2Million tons 9.7% market Share
Domtar 1.5million tons 7.5% market share
Canfor 1.4million tons 7.1% market share
Tembec 1.3million tons 6.3% market share
Georgia Pacific 1.2million tons 5.8% market share

Quebecor World begins Consolidation

Cash starved Quebecor World has announced it will consolidate divisions to become more efficient. It will integrate six divisions into three business units. The magazine, book, and directory divisions will become the Publishing Services Group. The US Retail, catalogue, Sunday magazine and direct mail will be combined to form Marketing Solutions. The Logistics and premedia groups will also combine.
The company also announced the sale of its European operations to Hombergh/De Pundert Group (HHBV) of the Netherlands.

Tag and Label Markets Continue to Grow

Times are tough for most paper markets, but the Tag and Label markets seem to be enjoying steady growth. Although these converters also share in the challenges of rising raw material costs, fierce competition, and a poor economy, but overall global growth has been steady at 4-4.5%. It is estimated that BRIC countries – Brazil, Russia, India, and China – will witness robust growth in future. The USA market is forecast to grow 5% annually, and reach $18billion by 2011. The pressure sensitive labels continue to account for the majority of this growth.
Top Label and Tag converters include
RR Donnelly
Avery Dennison
CCL Industries
Fort Dearborn
WS Packaging
Multi Color
Spear
Nashua Corporation
Standard Register
Hammer Packaging

Another Major Coated Freesheet Maker Raises Prices

Verso Paper has announced an increase of $60 per ton for its Influence and Velocity coated freehseet paper grades, effective October 1.

Paper.com announced that NewPage did the same last week for nine of its brands.

Smart Papers Goes ahead with Co-Generation

As we previously reported, it is now confirmed that Smart Papers will build a 40MW co-generation system to produce both steam and electricity to operate the mill. This project will establish the site to be a zero process waste discharge facility and now generate carbon credits.
Paper.com markets the mill's premium cast coated, matte coated , as well as the uncoated text, cover, and writing grades. Many of these grades are Forest Stewardship Council (FSC) certified.

Magazine Industry Troubled

So far, 2008 has not been good to the magazine industry with an increase in postage, fuel, printing, ink, and paper costs. This, coupled with a recessionary economy. The hope is the recent olympics and a presidential campaign will assist a boost in readership. So far, pages and revenue as well as circulation are off significantly. To date, only 41 new magazines were launched (compared to 50 in 2007 and 72 in 2006).
This effects the paper industry in that consumption is also now down for publication coated grades.

American Eagle Mill continues to Grow

The American Eagle mill of Tyrone, PA, continues to enjoy sales growth. The mill is operated by a group of employees that purchased the closed facility from Westvacao in 2001. The plant now employs 265 workers and produces 90,000TPA of printing and converting grades. The product line includes 100% recycled, 50- 80pound, as well as 30% recycled reply card as well as envelope grades on two paper machines. The mill can produce 50-120pound uncoated grades.

Ordering Paper online Grows

International Paper's xpedx merchant division posted $1.4billion in ecommerce sales in 2007, for a 12% increase from 2006. Xpedx confirmed 5.8 million orders were conducted, or about half of the total xpedx sales.
Paper.com, with 40,000 items and nearly 60 distribution centers also outlined aggressive growth for 2007. Industry experts forecast this tend to continue.

Acacruz Plans Pulp Capacity Expansion in Brazil

Acacruz Celulose announced plans to build a pulp mill in Brazil. Management stated the completed facility will produce 1.4million tons of hardwood market pulp. The plant will be operational by 2015. Once complete, Aracruz will supply 25% of the world's market hardwood pulp, or, about 7 million tons per year.

Soporcel Installs new Cutsize Sheeter

Portuguese pulp and paper manufacturer, Soporcel, ordered two cut size converting and packaging lines from ECH Will and Pemco for the new paper mill under construction. The new equipment will produce 500,000TPA.
The Soporcel sheet is a worry-free copy paper that is one of the brightest on the market. Paper.com markets this sheet at approximately the same price as the lower brightness grades.

Climax Paper Plant Purchased

As previously announced, the purchase was completed for the Climax Paper facility in Loweville, NY last month for $6.9million. The mill produced heavy weight cover and converting grades on a cylinder paper machine.

