At the end of 2008, demand for recycled raw material came to a stretching halt. For years, the cry for recycled product grew and end users were somewhat wiling to even pay a premium for paper made from post consumer recycled material. If fact, End users were demanding post-consumer waste be included as part of their sustainability efforts. Even though prices for recycled commodities such as corrugated, plastics, paper, steel and aluminum were at all-time highs, they were competitive with virgin materials.
Virtually overnight, prices for these recycled materials dropped 70 to 90 percent, depending on local markets.
Recycled-plastic bottles have gone from 25 cents per pound to 2 cents per pound. Old corrugated containers have dropped from nearly $110 per ton to $10 per ton— if it can be sold at all. Inventories are building up at recycling centers, warehouses and docks. Unfortunately, many of these materials are likely to end up in landfills, where their potential for reuse will be buried. We now wonder what will happen to paper prices that contain post consumer waste.
Wednesday, January 14, 2009
Monday, January 12, 2009
President-elect Obama Chooses Neenah Paper for his Big Day
Neenah Paper Inc. will have an important role in the inauguration of Mr. Obama. Classic Crest eco-friendly paper was picked for the invitation to the inauguration of Barack Obama on Jan. 20. More than 1 million inaugural invitations have been engraved and printed. Neenah has also provided the paper for the last three presidents’ inaugurations.
Containerboard Market Update
Best estimates for pricing on containerboard for December shipments reflect a decrease of $10-20/ton. January forecasted to be more pressure on pricing, in fact pressure will be constant for at least first half of 2009. 2008 ended with lower operating rates (hovering around 85%) and inventories up while shipments were down. Two big machines remain down (Missoula, MT and Ontonagon, MI).
Quad Graphics Reduces Production Capacity
Quad Graphics said it would reduce production capacity due to changes in the economy. Approximately 550 jobs, or 5.6% of its domestic workforce, will be eliminated across the company’s nine U.S. plants, five of which are in Wisconsin. The cuts include both production and administrative personnel, and will be completed by the end of this week.
U.S. Commercial Printing Shipments Fall 8%
according to WhatTheyThink’s Economics and Research Center
U.S. commercial printing shipments fell 8%, or $741 million in November to $8.4 billion year-over-year. November usually marks the end of the strongest three-month period in commercial printing, however declines in newspaper inserts, magazine ad pages and catalog circulations reduced overall print demand this year.
U.S. commercial printing shipments fell 8%, or $741 million in November to $8.4 billion year-over-year. November usually marks the end of the strongest three-month period in commercial printing, however declines in newspaper inserts, magazine ad pages and catalog circulations reduced overall print demand this year.
Publication Papers Decline
Mills such as Verso (100,000tons) and NewPage (150,000tons) continue to take production of line to correct for weak demand. In spite of these efforts, publication paper prices (LWC) continue to decline (down an estimated $30-70/ton in December) and 2009 is not showing any encouraging signs. Magazine and catalog demand is weak, imported paper producers are more aggressive, advertising dollars are down, and the economy is not improving - all leading to a poor paper market as we enter 2009.
Note: NewPage will cut production by 150,000 tons system wide in the first quarter. Its mills have a total annual production capacity of approximately 4.5 million tons of paper, including approximately 3.3 million tons of coated paper, approximately 900,000 tons of uncoated paper and approximately 300,000 tons of specialty paper, according to its Web site. It is the largest coated paper manufacturer in North America, based on production capacity, with $4.7 billion in net sales.
Verso Papers is based in Memphis, Tennessee, and is a leading North American producer of coated papers, including coated groundwood and coated freesheet, and supercalendered and specialty products. Verso’s paper products are used primarily in media and marketing applications, including magazines, catalogs and commercial printing applications such as high-end advertising brochures, annual reports and direct-mail advertising . The company operates manufacturing facilities in Jay, Maine; Bucksport, Maine; Sartell, Minn.; and Quinnesec, Mich. These mills have a combined annual capacity of approximately 1.7 million tons of paper.
Note: NewPage will cut production by 150,000 tons system wide in the first quarter. Its mills have a total annual production capacity of approximately 4.5 million tons of paper, including approximately 3.3 million tons of coated paper, approximately 900,000 tons of uncoated paper and approximately 300,000 tons of specialty paper, according to its Web site. It is the largest coated paper manufacturer in North America, based on production capacity, with $4.7 billion in net sales.
Verso Papers is based in Memphis, Tennessee, and is a leading North American producer of coated papers, including coated groundwood and coated freesheet, and supercalendered and specialty products. Verso’s paper products are used primarily in media and marketing applications, including magazines, catalogs and commercial printing applications such as high-end advertising brochures, annual reports and direct-mail advertising . The company operates manufacturing facilities in Jay, Maine; Bucksport, Maine; Sartell, Minn.; and Quinnesec, Mich. These mills have a combined annual capacity of approximately 1.7 million tons of paper.
Pulp Continues to Slide
List prices on NBSK are estimated to be $710-720/ton going into January 2009 (down $170/ton from August). Customers for large volume, spot orders of market pulp are reporting prices ‘well below’ list price.
Thursday, January 08, 2009
Meredith to cut 250 jobs, close magazine
Meredith Corp. will eliminate 250 jobs and close its Country Home magazine in March as it suffers from sharp declines in publishing and broadcasting advertising amid the recession. The company will announce a reorganization in the coming weeks.
Tuesday, January 06, 2009
Investor group acquires Chesapeake Corp.
Chesapeake Corporation announced that it has reached an agreement to sell all of its operating businesses to a group of investors including affiliates of Irving Place Capital Management, L.P. and Oaktree Capital Management, L.P., who intend to continue operating these businesses as a going concern.
All of the Company's operations - including all of its manufacturing and distribution facilities in the U.S. and around the world - are open and operating on normal schedules, fulfilling customer orders. The Company's non-U.S. subsidiaries were not included in the Chapter 11 filing. The proposed purchase price is $485 million.
All of the Company's operations - including all of its manufacturing and distribution facilities in the U.S. and around the world - are open and operating on normal schedules, fulfilling customer orders. The Company's non-U.S. subsidiaries were not included in the Chapter 11 filing. The proposed purchase price is $485 million.
Web Passes Papers as a News Source
The New York Times reported that in 2008 40 percent of Americans received most of their news from the internet; 35 percent received most of their news from a newspaper.
NYT Web Traffic Up, Ad Revenue Down
In what can be taken as another clear sign that online advertising is not immune to the slumping economy, traffic for The New York Times Web properties continued to climb in November, while advertising revenue slipped.
Internet advertising revenues for the Times collection of Web sites (NYTimes.com, About.com, Boston.com, etc.) dipped 3.8 percent last month. That decline represents a marked difference from earlier in the year, as overall online ad revenue for the Times properties has increased by 11.6 percent year to date.
Internet advertising revenues for the Times collection of Web sites (NYTimes.com, About.com, Boston.com, etc.) dipped 3.8 percent last month. That decline represents a marked difference from earlier in the year, as overall online ad revenue for the Times properties has increased by 11.6 percent year to date.
Magazines Frustrated with Economy
Facing a brutal economy in 2008, big magazine chains closed some titles deemed to have a smaller chance of survival. This translated into significantly less publication paper consumed.
At Time Inc., shelter magazine Cottage Living went by the wayside. Condé Nast folded Golf for Women and took Men’s Vogue to a twice-annual supplement of Vogue from a standalone title. Hearst Magazines shut down CosmoGirl!, Quick & Simple and O at Home.
“They’re going to have more difficulty than the multi-title companies because they don’t have [the resources] to do all the integrated and added-value programs for advertisers, and they don’t have as much ability to cut costs,” said Martin Walker, a longtime magazine consultant. Already gone: pop-culture mag Radar; Jewish Living; Harvard grad-aimed 02138; and the New York Sun.
In flusher times, publishing chains or private-equity money could toss a lifeline to struggling independents. But with the credit markets dried up, M&A activity has slowed to a crawl. For the first nine months of 2008, consumer magazine deals fell 95 percent in dollar value while newspaper deals fell 93 percent, per the Jordan, Edmiston Group investment bank, which tracks media deal-making. And with the unsettled outlook for print, publishers have been focused on digital buys, not collecting more magazines.
At Time Inc., shelter magazine Cottage Living went by the wayside. Condé Nast folded Golf for Women and took Men’s Vogue to a twice-annual supplement of Vogue from a standalone title. Hearst Magazines shut down CosmoGirl!, Quick & Simple and O at Home.
“They’re going to have more difficulty than the multi-title companies because they don’t have [the resources] to do all the integrated and added-value programs for advertisers, and they don’t have as much ability to cut costs,” said Martin Walker, a longtime magazine consultant. Already gone: pop-culture mag Radar; Jewish Living; Harvard grad-aimed 02138; and the New York Sun.
In flusher times, publishing chains or private-equity money could toss a lifeline to struggling independents. But with the credit markets dried up, M&A activity has slowed to a crawl. For the first nine months of 2008, consumer magazine deals fell 95 percent in dollar value while newspaper deals fell 93 percent, per the Jordan, Edmiston Group investment bank, which tracks media deal-making. And with the unsettled outlook for print, publishers have been focused on digital buys, not collecting more magazines.
