AbitibiBowater still negotiating

AbitibiBowater, the leader in newsprint, is still confirming a reorganization plan that might include bankruptcy filing. The company is restructuring $6billion in debt, brought on with its acquisition of both Consolidated and Bowater. AbitibiBowater’s main source of revenue is from marketing production to newspapers – an industry losing advertisers and readers to the web.

Uncoated Freesheet market in Trouble

The top four producers (Domtar, International Paper, Boise, Georgia Pacific) now control 75% of the North American capacity. Although they are doing a fine job in their attempts to match production to demand, 2008 yielded the lowest shipments since 1986 – down 1million tons from 2007. (Note: USA total printing and writing demand fell 8% to 23million tons).

Market pulp ....help!!!

The pulp market continued weak demand which yielded a decline in pulp prices, and high inventory . This despite major producers taking market pulp downtime (slated to continue well into 2009). This is in addition to the nearly 1million tons of downtime taken already this year.
Spot prices continue to decline – example NBSK down another $5/ton to $470-500/ton.

Containerboard Declines

Weak demand and low operating rates yielded costly down time for the containerboard producers. While prices for the fourth quarter of 2008 were reasonably healthy – given reduced raw material costs – margins remained steady. Unfortunately, the first quarter of 2009 yielded lower selling prices and weaker consumption. On average, prices were down $30/ton from 4Q2008 and most believe the trend for lower prices and lower demand will continue into 2009.
List prices of both 42-lb linerboard and medium fell $15/ton in
March

Thunder Bay Mill Purchased

A group of private investors purchased and will reopen Cascades' 180,000 tpy coated freesheet and groundwood specialty paper mill at Thunder Bay, Ont., The long awaited purchase will open soon and be the sole producer of double coated free sheet in Canada. The mill will be called SFP for Superior Fine Papers.

International Paper takes Another Mill Down

The International Paper Company announced it will shut down the Ticonderoga, NY mill for two weeks in May. Note, we recently announced they will also close the Franklin, VA mill in May. These temporary shut downs are market related - given the slow down of orders.

Sappi Announces new Digital Papers

Sappi Fine Paper North America recently announced the launch of its digital paper line-up including McCoy for HP Indigo, McCoy Digital and Flo Digital, with continued availability of Opus Digital, to round out the new tiered offering

AbitibiBowater Reduces Thunder Bay Capacity

AbitibiBowater will idle its Thunder Bay newsprint mill in Ontario from April 15 until April 28 due to a further reduction in newsprint demand. The shut down of the mill's two machines will curtail roughly 9,600 tonnes of newsprint and approximately 5,600 tonnes of uncoated mechanical paper.

NewPage to Idle PM at Luke Mill

NewPage will take downtime on one of the two paper machines at its Luke, MD mill next week. The closure is part of the 150,000 tons of downtime plan at various mills in the second quarter. The week long shut down will curtail about 5,500 tons of coated freesheet output. NewPage has already scheduled its Escanaba, MI, mill for ten days of downtime in April, curtailing about 20,500 tons of coated paper production.

Paper Prices keep Falling

Perhaps a slight sigh of relief if you are an end user is cheaper paper prices. After six months of witnessing a price increase every quarter – decreases were paid for the last several months and forecasted to continue. We predict at least $2.50/cwt – or $50/ton further price erosion across the board for second quarter 2009. Most end users have lean inventories and mill backlogs are quoted in terms of days – not weeks. All this despite over 2million tons taken out of the market between 2007 and 08

The Green Side of Paper

Almost every mill now offers recycled and environmentally friendly papers today. In fact, most mills now offer grades with 30% recycled fiber at same price as virgin. If post consumer fiber is required, mills DO command an up charge. If a grade has 10% PCW generally mills charge between $1-3/cwt or $20-60/ton. Most end users are also requesting third party certification – FSC, SFI, and PEFC are the bigger associations that do this – all charge for their certification (typically $1/cwt - $20/ton). Most mills are also working hard to reduce their carbon footprint and many are reviewing energy generated from wind turbines.

Wausau Paper Shutters Maine Mill

Report from Deutsche Bank - Equity Research
Wausau Paper announced a number of moves to conserve cash and improve financial performance. The two notable ones are the suspension of the dividend and the permanent closure of the remaining paper machine at the Jay, Maine mill. The dividend was previously $0.34 per year, which recently resulted in a 6.5% yield. The suspension will save the company almost $17MM/year.