MeadWestcavo Completes Sale of Specialty Papers Cedar Mill

MeadWestvaco Corporation announced it has completed the sale of its Specialty Papers Cedar mill in Potsdam, NY, to Potsdam Specialty Paper, Inc. (PSPI) on September 1, 2008. Terms of the agreement were not disclosed.

Kruger to Take Additional Downtime

Kruger announced it would take two more weeks of downtime on its 263,000 tons per year PM 4 at the Wayagamack mill starting September 1. The plans will remove approximately 10,000 tons of coated mechanical paper from the market.

White Birch to Increase US newsprint price by $60 per ton

North America's second largest newsprint producer, White Birch, told customers it would increase newsprint prices by $60/ton in the fourth quarter.
The hike follows an announcement by newsprint market leader AbitibiBowater last week that it would implement three monthly increases of $20/ton effective Oct. 1.
The new hike is the fourth $60/ton quarterly increase by North American newsprint producers this year.
Trade papers are reporting increased buyer resistance.

Wausau Paper Shut Down Otis Mill Machine

Wausau Paper will permanently shut down the #10 machine, one of the two paper machines, at the Otis Mill facility located in Jay, Maine on or prior to December 31, 2008 . Number 10 paper machine, with a capacity of 40,000 tons annually, presently serves the release liner market and a variety of smaller niche markets.

COATED GROUNDWOOD Market Update

The new coated market leader, NewPage, announced it will close Kimberly, WI mill by
Sept. 8. NewPage will also take two weeks of previously announced downtime at its Rumford, ME mill to rebuild a turbine.
Verso announced that it will take two weeks of downtime (13K/tons) in September at its Bucksport Mill in Maine.
UPM-Kymmene Corp. closed its two ground wood pulp and paper mills at Miramichi in Canada. The decision came almost eight years after UPM spent nearly $1 billion to buy the two mills
from Repap Inc.
The Finnish company closed the kraft mill in 2004, leaving 400 out of work.

Coated Freesheet Price Increase

North American coated freesheet (CFS) producers have told customers they will implement a $60/ton price increase on sheets and web grades effective October 1.
Suppliers that have announced include NewPage, Verso, Sappi, West Linn, Nippon and Appleton.
No mention, yet, for price increase for Groundwood coated publication products. US demand in the Groundwood market has not been as strong as free sheet.

Falling Pulp Prices

Surprise Surprise, Pulp prices are finally coming down, after months of increases......
We hear reports that “spot” market discounts of 15-20% on pulp prices, especially for large orders.
The fundamentals have shifted - demand is slowing, shipment volumes have eased, and world producer inventories are up nearly 24%.
Faced with slow demand, many mills are reportedly pressing suppliers for downward price adjustments.

Pulp & Paper Week Index revised the July NBSK list price from $890/mton to
$885/mton and held it flat for August, largely ending pricing
momentum. Pulp prices appear to have reached a near-term peak.

Newsprint prices boosted by $60/metric ton

by Tom Stundza
There has been an estimated 10.5% drop in U.S. newsprint consumption so far this year, yet list prices for the benchmark publication paper product are at $720/metric ton, a 12-year high. And now, the largest North American supplier, AbitibiBowater, has told customers the Montreal-based firm plans to raise prices by $20/month for the rest of the year, a move that would take newsprint prices to $780/metric ton in December.

Newsprint is used to print newspapers, other publications and advertising material. North American newsprint shipments of 624,000 metric tons in June were 12.5% lower than a year ago and in line with an overall demand drop of 12.3%, the Pulp and Paper Products Council has reported to its members. Production at midyear was down 10.7% year-over-year and 9.2% year-to-date. Overseas shipments also were reported down so that North American mill inventories of 334,000 metric tons at the end of June were 26% lower than a year earlier.

However, AbitibiBowater CEO David Paterson expects higher newsprint prices based on growth in newsprint exports. “Clearly, we'd expect the second half of 2008 to be better than the first half," Paterson tells reporters at the Reuters Paper Summit. Still, Paterson admits the company is facing resistance to price increases in North America and it is seeing an acceleration in demand declines due to its earlier pricing actions. 
Purchasingdata.com, for example, has yet to show transactions at $720 with the July average of $710 and the August average at $707.