New York Times Sells Front Page Ads
The New York Times has begun offering display ad placements below the fold on its front page. The move is a first for the paper, who has been struggling with declining ad revenue. The Times has previously sold small-classified liners on its front page, but never display ads. The company reported that ad revenue declined nearly 21% in November.
Neenah Announces new Digital Grade
Neenah Paper introduced an improved version of its Classic Crest Digital and Classic Linen Digital Papers are now HP Indigo certified. Paper.com markets these grades in three colors, four weights, and four digital sizes.
Chicago Papers See Troubled Future
Today, only two major dailies remain in this city of 3 million, and both are in serious trouble from declining circulation, plummeting advertising revenue and a new kind of competition that threatens to make newsprint itself obsolete (the internet!).
How long can the smaller Sun-Times survive as its parent, Sun-Times Media Group Inc., loses money every quarter? And what of the dominant Tribune, whose parent Tribune Co. sought bankruptcy protection this month because of its crushing $13 billion debt? The tabloid-size Sun-Times' average weekday circulation has fallen 3.9 percent from last year, to 313,176, and its Sunday circulation has declined 4.5 percent, to 255,905. hose declines actually were better than the industry average and not as steep as the Tribune's 7.8 percent drop. But the broadsheet Tribune, with a higher proportion of sales from outside the city, still sold about 203,000 more newspapers than its rival on weekdays and 609,000 more on Sundays, despite a higher newsstand price.
How long can the smaller Sun-Times survive as its parent, Sun-Times Media Group Inc., loses money every quarter? And what of the dominant Tribune, whose parent Tribune Co. sought bankruptcy protection this month because of its crushing $13 billion debt? The tabloid-size Sun-Times' average weekday circulation has fallen 3.9 percent from last year, to 313,176, and its Sunday circulation has declined 4.5 percent, to 255,905. hose declines actually were better than the industry average and not as steep as the Tribune's 7.8 percent drop. But the broadsheet Tribune, with a higher proportion of sales from outside the city, still sold about 203,000 more newspapers than its rival on weekdays and 609,000 more on Sundays, despite a higher newsstand price.
Sunday, January 04, 2009
Newprint Consumption Down, Down, Down
Consumption at US dailies fell -20.4% in November (-15.6% YTD). Total
US Consumption, a somewhat broader measure, fell -18.0% in November
(-13.3% YTD).
The competition from other media channels (internet) continues to plaque circulation and decline for the newspaper industry.
Most of the producers have announced downtime through the balance of the last quarter of 2008 and for 2009 ---
AbitibiBowater (#1 player) has announced 830,000 tons of production
cutbacks for 2009 (17% of its capacity) with 590,000tons for beginning of 2009. Also, additional downtime of 21,000 tons at its Grenada, MS mill for January. White Birch (#2 producer in North America) has announced 50,000 tons of downtime for first quarter of 2009.
Miraculously, newsprint manufacturers have managed to keep inventories in reasonable balance. Measured in terms of "days of supply", newsprint inventories at the US dailies stand at
47 days of supply (627,000 tons). (Note: normal inventory for now is 40-44 days).
Recall that newsprint has increased $215/ton from $560/ton in October of 2007 to $775/ton this November. Although, newsprint prices slipped $10/ton to $765/ton in December. Producers were blessed with decline in key input costs (fiber, energy, and transportation costs).
US Consumption, a somewhat broader measure, fell -18.0% in November
(-13.3% YTD).
The competition from other media channels (internet) continues to plaque circulation and decline for the newspaper industry.
Most of the producers have announced downtime through the balance of the last quarter of 2008 and for 2009 ---
AbitibiBowater (#1 player) has announced 830,000 tons of production
cutbacks for 2009 (17% of its capacity) with 590,000tons for beginning of 2009. Also, additional downtime of 21,000 tons at its Grenada, MS mill for January. White Birch (#2 producer in North America) has announced 50,000 tons of downtime for first quarter of 2009.
Miraculously, newsprint manufacturers have managed to keep inventories in reasonable balance. Measured in terms of "days of supply", newsprint inventories at the US dailies stand at
47 days of supply (627,000 tons). (Note: normal inventory for now is 40-44 days).
Recall that newsprint has increased $215/ton from $560/ton in October of 2007 to $775/ton this November. Although, newsprint prices slipped $10/ton to $765/ton in December. Producers were blessed with decline in key input costs (fiber, energy, and transportation costs).
Xerox Markets Erasable Paper
We previously reported on the research and development of a new paper that Xerox for working on late last year. Recently, the company showed an experimental sample of this ‘erasable grade’ to the public. The paper is designed to be printed on repeatedly – with the objective of reducing paper use in the office. The sheet contains a chemical the erases itself and can be reused in 24 hours.
Wednesday, December 31, 2008
Sappi Completes Acquisition of M-Real’s Coated Papers
Sappi Ltd. has successfully completed the acquisition of M-real’s coated graphic papers business for US $1.1 billion. M-real’s four coated graphic paper mills, the Kirkniemi and Kangas mills in Finland, the Stockstadt mill in Germany and the Biberist mill in Switzerland will now be part of the Sappi Fine Paper Europe operations.
The deal makes the Johannesburg, South Africa-based company the world's largest producer of coated fine paper with 23% of the world’s market share (15% for publication coated papers).
The deal makes the Johannesburg, South Africa-based company the world's largest producer of coated fine paper with 23% of the world’s market share (15% for publication coated papers).
Printing and Writing grades Update to Market
Notes from Deutsche Bank - Equity Research
Weak economy causing low demand and high producer inventory have yielded a decline in shipments of 6.4% year to date (down 20.1% Nov07 vs. NOV 08). January and February are traditionally slow months - so not much hope forecasted for next several months.
Virtually all the major uncoated free sheet (UFS) producers are cutting production to manage inventory. International Paper's announced target is 60K tons of uncoated downtime in 4Q. Domtar (#1 player) announced 4Q downtime of 173K tons and Boise (#3 player) is idling 2 machines at International Falls and significantly downsizing its St Helens, OR mill. More
recently, Glatfelter and Mohawk Fine Papers have also announced downtime.
Coated groundwood (LWC) shipments took the sharpest hit --- down 34.2% y/y in November. However, mill inventories have jumped from 110K tons to 252K tons over the past 12 months. Verso Paper recently announced 100K tons of downtime in 09H1. Earlier, Newpage, announced 40K tons of downtime in 4Q08 in addition to the earlier announced closures of Niagara, WI and Rumford, ME mills.
The groundwood coated publication price decline accelerated in December --- down $35-70/ton.
Meanwhile, list prices for Uncoated Freeshhet have held up better --- down between $5-15/ton.
Weak economy causing low demand and high producer inventory have yielded a decline in shipments of 6.4% year to date (down 20.1% Nov07 vs. NOV 08). January and February are traditionally slow months - so not much hope forecasted for next several months.
Virtually all the major uncoated free sheet (UFS) producers are cutting production to manage inventory. International Paper's announced target is 60K tons of uncoated downtime in 4Q. Domtar (#1 player) announced 4Q downtime of 173K tons and Boise (#3 player) is idling 2 machines at International Falls and significantly downsizing its St Helens, OR mill. More
recently, Glatfelter and Mohawk Fine Papers have also announced downtime.
Coated groundwood (LWC) shipments took the sharpest hit --- down 34.2% y/y in November. However, mill inventories have jumped from 110K tons to 252K tons over the past 12 months. Verso Paper recently announced 100K tons of downtime in 09H1. Earlier, Newpage, announced 40K tons of downtime in 4Q08 in addition to the earlier announced closures of Niagara, WI and Rumford, ME mills.
The groundwood coated publication price decline accelerated in December --- down $35-70/ton.
Meanwhile, list prices for Uncoated Freeshhet have held up better --- down between $5-15/ton.
Consumers Union Grabs Gawker's Consumerist Site
Adding to its growing portfolio of print and online properties, Consumers Union, the publisher of Consumer Reports magazine, bought watchdog blog Consumerist.com from Gawker Media
Tuesday, December 30, 2008
What Happened to Pulp Market?
As we approached 2008 and beyond the first half of the year, pulp prices continued a steady stream of price increases. Suddenly, we entered the forth quarter, and BOOM. Pulp inventories were on the rise, manufactures were curtailing production, and inventory surged from 29 days in September of 2007 to 44 days in September of 2008. Hardwood inventory increased to unheard of levels. 2009 comes along with the worst economic downturn in modern history and a new year does not appear to be reversing these trends. USA prices for NBSK saw a high of $880/ton. Challenge today is if prices decline to below $600/ton – this will be below manufacturing cost for the less efficient mills.
FOEX provided the following chart for monthly NBSK ‘list pricing’
June $880
July $890
August $887
September $873
October $849
November $823
FOEX provided the following chart for monthly NBSK ‘list pricing’
June $880
July $890
August $887
September $873
October $849
November $823
DIP Burrows Paper mill under the Hammer
as reported by, Paper Industry Magazine
Can-Am Machinery has been retained to sell the fixed assets of the Burrows Paper Corp. 120-ton/day market DIP mill in Little Falls, NY.
The plant was built in 1994 with mostly Voith equipment and ran successfully producing excellent yield, brightness and total efficiency.
The equipment is reported to be well maintained and in running condition, and will be sold in whole or in part.
Can-Am Machinery has been retained to sell the fixed assets of the Burrows Paper Corp. 120-ton/day market DIP mill in Little Falls, NY.
The plant was built in 1994 with mostly Voith equipment and ran successfully producing excellent yield, brightness and total efficiency.
The equipment is reported to be well maintained and in running condition, and will be sold in whole or in part.
N.A. Printing/Writing Paper Shipments Fall
Total printing and writing paper shipments to North America fell 22.8% in November compared to the year-ago period, according to the Pulp and Paper Products Council (PPPC). Total shipments to N.A. fell 7.8% year-to-date. Coated mechanical shipments plunged 32.7% compared to November 2007, while coated freesheet shipments dropped 21.8% year-over-year.
Green Fades to Black
Eco-themed issues victim of slumping ad market
-By Lucia Moses
Two years ago, spurred on by a groundswell of interest in all things eco-friendly, green-related content was sprouting everywhere. For magazines, that meant a flurry of green-themed issues. But the economic downturn, coupled with cooling consumer interest, have some publishers pulling the plug on those products.
Among titles holding off on green issues in ’09 are Condé Nast’s Domino, Time Inc.’s Sunset, Mariah Media’s Outside and indy Discover. Active Interest Media’s Backpacker, already seeing the concept as tired, did not produce a second global-warming issue this year. “My sense is the idea of doing a green issue has been done so much it feels anachronistic,” said Backpacker editor Jonathan Dorn.
Domino’s 2008 and 2007 green issues sold below average, even though vp/publisher Beth Brenner pointed out that March is not a strong month for single-copy sales.
Not all green issues bombed. Outside sold above average on stands, while this year’s special from Condé Nast’s Vanity Fair, featuring cover subject Madonna, sold 370,000 copies at stands, only slightly below average.
Editors insist readers are still interested in green themes, although some said they are evolving coverage in response to green’s maturation. Hachette Filipacchi Media’s Elle—which made a statement by publishing its green issue on recycled paper this year—plans a water-themed issue in ’09, reminiscent of the blue issue of Rodale’s Women’s Health in 2007
Ending their green issues could serve a PR purpose for magazines, given that the very practice of publishing on paper is seen as at odds with protecting the environment. Still, some maintain that while tips for sustainable living are well-worn, readers continue to want targeted green content.
-By Lucia Moses
Two years ago, spurred on by a groundswell of interest in all things eco-friendly, green-related content was sprouting everywhere. For magazines, that meant a flurry of green-themed issues. But the economic downturn, coupled with cooling consumer interest, have some publishers pulling the plug on those products.
Among titles holding off on green issues in ’09 are Condé Nast’s Domino, Time Inc.’s Sunset, Mariah Media’s Outside and indy Discover. Active Interest Media’s Backpacker, already seeing the concept as tired, did not produce a second global-warming issue this year. “My sense is the idea of doing a green issue has been done so much it feels anachronistic,” said Backpacker editor Jonathan Dorn.
Domino’s 2008 and 2007 green issues sold below average, even though vp/publisher Beth Brenner pointed out that March is not a strong month for single-copy sales.
Not all green issues bombed. Outside sold above average on stands, while this year’s special from Condé Nast’s Vanity Fair, featuring cover subject Madonna, sold 370,000 copies at stands, only slightly below average.
Editors insist readers are still interested in green themes, although some said they are evolving coverage in response to green’s maturation. Hachette Filipacchi Media’s Elle—which made a statement by publishing its green issue on recycled paper this year—plans a water-themed issue in ’09, reminiscent of the blue issue of Rodale’s Women’s Health in 2007
Ending their green issues could serve a PR purpose for magazines, given that the very practice of publishing on paper is seen as at odds with protecting the environment. Still, some maintain that while tips for sustainable living are well-worn, readers continue to want targeted green content.
Pulp Mill Back on Line
The former Pope and Talbot pulp mill in Nanaimo, BC was restarted and under the new name of Nanaimo Forest Products. Its former employees, Pioneer Log Homes, Sampson Group, and Totzauer Holdings purchased the mill for C$13.2million. The mil secured 5 year agreements from end users for 100% of production.
Update on Packaging Market
Mark Wilde of Deutsche Bank reports on trip to packaging companies
First, Mr. Wilde considers packaging more recession-resistant than paper.
Volume drops for shipments as much as 10-15% were confirmed with Europe experiencing weaker demand than USA, also Russia and China shipments down. While pressure on prices is alive and well, raw material and energy costs have also fallen.
First, Mr. Wilde considers packaging more recession-resistant than paper.
Volume drops for shipments as much as 10-15% were confirmed with Europe experiencing weaker demand than USA, also Russia and China shipments down. While pressure on prices is alive and well, raw material and energy costs have also fallen.
Mohawk Announces New Renewal Grade
Mohawk Paper Mills just introduced a renewable folding board for the luxury packaging market. The grade is made of 80% post consumer waste and is available in an 18-point board. The items are stocked in 28X40” sheets and is competitively priced.
Paper.com markets this grade for end uses such as cosmetics, jewelry, and beauty products.
Paper.com markets this grade for end uses such as cosmetics, jewelry, and beauty products.
The Comics are affected with fewer Newspapers
New York Times recently ran an article outlining the effects of fewer newspapers being distributed. With the trend of declining newspapers, the economic challenges effect many including comic strips. In the past, comics relied almost exclusively on newspapers to print and distribute the ‘funnies’. Syndications for comics are beginning to promote the web as a new means to read the comics. New sites such as Comics.com and the GoComics websites have become very popular.
Tuesday, December 23, 2008
Overall Paper Prices Continue in Free Fall
December continues to witness paper prices declining. Examples include $10-15/ton in newsprint, $5-15/ton for uncoated papers (freesheet), $25-70/ton in coated papers, and $10-20/ton in containerboard. Shipments and demand are very weak which continue to place strong downward pressure on prices. Look for additional downtime and possibly more consolidation and machine closures.
Containerboard Continues Slide
Even with our previously reported status of manufacturing curtailment, inventories were not reduced, infact, reports outline a slight increase. Obviously, demand continues to be weak. Lower volumes continue to place pressure on mills to reduce price beyond the $10-15/ton discount witnessed earlier in December.
November box shipments declined nearly 14.5% compare to November of 2007, this in spite of operating rates of only 85%. Look for more challenges as we enter 2009 and beyond.
November box shipments declined nearly 14.5% compare to November of 2007, this in spite of operating rates of only 85%. Look for more challenges as we enter 2009 and beyond.
Thursday, December 18, 2008
Bonnier Acquires Scuba Diving, Accompanying Site
In a generally dormant market for magazine sales, Bonnier Corp. continues to buy. The publisher recently announced its acquisition of Scuba Diving and its companion Web site from enthusiast publisher F+W Media Inc. for undisclosed terms.
Paper Prices for Printers
PIA/GATF just reported that paper prices (although currently depressed) had increased steadily from the first quarter of 2006 to first quarter of 2008. The study confirmed average price increases as follow 4Q06 +4.35%; 1Q07 + 4.96%; 2Q07 +5.39%; 3Q07 +5.47%; 4Q07 +5.77%; 1Q08 +6.70%; 2Q08 + 8.93%.
If paper accounts for 22% of the printer's sales, these increases significantly affected overall costs.
If paper accounts for 22% of the printer's sales, these increases significantly affected overall costs.
Box Makers Demand Decreases
As reported from Purchasing Magazine
Corrugated box demand is down so linerboard sales—and prices—are down and producers are reducing production. In fact, North American containerboard downtime is now expected to be nearly 13% of industry capacity—or around 1.25 million tons— in the fourth quarter. Producers already have responded to unusually weak demand for corrugated by cutting unbleached kraft linerboard production by 2.5% through October this year.
Since more than two thirds of the downtime is expected to take place in December, the latest production tally by the PPI Pulp & Paper Week subscription newsletter suggests that containerboard mill operating rates for December could drop to the mid-70% range. Yet, that’s still somewhat of a moving target because more mills are expected to take curtailments over the period between Christmas and yearend.
Corrugated box demand is down so linerboard sales—and prices—are down and producers are reducing production. In fact, North American containerboard downtime is now expected to be nearly 13% of industry capacity—or around 1.25 million tons— in the fourth quarter. Producers already have responded to unusually weak demand for corrugated by cutting unbleached kraft linerboard production by 2.5% through October this year.
Since more than two thirds of the downtime is expected to take place in December, the latest production tally by the PPI Pulp & Paper Week subscription newsletter suggests that containerboard mill operating rates for December could drop to the mid-70% range. Yet, that’s still somewhat of a moving target because more mills are expected to take curtailments over the period between Christmas and yearend.
Tuesday, December 16, 2008
KromeKote now available in FSC Certification
From Smart Paper Release
Smart Papers, manufacturers of Kromekote True-Photo, delivers outstanding photo and image reproduction, creating visuals that pop off the page. A brilliant 92-bright white shade also produces intense colors and maximum image resolution. The ultra-glossy, recycled-content digital papers are unmatched in the global marketplace. They combine the quality and feel of traditional photo paper with the unsurpassed printability of triple cast-coated Kromekote.