Wausau Paper Announces Grade Changes

Wausau Papers announced that the Astropaque grade line will be discontinued.
-They recommend purchasing alternatives such as
-Royal Resource
-Royal Compliments
-Exact Ice
-Exact Opaque
Paper.com has all these alternative grades in stock and ready for immediate shipment. The site also has inventory of the Astropaque items, which will be offered at a discount.

Paper Industry Recap

American Forest &Paper Association, the leading paper association, reported printing & writing data for July which confirmed the poor market conditions for coated paper shipments - Coated Free Sheet demand fell 8% and Groundwood coated - publication papers fell a over 19% . Uncoated paper demand was more in-line with trends, with Uncoated Freesheet shipments down only 4.3% and Uncoated Groundwood shipments up over 18%.

2008 Mid-Year Economic Report

by, Elisha Tropper, president, T3 Associates, Harrison, NY, USA
Elisha Tropper, an industry consultant and former label company owner

Energy Crunch: Oil prices are at all-time highs, impacting everything from fuel prices, home heating bills and commodity prices to global oil exploration, the development and expansion of alternative energy sources (solar, nuclear, agricultural), and a potpourri of political, military, ethnic, and religious conflicts.

China 2.0: The changing business face of China is significantly convoluting what for the past decade has been a relatively simple global business equation. Most visibly, rising production costs are impacting the market positioning of Chinese goods. These higher costs have arrived in the form of inflation (raw materials, utilities, freight, etc.), a reduction or elimination in the VAT rebate for exports, and a rash of new labor laws enacted to protect workers and ease international concerns of abuse, resulting in, by some estimates, an increase of as much as 40 percent of the labor costs. In addition, the no-longer fixed Chinese yuan has dramatically risen against the US dollar (10 percent in 2007 alone), resulting in lower export profits. The effects of these changes are beginning to affect the world economy, as lower cost nations are making inroads into the low-end manufacturing sectors, while the (relatively) shrinking margins of Chinese manufacturing is putting pressure on global manufacturers who based financial investments on higher profitability.

The Fed: The US Federal Reserve has succeeded in its effort to devalue the dollar, and is now striving to stave off the inflation that appears to be following. We could debate Fed decision making all day long, but the consequences, however unintended, of the current policies have damaged US credit abroad, slowed economic growth, and enabled foreign investment in US assets at a discount.

Credit Markets: The housing and credit market crunch has dramatically (and disproportionately) had an impact on just about everything financial from Wall Street to Main Street. For businesses, the credit approval process is tougher, loan covenants are stricter, and despite low interest rates, the capital markets are tighter then they’ve been in very long time.

Election Day: The upcoming US presidential election will have significant ramifications across the board, including the economy, taxes, and international diplomacy (or lack thereof). For example, it would be difficult to imagine any new administration, in the face of budget deficits and political pressure, capable of fending off a congressional effort to raise capital gains taxes, let alone personal income taxes (regardless of the potential damage such moves might make to the overall health of the economy).

There is no doubt that each of our businesses is and will continue to be affected in a very significant way by some combination of these events and pressures. The challenge for us is to harness an understanding of how these economic developments in their various permutations potentially impact our existing businesses, and plot the course of action that gives us the best opportunity to grow and thrive.

Digital Printing Continues to Improve

Many believe the future of printing is in the future of Digital equipment. The markets are segmented into several target markets, namely,
Prints – Photo, labels, decals
-Pages – Documents, direct mail, promotions
-Poster – display, signage
-Reply card – Promotion,
-Packaging – Flexible packaging.
Digital printing involved any reproduction process that does not use a static image carrier. Every page is a new impression.
The digital presses continue to improve in quality, speed, integration of finishing, and ability to use larger sheets. Color printing dominates this market. Digital pareses are the perfect choice for variable data and ability to personalize every page. Toner quality now allows for resolutions of up to 1200dpi at speeds of 40-110 pages or 200ppm if roll fed.
Paper.com recently focused on this market and markets literally every major mills grade. The site has most sheet sizes in stock and ready for immediate shipment.

Paper …. The New Industry

The paper industry has undergone a transformation. In the past, mills ran to full capacity – no matter what ….. even if it meant reduced pricing of products. Today, inefficient mills and/or paper machines are being shuttered, or at least curtailed until market conditions improve. Operators are now controlling supply and inventory levels are lean. With the reduction in the US Dollar, USA producers can export paper successfully. Paper mills are shading non-strategic assets – forestlands, saw mills, packaging plants, etc. Producers are also reducing the products manufacturer – evaluating and only committing to the most profitable items. Yes, the paper industry has changed, and we continue to predict that paper prices will increase and end users will have fewer grades and producers to chose from.