This new line of new archival and acid-free papers enable digital press owners to profitably meet the growing demand for custom short-run photos and photo applications like greeting cards, direct mail, personalized calendars and much more. The papers are guaranteed on HP Indigo, Xerox iGen, Kodak NexPress, Canon, Konica-Minolta and all production-rated laser printers. The papers are FSC certified and feature 30% post-consumer fiber.
SMART Papers is the only North American premium papermaker now in the process of becoming 100% fossil-fuel free, converting all of its energy production to 100% carbon-neutral waste wood biomass.
The website, Paper.com, markets papers such as Kromekote that are RIT-certified and available in 8- and 10-point caliper, 18x12 size and are sealed in 250 sheet packs, 1000 sheets per carton. All Kromekote True-Photo sheets are acid free, archival, process and elemental chlorine free.
Other applications include photo books, advertising materials, brochures and business cards.
Smart Papers, manufacturers of Kromekote True-Photo, delivers outstanding photo and image reproduction, creating visuals that pop off the page. A brilliant 92-bright white shade also produces intense colors and maximum image resolution. The ultra-glossy, recycled-content digital papers are unmatched in the global marketplace. They combine the quality and feel of traditional photo paper with the unsurpassed printability of triple cast-coated Kromekote.
This new line of new archival and acid-free papers enable digital press owners to profitably meet the growing demand for custom short-run photos and photo applications like greeting cards, direct mail, personalized calendars and much more. The papers are guaranteed on HP Indigo, Xerox iGen, Kodak NexPress, Canon, Konica-Minolta and all production-rated laser printers. The papers are FSC certified and feature 30% post-consumer fiber.
SMART Papers is the only North American premium papermaker now in the process of becoming 100% fossil-fuel free, converting all of its energy production to 100% carbon-neutral waste wood biomass.
The website, Paper.com, markets papers such as Kromekote that are RIT-certified and available in 8- and 10-point caliper, 18x12 size and are sealed in 250 sheet packs, 1000 sheets per carton. All Kromekote True-Photo sheets are acid free, archival, process and elemental chlorine free.
Other applications include photo books, advertising materials, brochures and business cards.
International Paper to Reduce Work Force
International Paper Co. announced its plans to eliminate 1,000 to 1,500 salaried jobs by the end of next year. The company said the cuts are part of a cost-cutting measure that would result in savings of $150 million to $200 million. International Paper has just over 50,000 employees worldwide.
Tuesday, December 09, 2008
Tribune Company Files for Bankruptcy
The Tribune Company, a struggling television and newspaper operator and owner of Los Angeles Times and Chicago Tribune, filed for bankruptcy. The owner Sam Zell sited the recession as well as a shift of advertising dollars and readers to the internet as prime reasons for the company's recent trouble.
Monday, December 08, 2008
Market Downtime Hits Paper Companies Hard
It appears the literally every producer of paper products is taking significant market downtime in the forth quarter of this year in an attempt to control inventories. In many cases, downtime could amount to 10-15% of capacity. Although this downtime is expensive, if it avoids a sharp drop in industry prices, it looks like the right trade-off.
Newsprint Pricing Officially Reduced
The largest producer of newsprint, AbitibiBowater, rescinded $20/ton price increase originally announced for December due to poor demand. Consumption continues to decline with the increase of the internet and less advertising.
Market Pulp Continues Downward Trend in Price
List price for NBSK market pulp fell $45/ton this month to $750/ton. This yields a total reduction of $135/ton since the peak in August. Further discounts are reported for large spot orders. Producer inventories continue to increase (now at 47 days).
UPM Signs 10-Year Deal with Baltimore Port
UPM has signed a contract with the Maryland Port Administration, which guarantees that they will ship at least 320,000 tons of forest products into the port of Baltimore over the next 10 years. The agreement will result in 120 jobs and $2.7 million in tax revenue, according to the state. The contract signing took place in a $32 million portside warehouse that Maryland built for UPM.
Friday, December 05, 2008
International Paper to "Indefinitely" Close Pulp Mill in Bastrop
International Paper announced the indefinite closure of its pulp mill in Bastrop, LA. The decision to idle the 100 percent pulp mill operation is because of the continuing decline in pulp demand from its customers worldwide coupled with a weak economy across the globe. The shutdown process will begin immediately. The mill is currently taking downtime due to a lack of pulp orders.
Market Pulp
NBSK market pulp prices fell $45-50/ton to $795/ton in November. The list price is now down $90/ton since peaking in August. Even so, the gap with spot prices has widened significantly. Spot prices are reportedly $550/ton in the US and $500/ton & below in China.
Demand has been off sharply over the past 3-4 months - especially in Asia. As a result, producer stocks have piled up - rising to 44 days of supply from 29 days a year earlier.
Demand has been off sharply over the past 3-4 months - especially in Asia. As a result, producer stocks have piled up - rising to 44 days of supply from 29 days a year earlier.
U.S. Paper Production Down 9.3% in October
The latest statistics from the American Forest and Paper Association (AF&PA) shows that total paper production in the U.S. fell 9.3% in October from a year ago. Total U.S. paper production is down 3.5% year-to-date. Total U.S. printing and writing paper shipments were down 12.4% in October from a year earlier and down 5.0% year-to-date.
Thursday, December 04, 2008
AbitibiBowater to Curtail Production
AbitibiBowater Inc. said it plans to idle or permanently close at least four paper mills and lay off approximately 1,100 employees as a result of the closures. The company will permanently close the Grand Falls, Newfoundland and Labrador newsprint mill by the end of the first quarter of 2009, removing 205,000 tons from the marketplace. AbitibiBowater will also permanently close the Covington, Tennessee paper converting center by the end of 2008, representing 70,000 tons of coated grades. The production curtailment includes the immediate idling of the Alabama River newsprint mill in Alabama and two paper machines in Calhoun, Tennessee. In all, the capacity reductions include approximately 830,000 tons of newsprint, 110,000 tons of specialty grades and 70,000 tonnes of coated grades.
Kraft Paper Market
The Kraft Paper market has been in a steady decline, mainly due to competition from plastics. The market has declined from a peak of 5million tons in the early 1970s to current demand of approximately 1.6million tons. The manufacturers have responded by shuttering equipment. Although, near term, experts believe this market could increase somewhat, given recent bad publicity on inability to recycle plastics; however, the trend for demand is still estimated to decline.
Top North American Producers by name, capacity and market share as follows
Longview Fiber 333,000 13.5%
KapStone 310,000 12.5%
Georgia Pacific 260,000 11%
Smurfit Stone 180,000 7.5%
Delta Kraft 180,000 7.5%
Tolko Indust. 180,000 7.5%
Canfor 155,000 6.5%
West Fraser 135,000 5.5%
Cascades 100,000 4.5%
Intern'l Paper 60,000 2.5%
Top North American Producers by name, capacity and market share as follows
Longview Fiber 333,000 13.5%
KapStone 310,000 12.5%
Georgia Pacific 260,000 11%
Smurfit Stone 180,000 7.5%
Delta Kraft 180,000 7.5%
Tolko Indust. 180,000 7.5%
Canfor 155,000 6.5%
West Fraser 135,000 5.5%
Cascades 100,000 4.5%
Intern'l Paper 60,000 2.5%
Wausau Mill in New Hampshire Sold
Strong industry talk that the Wausau Paper mill in Groveton, NH was sold for $100,000. The mill will NOT reopen as a paper mill.
Book Publishers feel the Pressure
Many of the big publishers in the book business are trimming costs and reducing staff because of poor book sales. The New York Times reported such companies as Simon and Schuster, Houghton Mifflin Harcourt, Bertesmann, Doubleday and Bantam Dell all making difficult choices and stating it is the worst retailing environment in memory. Although book sales through September were actually up slightly, October and November witnessed deterioration in sales.
Tuesday, December 02, 2008
Fun Facts on Paper and Recycling
-More forests exist today than 100 years ago
-SFI (Sustainable Forestry Initiative reports that it has 153million acres certified which represents 13% of all world forests
-Only 25% of forested trees are destined for a pulp and paper mill.
Every year, the paper industry becomes more efficient with energy consumption, forest management, and Carbon neutrality.
-Paper Industry is four largest consumer of energy of all industries in USA
-Mills have all engaged in logistical software for most efficient routing of trucks
-Many mills consume at least a portion of their energy from alternative sources.
-SFI (Sustainable Forestry Initiative reports that it has 153million acres certified which represents 13% of all world forests
-Only 25% of forested trees are destined for a pulp and paper mill.
Every year, the paper industry becomes more efficient with energy consumption, forest management, and Carbon neutrality.
-Paper Industry is four largest consumer of energy of all industries in USA
-Mills have all engaged in logistical software for most efficient routing of trucks
-Many mills consume at least a portion of their energy from alternative sources.
USA Post Office Reports Loss
The USPS has reported a net loss of $2.8billion for fiscal year ending September. The service blamed this loss on the economic slow down, additional costs, and the gradual popularity of the Internet. 202.7billion pieces were mailed, this represents a decline of 9.5billion pieces or 4.5% from 2007. In that the majority of mail consists on paper in some form, also translates into less paper demanded.
Wednesday, November 26, 2008
U.S. Uncoated Freesheet Downtime Spreads as Market Weakens
Notes from Pulp and Paper
Large and small producers alike are cutting production of uncoated freesheet printing & writing paper grades to match the sharp demand downturn in September and October.
U.S. shipments of uncoated freesheet fell 10.5% in October to 855,000 tons, according to preliminary data from the American Forest & Paper Assn. On top of a 5.4% drop in September, the 10-month decline moved to -6.1%. The November demand figures will not be better.
Producers have eliminated capacity to control flooding the market with unwanted tons with temporary machine shut down and some permanent shuttering of equipment.
Domtar Dryden, Ont 151,000tons
International Paper – Frankin, VA 150,00tons
-Also, IP in Ticonderoga, NY and Selma, AL 60,000 tons total
-Also, IP announce Riverdale, AL will take down time
Boise St Helen, OR. 200,000 tons
-Also, Boise will take down time in International Fall, MN
Finch Paper Glens Falls, NY is considering down time (capacity is 250,000 tons)
Large and small producers alike are cutting production of uncoated freesheet printing & writing paper grades to match the sharp demand downturn in September and October.
U.S. shipments of uncoated freesheet fell 10.5% in October to 855,000 tons, according to preliminary data from the American Forest & Paper Assn. On top of a 5.4% drop in September, the 10-month decline moved to -6.1%. The November demand figures will not be better.
Producers have eliminated capacity to control flooding the market with unwanted tons with temporary machine shut down and some permanent shuttering of equipment.
Domtar Dryden, Ont 151,000tons
International Paper – Frankin, VA 150,00tons
-Also, IP in Ticonderoga, NY and Selma, AL 60,000 tons total
-Also, IP announce Riverdale, AL will take down time
Boise St Helen, OR. 200,000 tons
-Also, Boise will take down time in International Fall, MN
Finch Paper Glens Falls, NY is considering down time (capacity is 250,000 tons)
M-Real to Hike Prices in Early 2009
M-real plans to raise prices for coated fine paper and coated magazine paper by 8% effective in the beginning of 2009. Earlier this year, the European paper supplier increased prices for its U.S. market coated magazine papers by $60/ton and its U.K. magazine paper prices by about $80/ton.
Catalyst to Curtail Production at All Mills
Catalyst Paper Corp. said it will be curtailing production at all six of its mills during the seasonally slow Christmas period. The curtailments will vary in duration, but will begin December 19 and end in the first week of January. The recent announcement will remove an additional 21,000 tonnes of newsprint, 14,000 tonnes of specialty papers and 2,000 tonnes of pulp production from the market.
Pulp Inventory Increases
World pulp inventories rose in October to 47 days – up from 44 in September and up 19 days from 2007 levels. Compare to October 2007, shipments fell 9.5% to 3.2million tons. The operating rate fell to 83%.
China alone demanded 24% less tons (demand for October was only 306,000tons).
Obviously, as demand for paper declines, all the raw materials to produce paper also experience
a slow down in demand.
China alone demanded 24% less tons (demand for October was only 306,000tons).
Obviously, as demand for paper declines, all the raw materials to produce paper also experience
a slow down in demand.
European Producers believe Prices will increase
Management of leading European paper producers all agree that prices will start to increase. This, for all grades including Newsprint, Super calendar, coated Groundwood because of massive curtailment of production, both temporary and permanent to control supply.
These producers expect to continue to shutter equipment, if demand not support supply.
These producers expect to continue to shutter equipment, if demand not support supply.
Bukeye Takes Downtime for Cotton Fiber
Buckeye Technologies Inc. announced today that, due to softening of demand in the markets that use its cotton specialty fibers, Buckeye will be taking market downtime at its Americana Cotton Specialty Fibers facility in Brazil and reducing production by one shift at its Memphis Cotton Specialty Fibers facility.
This will result in the Americana facility being idled for the entire month of December and the Memphis facility operating at about two-thirds capacity going forward
This will result in the Americana facility being idled for the entire month of December and the Memphis facility operating at about two-thirds capacity going forward
Tuesday, November 25, 2008
Pulp Prices Fall
Dramatic reductions in pulp pricing have occurred over last 90- days, with recent drops of $200-250/ton. This is 25-35% less than price levels in May and June. Pulp inventories remain high, mainly as a result of China slowing purchases to almost nothing.
Recent Uncoated Price Discounts
Industry reports that most producers of Uncoated Freesheet discounted prices by $10-15/ton for converting and business papers / cutsize. As outlined in this Paper News Blog, most of the producers for uncoated paper have taken market related down time, but many of the manufacturers that traditionally sell coated papers have 'turned off' the coater and flooded the market with uncoated paper.
Paper Shipments Tumble as Producers Slash Supply to Match Falling Demand
Associated Press -- Newly released figures on paper shipments confirm the sector's rapid contraction as producers accelerate capacity cuts in to retain pricing power, analysts said.
Goldman Sachs analyst Richard Skidmore, in a note to clients Sunday, said U.S. printing and writing paper shipments fell 12.7 percent in October year-over-year.
Shipments of so-called coated freesheet, a glossy paper, dropped 15.4 percent, and shipments of coated groundwood, a lower-cost grade of paper used in catalogs and advertising inserts, declined 19.4 percent.
"Responding to accelerating demand declines, producers have quickly acted to permanently close and temporarily idle capacity. Producer efforts to balance supply with demand have been impressive," Skidmore wrote.
International Paper Co. on Friday closed its pulp mill in northeastern Louisiana, terminating 550 employees. International Paper, based in Memphis, Tenn., earlier this month began what was expected to be a seven-week shutdown at its Bastrop mill. But Friday the company said the shuttering would be indefinite.
And early this month, Weyerhaeuser Co. said it was closing a Georgia mill indefinitely due to softening engineered wood product demand amid the ongoing housing downturn.
Deutsche Bank-North America analyst Mark Wilde termed such supply cuts "aggressive," though perhaps not sufficient to eliminate pricing pressure.
"The key issues will be margins," Wilde said in a research report late Friday.
Besides supplies of coated freesheet and coated groundwood, other grades of paper whose supplies are being reduced are uncoated freesheet, uncoated groundwood, containerboard, which is used to make cardboard, and market pulp, a raw material for various grades of paper.
"We forecast the next few quarters to be challenging for the industry as demand deteriorates, downtime rises and prices move lower," Skidmore said.
He expects prices for uncoated freesheet to decline through the middle of next year.
Goldman Sachs analyst Richard Skidmore, in a note to clients Sunday, said U.S. printing and writing paper shipments fell 12.7 percent in October year-over-year.
Shipments of so-called coated freesheet, a glossy paper, dropped 15.4 percent, and shipments of coated groundwood, a lower-cost grade of paper used in catalogs and advertising inserts, declined 19.4 percent.
"Responding to accelerating demand declines, producers have quickly acted to permanently close and temporarily idle capacity. Producer efforts to balance supply with demand have been impressive," Skidmore wrote.
International Paper Co. on Friday closed its pulp mill in northeastern Louisiana, terminating 550 employees. International Paper, based in Memphis, Tenn., earlier this month began what was expected to be a seven-week shutdown at its Bastrop mill. But Friday the company said the shuttering would be indefinite.
And early this month, Weyerhaeuser Co. said it was closing a Georgia mill indefinitely due to softening engineered wood product demand amid the ongoing housing downturn.
Deutsche Bank-North America analyst Mark Wilde termed such supply cuts "aggressive," though perhaps not sufficient to eliminate pricing pressure.
"The key issues will be margins," Wilde said in a research report late Friday.
Besides supplies of coated freesheet and coated groundwood, other grades of paper whose supplies are being reduced are uncoated freesheet, uncoated groundwood, containerboard, which is used to make cardboard, and market pulp, a raw material for various grades of paper.
"We forecast the next few quarters to be challenging for the industry as demand deteriorates, downtime rises and prices move lower," Skidmore said.
He expects prices for uncoated freesheet to decline through the middle of next year.
Fraser Papers Announces Temporary Shutdown of Thurso Pulp Mill
MARKET WIRE - Fraser Papers Inc. announced today that it plans to take up to 14,000 tonnes of market-related downtime at its hardwood kraft pulp mill in Thurso, Quebec. The shutdown will allow Fraser Papers to balance its pulp inventory with current customer requirements. Fraser Papers plans to close the mill December 15, 2008 and restart January 6, 2009, subject to orders.
Fraser Papers is an integrated specialty paper company that produces a broad range of specialty packaging and printing papers. The company has operations in New Brunswick, Maine, New Hampshire and Quebec.
Fraser Papers is an integrated specialty paper company that produces a broad range of specialty packaging and printing papers. The company has operations in New Brunswick, Maine, New Hampshire and Quebec.
Total Printing/Writing Paper Shipments Drop
U.S. printing and writing paper shipments overall dropped 9.1% in October from the previous month and fell 12.5% compared to October 2007, the American Forest & Paper Assn. reported. Total U.S. coated paper shipments dropped 5.0% to 750,900 tons in October from September and decreased 17.3% compared to a year earlier. Coated freesheet paper volumes declined 4.7% month-to-month and 15.4% year-over-year. Coated mechanical paper volumes were down 5.2% in October from the previous month and 19.4% lower than October 2007.
Wednesday, November 19, 2008
PC Magazine Folds Monthly Print Edition
fr PC Magazine
In the latest contraction of the computing magazine category, Ziff Davis Media said it would fold flagship PC Magazine with the January issue and convert the brand to an all-digital format at PCMag.com.