Paper Economics

With demand declining for both Coated and Uncoated Papers, one would logically conclude that price is also declining (Economics 101). However, after years of disappointing financials, new operators owning and managing manufacturing sites, and strict adherence to capacity rationalization – paper is steadily increasing in price. Manufacturers are producing to demand. That being said, producers are still struggling with raw material increases for important components such as fiber, energy, transpiration, and chemicals and can not raise prices fast enough to keep up with cost. Look for more paper price increases.

Uncoated Free Sheet Market

Shipments for June were down slightly- 0.8% . Virtually all trade sources reported that pricing is relatively healthy. Approximately $40/ton of the proposed $60/ton mid-June price hike on cut-size business paper has gone through, with $15-20/ton of the late June offset increase showing in July. Note, a number of major producers and importers have hinted of yet another hike attempt in September. The key issue will be demand.

Coated Groundwood Market

Prices increased $20-40/ton in July for publication papers. However, with mill & printer inventories up sharply and consumption falling, the full $50/ton price hike was not successful. Shipment data for June was down: -12.9% from 2007, and the balance of this year appears worse. To maintain some measure of pricing stability, the new market leader, NewPage, is curtailing equipment and Verso announced that it will take two weeks of downtime (13K/tons) in September at its Bucksport Mill in Maine

Appleton to open expanded thermal-paper plant

-- Converting Magazine, 8/4/2008
Substrate provider Appleton will dedicate its $125-million expansion of the company's thermal-paper mill in West Carrollton, OH, tomorrow.
Capital investments include a new proprietary coater to produce thermal paper and construction of related facilities as well as enhancements to the mill's No. 92 paper machine. The expansion program will add 35 new jobs, the company says.
“The expansion will improve our capability to meet customer needs for enhanced product design and quality as well as increase capacity to satisfy projected demand for thermal products from our domestic and international customers," says Appleton CEO Mark Richards.
Paper.com has all the Appleton grades on site and ready for immediate shipments.

North American Label Market

America is the largest pressure sensitive label market in the world.
Current trends outline both the pressure sensitive as well as the wet glue labels are being cannibalized by competition from direct printing, in mold, and glue applied wrap around labels. Traditional label demand from around the world continues to grow at nearly 5% - but the mature markets of North America and Europe are only growing at 2.5%. Market demand breaks down as follows – Pressure Sensitive enjoys 45% of the market share; glue applied is 43%; and Sleeving and in mold are 8.6% and 2%. We are happy to report that paper is still the leading choice for sub straight, at 75% of total demand. One big hurdle for Pressure sensitive labels remains difficult environmental factors and ability to recycle the release liner. Also, RFID and digital printing remain formidable competition.

More Paper Price Increases

Several major paper mills recently made announcements for price increase of 5-7% . Notably, the Xerox 4200 and Digital paper families will advance; as well as Smart Paper's Kromekote grades; Nekoosa Carbonless; all SBS Board C1S and C2S; and all continuous stock computer papers - all will increase. Paper.com still has some inventory for immediate shipment at the old price.

Uncoated Free Sheet Update

Although shipments of uncoated woodfree papers are down 7.3% through June, the producers have been successful with the proposed price increase. We understand $40/ton of the proposed $60/ton mid-June price hike on cut-size (copy paper) paper has gone through, with $15-20/ton of the late June offset increase showing in July. The major producers and
importers have suggested t another hike attempt in September...

Coated Groundwood Market Update

Prices for publication papers increased $20-40/ton in July. Note: both mill & printer inventories are up sharply and consumption is falling, accordingly, the full $50/ton price hike has not passed through. USA shipments for June was unfavorable: -14.3% and July does not appear much better.

More trouble ahead for Paper Buyers

Problems continue to lie ahead for larger paper buyers for both price and availability. Several paper mills have recently announced permanent closure and others are taking ‘market’ downtime to control supply. In fact North America coated capacity has been reduced by approximately 20%. A different type of operator, the venture capitalist, is now managing the ‘new economics’.
AND, with the reduction of supply – with economics 101 – curtained supply generally generates increased revenue if demand exceeds supply.