All magazines are facing a tough road these days, but computing magazines had already been particularly impacted by readers’ growing preference for the Web. This year, 27-year-old PC Magazine was forced to cut its rate base to 600,000 from 700,000 and reduce frequency to 12 issues per year from about 25; its ad pages dropped 35.8 percent to 330 for the first six months of this year, per Publishers Information Bureau.
Also this year, rival monthly PC World, published by International Data Group, cut its rate base to 600,000 from 710,000, citing growing paper, postal and ink costs.
In the latest contraction of the computing magazine category, Ziff Davis Media said it would fold flagship PC Magazine with the January issue and convert the brand to an all-digital format at PCMag.com.
All magazines are facing a tough road these days, but computing magazines had already been particularly impacted by readers’ growing preference for the Web. This year, 27-year-old PC Magazine was forced to cut its rate base to 600,000 from 700,000 and reduce frequency to 12 issues per year from about 25; its ad pages dropped 35.8 percent to 330 for the first six months of this year, per Publishers Information Bureau.
Also this year, rival monthly PC World, published by International Data Group, cut its rate base to 600,000 from 710,000, citing growing paper, postal and ink costs.
Time Spent on Top News Sites in Decline
By Jennifer Saba, MediaWeek
Following the same trend in September, the average time spent per person on newspaper Web sites declined in October year-over-year as monthly uniques soared.
The data is from Nielsen Online (owned by E&P's and Mediaweek's parent company) and tracks the average time spent per person at a site during October.
Some sites, however, made big increases.
The New York Times was up to an average of 40 minutes versus 35 minutes in October '07. Politico, which increased its monthly uniques 178 percent, managed to up the average time spent on the site from 9 minutes in October 2007 to almost 19 minutes in October 2008. The Houston Chronicle doubled the average time spent on its Web site year-over-year to 30 minutes.
Below is the average time spent per person for the month of October, ranked in the order of that site's unique visitors. This is a custom list from Nielsen Online and can fluctuate based on several factors including news cycles.
Following the same trend in September, the average time spent per person on newspaper Web sites declined in October year-over-year as monthly uniques soared.
The data is from Nielsen Online (owned by E&P's and Mediaweek's parent company) and tracks the average time spent per person at a site during October.
Some sites, however, made big increases.
The New York Times was up to an average of 40 minutes versus 35 minutes in October '07. Politico, which increased its monthly uniques 178 percent, managed to up the average time spent on the site from 9 minutes in October 2007 to almost 19 minutes in October 2008. The Houston Chronicle doubled the average time spent on its Web site year-over-year to 30 minutes.
Below is the average time spent per person for the month of October, ranked in the order of that site's unique visitors. This is a custom list from Nielsen Online and can fluctuate based on several factors including news cycles.
Boise Cuts Paper Production
Boise Inc. announced plans to restructure its St. Helens, Ore., paper mill that includes halting pulp production entirely and reducing annual paper output capacity by 200,000 tons. The move is expected to be complete mid-January.
Poor USA Paper Demand
The last 60 days have been nothing short of a disaster. Poorest demand for the pulp and paper industry in ages. Mark Wilde of Deutsche Bank predicted 4-5millions additional tons of paper capacity in North America will be out of system before 2009 draws to an end. Recall, he also forecasted that 3-4million tons of pulp, on a worldwide basis, will be shuttered by end of 2009 as well.
Estimated market demand for shipments so far through October YTD for 2008
Newsprint down 20.7%
Coated down 5.3%
-Note in October alone coated free down 16.3%; coated Groundwood down 20.7%
Uncoated Free down 6.3%
-Note in October alone, this segment down 10.5%
Containerboard down 3.3%
-October down 8.6%
Estimated market demand for shipments so far through October YTD for 2008
Newsprint down 20.7%
Coated down 5.3%
-Note in October alone coated free down 16.3%; coated Groundwood down 20.7%
Uncoated Free down 6.3%
-Note in October alone, this segment down 10.5%
Containerboard down 3.3%
-October down 8.6%
Uncoated free sheet supply is also being reduced
From Deutsche Bank - Equity Research
Domtar recently announced that it would cease paper production at its Dryden, Ontario mill, removing 151K tpy of capacity. Earlier this summer, Domtar closed a 165K tpy mill in Port Edwards, WI. Last week, Domtar's largest competitor, International Paper, announced
plans to permanently shutter a 150K tpy machine at its Franklin, VA mill just before Thanksgiving. IP is also taking a reported 60K tons of Q4 downtime across its other uncoated mills. On Monday, the #3 producer, Boise, announced that it would shut 2 paper machines at
its St Helens, OR mill, removing 200K tpy of uncoated white paper.
With sharply slowing domestic demand, weak offshore markets, and rapid appreciation in the US$, we expect prices for virtually all paper grades to come under pressure as business slows seasonally in December. The "best case scenario" is that a disciplined approach
to supply & inventories will mitigate pricing pressure. The good news is that many key input costs are also falling. The key question in 2009 will be the interplay between probable lower prices & volumes on the one hand and lower input costs on the other hand.
Domtar recently announced that it would cease paper production at its Dryden, Ontario mill, removing 151K tpy of capacity. Earlier this summer, Domtar closed a 165K tpy mill in Port Edwards, WI. Last week, Domtar's largest competitor, International Paper, announced
plans to permanently shutter a 150K tpy machine at its Franklin, VA mill just before Thanksgiving. IP is also taking a reported 60K tons of Q4 downtime across its other uncoated mills. On Monday, the #3 producer, Boise, announced that it would shut 2 paper machines at
its St Helens, OR mill, removing 200K tpy of uncoated white paper.
With sharply slowing domestic demand, weak offshore markets, and rapid appreciation in the US$, we expect prices for virtually all paper grades to come under pressure as business slows seasonally in December. The "best case scenario" is that a disciplined approach
to supply & inventories will mitigate pricing pressure. The good news is that many key input costs are also falling. The key question in 2009 will be the interplay between probable lower prices & volumes on the one hand and lower input costs on the other hand.
Most major containerboard producers are reducing supply
From Deutsche Bank - Equity Research
International Paper (#1 producer) has idled 2 large machines with almost 700K tpy of capacity this autumn. IP is also "slowing back" production at other mills to the tune of 200K tons in Q4. With less fanfare, the #2 producer, Smurfit-Stone, has permanently shuttered a
135K tpy machine and is idling machines at 5 different mills during Q4. The #3 and #5 containerboard producers, Georgia-Pacific and PCA, are reportedly operating their mills on a "slow-back" strategy.
International Paper (#1 producer) has idled 2 large machines with almost 700K tpy of capacity this autumn. IP is also "slowing back" production at other mills to the tune of 200K tons in Q4. With less fanfare, the #2 producer, Smurfit-Stone, has permanently shuttered a
135K tpy machine and is idling machines at 5 different mills during Q4. The #3 and #5 containerboard producers, Georgia-Pacific and PCA, are reportedly operating their mills on a "slow-back" strategy.
Pressure Continues on Paper Prices
The Paper industry continues to face challenges on prices given the slowing economy and raising US Dollar. There is also much pressure from the market on producers given falling production costs with the reduction in pulp, energy, transportation and certain chemicals.
List prices of Uncoated Free sheet are discounted $30-40/ton for rolls. International Paper, Domtar, and Boise have all announced machine closures, idling, or market downtime.
Coated Groundwood - paper used for Magazines and catalogues - continue to witness slow demand and suppliers have done well by reducing capacity to stabilize pricing. NewPage, Verso, Kruger, Domtar, and AbitibiBowater have all announced market downtime.
Shipments are down 9.5%.
List prices of Uncoated Free sheet are discounted $30-40/ton for rolls. International Paper, Domtar, and Boise have all announced machine closures, idling, or market downtime.
Coated Groundwood - paper used for Magazines and catalogues - continue to witness slow demand and suppliers have done well by reducing capacity to stabilize pricing. NewPage, Verso, Kruger, Domtar, and AbitibiBowater have all announced market downtime.
Shipments are down 9.5%.
Thursday, November 13, 2008
International Paper to Shutdown Machine
International Paper announced that it is permanently shutting down its No. 3 uncoated freesheet paper machine at its Franklin mill in Virginia. The closure, scheduled for November 23, will affect about 50 workers and will remove approximately 150,000 tons of uncoated freesheet paper from the market. Furthermore, the company is planning to take approximately 60,000 tons of lack of order downtime at its U.S. coated freesheet paper mills in the fourth quarter.
NYT Runs 50,000 Extra for Election Day
-By Joe Strupp, Editor and Publisher - Media Week
Demand for copies of today's historic Obama presidential election coverage has sparked two of the nation's largest dailies to gear up their presses again for more.
The New York Times is printing another 50,000 copies of today's historic paper while The Washington Post is planning a 26-page extra edition, expected to hit newsstands this afternoon.
"There has been immense demand for the paper. There are lines around the building. We are thrilled people are still interested in the print paper," said executive editor Marcus Brauchli. "We are scrambling to pull together a special edition."
He had few specifics on the extra, but said at least 150,000 copies would likely be printed.
Demand for copies of today's historic Obama presidential election coverage has sparked two of the nation's largest dailies to gear up their presses again for more.
The New York Times is printing another 50,000 copies of today's historic paper while The Washington Post is planning a 26-page extra edition, expected to hit newsstands this afternoon.
"There has been immense demand for the paper. There are lines around the building. We are thrilled people are still interested in the print paper," said executive editor Marcus Brauchli. "We are scrambling to pull together a special edition."
He had few specifics on the extra, but said at least 150,000 copies would likely be printed.
Wednesday, November 12, 2008
NewPage to Further Reduce LWC Production
NewPage Corp. announced plans to curtail lightweight coated (LWC) paper production by 40,000 tons in the fourth quarter as a result of a downturn in demand. The production curtailment is in addition to previously announced market-related downtime.
Paper Market Shipments
Notes from Deutsche Bank - Equity Research
Coated paper volumes fell more than forecasted. Coated Mechanical (LWC- Magazine Papers) fell 21.7% in October vs. October 2007 (-6.9% YTD). Coated Freesheet demand is somewhat better, but still fell 16.3% in October vs. October 2007 (-9.4% YTD). Weak demand for catalogues and magazines hurt the coated markets.
Uncoated shipments were off as well. Shipments of Uncoated Free Sheet fell 10.5% in October vs. October 2007 (6.1% YTD). Even Uncoated mechanical was weak, with shipments falling 3.1% in October vs. October 2007 (+10.6% YTD). This marks the first decline in over a year.
Coated paper volumes fell more than forecasted. Coated Mechanical (LWC- Magazine Papers) fell 21.7% in October vs. October 2007 (-6.9% YTD). Coated Freesheet demand is somewhat better, but still fell 16.3% in October vs. October 2007 (-9.4% YTD). Weak demand for catalogues and magazines hurt the coated markets.
Uncoated shipments were off as well. Shipments of Uncoated Free Sheet fell 10.5% in October vs. October 2007 (6.1% YTD). Even Uncoated mechanical was weak, with shipments falling 3.1% in October vs. October 2007 (+10.6% YTD). This marks the first decline in over a year.
Tuesday, November 11, 2008
Magazines Announce Lay Offs
Time Inc. sent memos to employees at Fortune, Time, People and Sports Illustrated asking for volunteers to take buyout packages. The offer was part of Time Inc.’s reorganization plan announced a couple weeks ago and was limited to editorial employees at magazines that have contracts with the Newspaper Guild. The company is looking for roughly 100 volunteers from editorial, with about 40 from Sports Illustrated alone.
Meredith Publishing just reported they lay off 12 Senior Vice Presidents last week because of sluggish magazine sales and declining revenue.
Meredith Publishing just reported they lay off 12 Senior Vice Presidents last week because of sluggish magazine sales and declining revenue.
Nukote introduces HP Indigo product line
from Labels and Narrow Web magazine
Nukote International has unveiled a new line of HP Indigo receptive substrates. In stock are white BOPP, clear BOPP, glossy paper and semi-gloss paper roll labelstocks. Specialty Indigo products such as synthetic paper in roll form or in cut sheets are also available.
“The release of the HP Indigo line adds to Nukote’s expansive selection of imaging products. We continue to invest in research and development to support customers as they take advantage of new opportunities,” says Steve Baiocchi, president of sales. Nukote’s Indigo product line has been certified for HP Indigo by the Rochester Institute of Technology Printing Applications Laboratory.
Nukote International, based in Rochester, NY, USA, provides a variety of products for more than 30,000 imaging devices, including ink, laser, toner, ribbons, thermal, wide format, industrial and packaging inks, specialized security coating, and extruded film applications.
Nukote International has unveiled a new line of HP Indigo receptive substrates. In stock are white BOPP, clear BOPP, glossy paper and semi-gloss paper roll labelstocks. Specialty Indigo products such as synthetic paper in roll form or in cut sheets are also available.
“The release of the HP Indigo line adds to Nukote’s expansive selection of imaging products. We continue to invest in research and development to support customers as they take advantage of new opportunities,” says Steve Baiocchi, president of sales. Nukote’s Indigo product line has been certified for HP Indigo by the Rochester Institute of Technology Printing Applications Laboratory.
Nukote International, based in Rochester, NY, USA, provides a variety of products for more than 30,000 imaging devices, including ink, laser, toner, ribbons, thermal, wide format, industrial and packaging inks, specialized security coating, and extruded film applications.
Monday, November 10, 2008
Emails Grow
Not sure when the paperless office will formally be here, but the internet continues to cannibalize traditional paper demands.
Retailers and wholesalers expected to send 158 billion e-mail marketing messages in 2008 and 258 billion by 2013, according to Forrester Research.
Not too long ago, this was letters, direct mail, magazine advertisements and catalogues......
Retailers and wholesalers expected to send 158 billion e-mail marketing messages in 2008 and 258 billion by 2013, according to Forrester Research.
Not too long ago, this was letters, direct mail, magazine advertisements and catalogues......
Uncoated Freesheet also witnessing Price Pressure
Reports in the market confirm producers of roll stock for uncoated freesheet are discounting to about $30-40/ton. Some of the production ending up in the market is from large coated manufacturers that have 'turned of the coater' and flooded the market with cheaper uncoated paper. We are beginning to also hear of discounts for large spot orders of cut size. Both Domtar (North America's largest producer) and Boise (#3) will idle equipment in an effort to stabilize supply and pricing.
Publication Papers Remain Weak in Demand
Producers of Groundwood containing papers for publications continue to take market related down time to maintain a balance because of weak demand. Magazines pages have been reduced, fewer catalogues are being mailed, and newspapers have reduced Sunday Inserts - all hurting Groundwood demand. Resulting from poor advertising pages (down 12% this year) and no relief in sight - 2009 is forecasted to be difficult for manufactures.
We have reported in past of paper producers taking down time - NewPage (Kimberly, WI); Kruger (Trois-Rivières -Québec -Canada); Domtar (Columbus, MS); AbitibiBowater (Catawba, SC). Although this will assist, we beleive manufactures will begin to 'officially' reduce pricing.
We have reported in past of paper producers taking down time - NewPage (Kimberly, WI); Kruger (Trois-Rivières -Québec -Canada); Domtar (Columbus, MS); AbitibiBowater (Catawba, SC). Although this will assist, we beleive manufactures will begin to 'officially' reduce pricing.
Pulp prices on the decline
Pulp prices continue to witness pressure due to demand reduction. Producer inventories have increased to 44 days (up from 30 days). Spot pricing of $500/ton for large orders of NBSK are rumored on shipments exported to China. Domtar and Canfor Pulp have reduced NBSK list to approximately $40-50/ton. We forecast today's spot pricing could become market pricing soon.
Two Newspapers Report Stable - nondeclining circulation
We continue to report on the decline of readers, and thus newspapers, in the USA. Newspapers such as the New York Times posted a 3.6% decline through September 30; Boston Globe reported a 10% drop.
However, the Wall Street Journal kept its circulation stable at 2million readers; USA Today and Chicago Sun Times also reported level sales at 2.3million and 313,174, respectively.
Most newspapers claim the internet is Cannibalizing business.
However, the Wall Street Journal kept its circulation stable at 2million readers; USA Today and Chicago Sun Times also reported level sales at 2.3million and 313,174, respectively.
Most newspapers claim the internet is Cannibalizing business.
US News Magazine Becomes Monthly
US News and World Report, once one of the 'big 3 newsweeklies' (along with Newsweek and Time Magazine), announced it will now publish only just once per month. Newsmagazines have been struggling and hurt by the free availability of news and analysis on the web.
US News had averaged 1.8 million readers compare to 2.7million for Newsweek and 3.4million for Time.
US News had averaged 1.8 million readers compare to 2.7million for Newsweek and 3.4million for Time.
Select Printers Announce Results
Quebecor World Inc. reported a net loss of US$64.2 million in the third quarter, as revenue declined to $993.6 million from $1.17 billion in the prior-year.
Valassis Communications posted a net loss of $5.2 million for the three-month period ended Sept. 30, compared to a net profit of $16.4 million in the prior-year quarter.
Valassis Communications posted a net loss of $5.2 million for the three-month period ended Sept. 30, compared to a net profit of $16.4 million in the prior-year quarter.
Thursday, October 30, 2008
Appleton Reduces Carbonless Capacity
Appleton will idle some carbonless production capacity at the Appleton, Wisconsin Plant. The company also plans to transfer some production of thermal paper grades from the Appleton Plant to the company’s mill in West Carrollton, Ohio. .
According to Appleton, its Appleton Plant has historically been the first of the company’s facilities to be affected by changing demand for carbonless paper. Unprecedented economic conditions worldwide have compounded the effects of the ongoing decline in the use of business forms made from carbonless paper. Despite Appleton’s recent success at increasing its share of the world’s carbonless paper market, a sharp decline in demand for the product has created excess production capacity and staffing levels at the Appleton Plant.
Paper.com has all the Appleton carbonless products ready for immediate shipment.
According to Appleton, its Appleton Plant has historically been the first of the company’s facilities to be affected by changing demand for carbonless paper. Unprecedented economic conditions worldwide have compounded the effects of the ongoing decline in the use of business forms made from carbonless paper. Despite Appleton’s recent success at increasing its share of the world’s carbonless paper market, a sharp decline in demand for the product has created excess production capacity and staffing levels at the Appleton Plant.