Added Capacity by Brazil Producer

Brazilian pulp and paper producer, Suzano, is considering building an uncoated white paper machine outside of Brazil. The objective would be to forward integrate some of its
market pulp into paper, but do it closer to the final customer. One location reportedly under consideration is on/near the Texas gulf coast. Suzano would export pulp to the US for conversion into Paper. Suzano currently exports about 60K/tpy of various uncoated free sheet products into the US and has a near-term goal of moving to over 100,000/tons. Within Brazil, Suzano's estimated 2008 capacity is 1.64MM/mtons of market pulp and 1.1MM/mtons of paper.

More Sustainable Fast Facts

-56% of paper consumed in USA was recovered and recycled in 2007.
- The 54.3 million tons of paper recovered in 2007 would add up to 360 pounds for every USA citizen.
-The paper industry has a goal of recovering over 60% of paper by 2012

Smart Papers Constructing Biomass Co-Gen Plant

Smart Papers recently announced they would start a new $30million co-generation plant, which will use 100% biomass fuel. This will assist the mill in producing more environmentally friendly papers by reducing greenhouse gas emissions.

International Paper purchases Weyerhaeuser’s Packaging division

International Paper purchased the packaging division of Weyerhaeuser, which included 9 container plants (6.3Million tons); 72 packaging plants (99.4billion sq. ft); 10 specialty packaging plants, 4 bag Kraft plants, and 19 recycling plants. This affected 14,300 employees.

Paper, Packaging Companies Struggle To Make Profit

By Mike Obel,
Manufacturing.Net - July 25, 2008
NEW YORK (AP) -- Profits at paper, packaging and building supply companies are getting squeezed by raw material costs and falling demand for their goods as the U.S. economy and housing market languish.
Even as these companies cut costs by shuttering mills and raise customer prices, it's not fast enough to offset inflation. And if they raise what they charge too quickly, they could see a greater falloff in demand.
With the exception of newsprint and the price of land with timber on it, product prices are struggling to keep up, says RBC Capital Markets analyst Paul Quinn.
"While forest product prices are increasing, these gains are largely the result of capacity curtailments and closures rather than rising demand," he wrote in a July 22 client note.
Meanwhile, companies are still paying for the surging cost of materials like fiber, energy, chemicals and transportation. Take natural gas, both a fuel and a component for plastic packaging makers: In the last 52 weeks its price has shot up about 54 percent, even after the effect of a dramatic sell-off over the past three weeks.
Earnings also are staggering under the worst U.S. housing construction in decades and -- for companies with significant assets north of the U.S. -- a sharp rise in the value of the Canadian dollar against the greenback. Those conditions are freezing up demand for lumber and other goods used in buildings.
"We expect the industry to report aggregate net income of just $37 million for the second quarter of 2008, down 93 percent from the second quarter 2007, despite higher product prices," wrote Citi Investment Research analyst Chip Dillon in a July 21 note.
Among building products, paper and packaging companies that will release second-quarter earnings are Louisiana-Pacific Corp., reporting July 29, and Memphis-based International Paper, reporting July 31.
Analysts polled by Thomson Financial expect, on average, that Louisiana-Pacific will report a wider loss of 38 cents per share, while International Paper will report a smaller profit of 39 cents. Analysts' estimates typically exclude one-time items.
Share prices have declined with the sector's weakened results. In the last 52 weeks, the S&P 500 Paper and Forest Products index has tumbled 34 percent.
"The sector is a long way from a sustained recovery ... significant cost inflation remains the industry's main concern," says Quinn. "On the top line, we see little sustained momentum in commodity pricing, with the exception of newsprint and groundwood paper, offering limited ability to offset higher fibre, chemical, energy and transportation costs," Quinn wrote.
Quinn also said the average estimate of 11 cents per share loss is down from the 10 cents per share average profit seen in the second quarter of 2007, but narrower than the 17 cents per share loss seen in the first quarter of 2008.
Although there is evidence of sequential price increases and sequential improvements in earnings, new threats are looming.
Deutsche Bank-North America analyst Mark Wilde said in a July 21 client note that "reliable trade sources" report Brazilian pulp and white paper producer Suzano Papel e Celulose is considering building a plant on or near the Texas Gulf Coast.
He said as the industry scrambles to close mills and plants in the face of declining demand, "the specter of new capacity coming into the market is troubling

Mohawk Paper wins HP Award

Mohawk Fine Papers was named a Hewlett Packard Indigo Preferred Partner. Mohawk’s Digital products all have the proprietary i-tone finish for superior reproduction.
Digitally printed page counts are exploding 40+% and the quality of papers improves every year. Websites such as Paper.com have focused on marketing all the popular digital papers including Mohawk Fine Paper.