Paper.com has all the Appleton carbonless products ready for immediate shipment.
Verso Paper to Take Coated Paper Downtime
As reported by PaperAge Magazine
October 28, 2008 - Verso Paper today announced that it intends to take approximately 50,000 tons of downtime related to coated groundwood production, primarily during the fourth quarter of 2008.
The specific timing and facilities impacted to achieve this curtailment will be determined as the fourth quarter progresses, Verso said.
This downtime is in addition to the approximately 43,000 tons of coated groundwood downtime that Verso has already taken or announced in the second half of this year, the company added.
“We remain committed to running our manufacturing operations in a manner to achieve a balance between our supply of paper and the demand for paper by our customers,” said Verso president and CEO Mike Jackson. “Based on what we currently see relative to demand and inventory levels, this additional downtime is necessary to help us maintain that balance.”
Verso's coated groundwood paper is used in catalogs and magazines.
Appleton Prevails in Trade Case Against Foreign Competitors
The International Trade Commission (ITC) has supported paper manufacturer Appleton in its complaint that Chinese and German companies are trading unfairly. The commissions ruling clears the way for the U.S. Commerce Department to impose anti-dumping and countervailing duties on lightweight thermal paper imported from those countries. Appleton claimed that the Chinese government subsidized its manufacturers and that both China and Germany sold their products in the U.S. at less than fair market value.
Paper.com markets many of Appleton's paper products.
Paper.com markets many of Appleton's paper products.
In-Plant Printers Continue to Grow
In Plant Graphic Magazine recently released their survey of the in-plant market. These are companies that have elected to commission printing equipment on premise. When asked what the in-plant printing department produced the most of, they replied, in order of volume (top 5)
Brochures
Newsletters
Business Forms
Pamphlets
Manuals
More than half reported majority of the pieces printed were variable data printing for such jobs as,
Address labels
Recipients name
Whole paragraph of text
Interestingly, the vast majority state they have an in-plant printing center for more than convenience and service - most are a profit center!
Paper.com, a major website with 40,000 paper items, is a big supplier to these in-plant printers. The company will fulfill as little as one ream of paper and ships within 24 hours.
Brochures
Newsletters
Business Forms
Pamphlets
Manuals
More than half reported majority of the pieces printed were variable data printing for such jobs as,
Address labels
Recipients name
Whole paragraph of text
Interestingly, the vast majority state they have an in-plant printing center for more than convenience and service - most are a profit center!
Paper.com, a major website with 40,000 paper items, is a big supplier to these in-plant printers. The company will fulfill as little as one ream of paper and ships within 24 hours.
Tuesday, October 28, 2008
Watch your International Source!
NewPage Paper Company just released a document outlining Asian imports make up to an estimated 40% of the North American coated sheet paper market, but in many cases, consumers and corporations are not aware of the real source behind the paper they use. Many importers use private label brand names or re-branded names that obscure their identity and true manufacturing origins. It’s just one of a variety of surprises that can be found beneath the surface of paper’s global supply chain.
Unless they choose paper from a known source, with a verifiable supply chain, many North American paper buyers risk unknowingly supporting environmentally destructive practices. Paper processing that is not well regulated can cause air and water pollution, especially in countries where environmental policies are inadequate or not well enforced.
Note; nearly 80% of US mills use recovered paper and are certified by third party associations. Thirty-eight percent of wood fiber used in the United States for paper production comes from recovered paper, or post-consumer recycled fiber.
Unless they choose paper from a known source, with a verifiable supply chain, many North American paper buyers risk unknowingly supporting environmentally destructive practices. Paper processing that is not well regulated can cause air and water pollution, especially in countries where environmental policies are inadequate or not well enforced.
Note; nearly 80% of US mills use recovered paper and are certified by third party associations. Thirty-eight percent of wood fiber used in the United States for paper production comes from recovered paper, or post-consumer recycled fiber.
USA Newspapers Continue to Struggle
Circulation of US newspapers declined 4.6% in the past year as readers now rely on the internet. We also note reduction is due to publishers raising prices and limiting distribution. Weekday print circulation at 500 newspapers fell to slightly over 38million copies (versus 40million a yer ago).
Wednesday, October 22, 2008
Rachael Ray Goes Green
Rachael Ray's publisher, Reader's Digest, just reported that the magazine 'Every Day with Rachael Ray ' switched to 85% recycled paper, with 10% being post consumer. They claim the new paper is every bit as good in quality and will save 125,000 trees, 7800 pounds of hazardous air pollution, eliminate 380 garbage trucks of solid waste, and over 25 million tons of carbon dioxide. The publisher also chose a paper mill closer to the printer for savings of gas. The trucks deliver rolls of recycle paper to the plant and pick up printed waste to be returned to paper mill for future production.
Paper Industry Continues Sustainability to Environment
The paper producers now all offer grades with recycled post consumer fiber, many reclaim chemicals, all recycle water, and most consume alternative energy. The fact is, the industry has always been a good steward to the environment – they have always recycled broke, water, and chemicals. In fact, manufacturers plant 1.7million trees per day, more are planted than harvested. We now enjoy 12million more acres of forestland today than were in existence 20 years ago.
Of note, the USA publishers currently print 18,000 magazines and less than 1% print on recycled paper consistently. This might be because paper made from post consumer fiber typically costs a little more.
Of note, the USA publishers currently print 18,000 magazines and less than 1% print on recycled paper consistently. This might be because paper made from post consumer fiber typically costs a little more.
Longview Fiber closes paper machine
Longview Fiber Paper and Packaging is closing one of its paper machines Tuesday and laying off about 90 hourly workers by next week.
Fiber President Frank McCone says the slowing economy reduced demand for products produced at the No. 9 machine, including lightweight containerboard used in corrugated boxes and Kraft paper used in cement bags.
McShane says the move is a business decision and the company will re-evaluate whether to restart the machine next year.
The pulp and paper mill was sold to Brookfield Asset Management for $2.15 billion last year, ending 80 years of local family management.
Fiber President Frank McCone says the slowing economy reduced demand for products produced at the No. 9 machine, including lightweight containerboard used in corrugated boxes and Kraft paper used in cement bags.
McShane says the move is a business decision and the company will re-evaluate whether to restart the machine next year.
The pulp and paper mill was sold to Brookfield Asset Management for $2.15 billion last year, ending 80 years of local family management.
Some Printers Growing
According to the PI/GATF survey, some printers experienced good sales revenue growth this year. For the first six moths, printers that had a staff of 1-19 grew 0.08%; 20-49 decreased 0.79%; 50-99 increased 1.55%; over 100 declined 0.99%.
Monday, October 20, 2008
Wausau on Target for Paper Machine Shut Down
Wausau Paper is on target for shuttering one of two paper machines in the (Otis) Jay, Maine plant. The company will stop production of 40,000 tons of release liner and other specialty grades on this machine on or before December 31, 2008. Management sited the size and speed of the machine no longer allowed for efficient production.
Containerboard Market
Containerboard producers were unsuccessful in customers paying the $60/ton price increase for October. Main factor responsible for this was poor demand and high end user inventories. The declining economy will NOT assist containerboard demand. We look for a difficult several months ahead.
Newsprint Pricing
Much to my surprise, Newsprint producers are enjoying at least a portion of the announced price increase. Surprised because the demand for newsprint continues to decline. Interesting observation includes the re introduction of East / West coast pricing. The East coast end users are paying nearly $15/ton more than the West Coast. AbitibiBowater will take an additional 150,000tons of down time beginning of 2009 - in addition to the previously announced curtailments for end of 2008.
UNCOATED FREE SHEET UPDATE
So far this month, producers have only enjoyed approximately $5/ton of the announced price increase for rolls (no increase for cut sheets). We think pricing pressures will grow due to the increased shipments from imports of Brazil and Europe as well as coated freesheet producers supplying base sheet as alternative. I would bet large spot orders are already enjoying discounted
prices. Shipments through September were own 5%.
prices. Shipments through September were own 5%.
Bleached Paperboard SBS Market
The 2008 capacity for bleached packaging papers is forecasted to be 6.1million tons, and bleached bristols account for an additional 1.2million tons. The folding carton market consumes the vast majority of these products at 54%. Market related shuttered equipment now allow for the top five producers to produce 85% of this capacity, these manufactures include
Company/Capacity/mkt share
International Paper/1,520,000/25%
MeadWestvaco/1,350,000/22%
Georgia Pacific/815,000/13.5%
Rank Group/765,000/12.5%
Potlatch/550,000/12%
Company/Capacity/mkt share
International Paper/1,520,000/25%
MeadWestvaco/1,350,000/22%
Georgia Pacific/815,000/13.5%
Rank Group/765,000/12.5%
Potlatch/550,000/12%
Versa on Track with Mill Transition
As an update to our previous post, the Versa paper mill in Bucksport, Maine is on target with the
project transitioning the #1 paper machine (which had produced publication paper) will produce specialty coated papers. This will effect 84,000 tons of production.
project transitioning the #1 paper machine (which had produced publication paper) will produce specialty coated papers. This will effect 84,000 tons of production.
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.
Thursday, October 16, 2008
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.
* 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.
Wednesday, October 15, 2008
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.
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