Uncoated Free Sheet

Although the uncoated woodfree shipments are down over the past few months, the $60/ton mid-June price hike on cut-size business paper as well as a late June offset increase seems to have been implemented with 100% success.
A number of major producers and importers have hinted about the prospect of yet another hike attempt – look for Fall announcement.

Digital Producer Expands Line

Wausau Paper now offers its new line of improved Exact Digital papers. The new line, marketed by Paper.com, includes a wide range of finishes, sizes, and basis weights. All 44 Digital items are FSC certified

Baltimore becomes Largest Paper Port

When the paper mill M-Real of Finland opened its new warehouse in Baltimore, and increased its shipments into USA, the seaport effectively became the largest port for paper imports. US Forest product imports have grown from 185,000tons a year six years ago to 1.4million tons a year today. M-Real reports it now ships between 1000 – 1400 truck loads of paper every year from Baltimore.

Market Pulp

DB Research Paper
Pulp appears to have reached a near-term top and prices are under modest pressure in some regional markets. The trade papers have yet to reflect this easing. The July price hike initiative on NBSK achieved only partial success, with the list price increasing by $10/mton to $890/mton. Other grades showing higher prices: SBSK (+$10 to $850), SBHK (+$15 to $820), and fluff (+$15 to $915). Trade reports suggest that the softwood market in Europe remains still over-supplied. In the European market, NBSK slipped by $5/mton to $895/mton. CTMP and hardwood prices have reportedly slipped in Asia.
How much could prices ease? With the US$ and costs rising, we think it won't take much of a price decline to trigger more capacity closures in CN & Europe.

Brookfield Investments changes Fraser Paper Name

Fraser Paper Inc.’s owner, Brookfield Investments Corp, recently announced it will change the name of the company from Fraser to Brascade Corporation.

NewsPapers Facing Worst Year

Newspapers went from bad to worse; they experienced a double digit drop in advertising revenue – their primary source of income. Housing markets have slumped, therefore limited real estate advertisements, and fewer classified ads. The internet is a newspapers’ public enemy #1 (with web based advertising revenues growing 20-30% a year).
Overall, ad revenue fell almost 8% last year – this year is forecasted to be over 12%. Newspapers attempt to reduce costs through fewer pages, smaller size newspaper, eliminating distribution routes, lighter weight paper, consolidating plants, and laying off labor but profit margins continue to erode.

Prices of packaging materials continue to rise

Prices for materials used in packaging continue to rise. Among the most recent announcements of price increases are those from Sun Chemical, the world’s largest ink manufacturer, Valéron and Michelman. The increases are the result, they say, of rising energy, transportation and raw materials costs.

♦ Caraustar Industries will increase prices by $50 per ton for all coated, recycled paperboard grades, as well as pass through certain freight surcharges to customers, effective with shipments on and after July 28. It will also raise prices on all paperboard-based converted products by 6%, effective with shipments on and after Aug. 11.
♦ Graphic Packaging International announced a $50 per ton price increase for its coated recycled board (CRB) and uncoated recycled board (URB). GPI will also set new freight allowances. These price hikes are effective with shipments on or after July 28.
♦ Rock-Tenn Co. will increases prices by $65
♦ Sun Chemical North America including Canada, will implement energy/material surcharges on inks effective July 14. A 10-cent/lb surcharge will be applied to news inks, directory inks, coldest, heatset, publication gravure, solvent packaging, and energy curing inks. Water packaging inks will be subjected to a 6-cent/lb surcharge.
♦ Flint Group announced price increases and surcharges on all packaging inks sold in North America, effective on all products billed on or after July 21.Surcharges on all solvent, energy-curable and paste products (inks, coatings, extenders/blend vehicles) is 10 cents/lb. Surcharges on water-based inks, coatings, extenders/blend vehicles and additives: 6 cents/lb. Price increases are as follows: Solvent liquid ink colors, extenders/blend vehicles and additives: 5%; solvent liquid blacks and all solvent and water whites: 7%; water-based ink colors and blacks: 4%; conventional sheetfed paste inks: 6%; all energy-curable products: 6%.
♦ Michelman will increase prices 15-25% on coatings and additives across all product categories in the Americas region, effective July 14. The supplier's products are used on flexible packaging, paperboard and corrugated boxes.

Catalyst pulp mill closing

Catalyst Paper is permanently shutting its pulp mill near Campbell River, putting 440 people out of work.
It is the third major industrial shutdown for the area this year.
Garneau said the No. 1 problem with the future of the Elk Falls pulp operation is a shortage of sawdust.
The recent shutdown of a nearby TimberWest sawmill that supplied sawdust, and the slowdown in the U.S. housing market, have meant less lumber is being milled. Less lumber means less sawdust.
In April, Catalyst announced the shutdown of one paper machine putting 145 people out of work. In February, TimberWest announced the permanent closing of its Elk Falls sawmill putting 257 people out of work.
The Elk Falls mill is the second Vancouver Island pulp mill to shut down within the last two months.
Pope and Talbot's Harmac mill closed in June when that company went into receivership. The mill remains down while the receiver attempts to sell it.

Five Mills close

This week saw closures announced for 5 recycled boxboard mills with 450,000 ton of capacity. Closures: Brownsville Specialty, Cascades, Newark Group (2) and Sonoco. Further announcements are probable.

Box makers are pushing 11% box price hike

-- Purchasing Magazine
Producers have announced a price increase of 11% on corrugated boxes, assuming that the announced $55/ton containerboard price increase for July will take effect. At least five major integrated box makers have announced the hikes, with effective dates ranging from July 14 to August 1. The subscription news service RISIinfo.com says independent box makers have been concerned about their ability to pass through the containerboard price increase in the current U.S. economic environment “and are watching closely to see if integrated producers are serious about implementing the box price increase.”

Office paper prices continue to stiffen

Energy, raw material costs are key factors
By Maria Varmazis – Purchasing Magazine

Office paper prices were forecast to increase by 10% this year after a 7% increase last year, though the market looks poised to easily surpass that forecast. Cut size copier paper prices of $1,120/ton are 9% higher than in January. The latest Purchasingdata.com quarterly forecast shows uncoated bond will average $1,125/ton in the third quarter, up from $1,113/ton in the second quarter, while forms bond will increase to an average $981/ton from $970/ton in the April-June period

It’s been a perfect storm of cost increases that have affected paper prices. Most notably, as energy prices continue to skyrocket through the first half, so do the costs for many other aspects of paper manufacturing: Higher costs for pulp, higher manufacturing costs, higher chemicals costs, higher shipping costs—and it’s all being passed down to the buyer. On top of that, the weak dollar has curtailed paper and pulp imports to the U.S., all while paper producers announce mill closures and producer consolidations, adding more pressure to the market.

Paper producers are quick to point out their higher manufacturing costs as they announce price increases at previously unforeseen rates. In late May, Boise announced a $60/ton price increase on its uncoated free sheet, citing “significant cost increases in energy, chemicals, transportation and fiber” after previously hiking prices by $60/ton in February. After Boise’s announcement, other producers including Domtar, Glatfelter and Finch announced price increases, also at $60/ton, just days later. Domtar and Boise together produce 40% of all the uncoated free sheet in North America.

School Paper Grades all Experience Price Increase

We would like to make you aware of recent changes in pricing that have taken place. As you are aware, manufacturers and publishers in our industry announce price increases at various times throughout the year. School Products do not normally make a point to communicate each individual price change. However, this year a large number of suppliers have announced mid-year price increases. Most of these became effective Tuesday, July 1st. Undoubtedly, these increases are the result of the well-documented increase in the costs of production and transportation worldwide. 
 
The website Paper.com has negotiated the very best prices available for school papers, most will be effected due to cost pressures.

Coated Publication papers ..... in Trouble??

Recent reports on the coated paper consumption as well as inventory figures are troubling.
These reports raise questions about further industry pricing gains and could open the door to discounting. Please note important coated vendors to Paper.com’s website include NewPage, Sappi and Verso and are the largest North American coated paper producers.

The report outlines inventory figures for lighter-weight coated Groundwood (LWC – publication papers) were especially troublesome. Inventories have increased (up 37%) and currently sit at 59 days of consumption. Consumption has fallen 22% from May, 2007
levels and is off 17% on YTD basis.