The machine being closed at Jay, Maine had annual capacity to produce 28K tons of Specialty Products. The closure will result in $26MM in charges, $22MM of which will be non-cash. The closure, along with other cost improvements, is expected to save $20MM/year pre-tax. If successful, this would improve EPS by about $0.25/year, which is more than the company has earned in any year since 2004.

NewPage Announces Downtime Plans

NewPage Corporation will take 150,000 short tons of downtime in the second quarter to help maintain the supply and demand balance in the paper industry. The curtailment will be system wide, as customer commitments dictate over the next three months. NewPage had reported plans to take 150,000 tons of downtime in the first quarter as well, cutting production of coated mechanical, coated freesheet and supercalendered paper.

Lyons Falls Paper Mill Deal on Hold

The proposal is dead to have a Lewis County agency buy the former Lyons Falls Pulp & Paper for conversion into a business park. Reasons sited include too many property liabilities had surfaced, including asbestos.

Media Week Announces Top 10 magazines

The index annually recognizes consumer magazines with a recent track record of standout advertising revenue and page performance.
1The Economist
2Elle
3People
4Women’s Health
5EveryDay – Rachael Ray
6Real Simple
7Men’s Health
8Family Circle
9Vogue
10New York

Containerboard Demand Down

Economists at RISI Inc. forest products information service, have forecast as much as 1.8 million tons of containerboard papers are out of service this quarter. However, supply remains in excess because of the recent 40% plunge in U.S. linerboard export production, which has caused extra tonnage into the domestic marketplace.

Another Chicago Newspaper Files for Bankruptcy

Sun-Times Media Group , the parent of the Chicago Sun-Times and 59 other Chicago-area newspapers, after burning through cash at more than $5 million a month--filed for Chapter 11 bankruptcy protection. Recall, in December, we reported on Chicago Tribune parent Tribune Co. straining under nearly $13 billion in debt--filed for protection while it restructures.

Linerboard and Corrugated Medium Price Declines

Price declines for containerboard continue to increase.
Containerboard sales prices are in a steep decline and most buyers expect this trend will continue in April because box consumption has been reduced substantially.
Buyers report that linerboard spot sales prices averaged $540/ton this month, down $15 from the month before, while corrugated medium also has dropped $15 to $530. Early orders for April deliveries put these prices at $500-$510 before customer-specific discounts.
In fact, analyst George L. Staphos at Merrill Lynch & Co. says some April linerboard prices could be as low as $470-480/ton after volume discounts in the competitive Northeast region --and only slightly higher in the Midwest. He adds that corrugating medium transaction prices in the East Coast and Midwest may be heading for $440-$470 in coming weeks.

U.S. Paper, Paperboard Capacity Falls - First Word from “Paper Week”

Source: Manufacturing.Net
NEW YORK (AP) -- U.S. paper and paperboard capacity fell 0.8 percent last year as 41 manufacturing facilities were permanently closed, according to the American Forest & Paper Association.
The group, which put domestic capacity at 96.3 million tons, also said it expects total paper and paperboard capacity to decline 1.8 percent this year and then expand 0.3 percent in each of the subsequent two years.
In 2007, 38 manufacturing facilities were permanently closed, AF&PA said.
In addition to last year's permanent closures, additional facilities in 2008 were idled, meaning they could be restarted.
The survey's results underscore the continued shrinkage in the industry, a sector whose capacity has fallen 7.3 percent since 2000.
AF&PA President, Donna Harman, speaking at the start of the trade group's annual "Paper Week" meeting in New York, said the industry has been hit "with a double whammy," the housing market collapsing and credit markets drying up.

Publications Papers Down

So far, for the month of March, publication coated groundwood grades fell $40/ton to $880/ton. Many buyers report discounts of $60/ton. Consumption continues to be depressed - both magazine and catalogue demand are down. We understand shipments in February were down 36.5% vs. February 2008. Printers such as RRDonnelly and Quad have shuttered presses. Paper manufactures continue managing downtime to avoid more aggressive price deterioration. Veros/100,000tons NewPage/150,000tons; AbitibiBowater/14,000 tons.

Containerboard Declines

List prices for 42lbs linerboard and medium have been reported to have declined $15/ton so far in March - after decreasing $10/ton in February. February 2009 shipments fell 10.5% from February 2008.

Kruger Shuts Down Machine

The number 4 machine at Corner Brook Pulp and Paper has shutdown. Kruger made the announcement earlier this month citing economic recession. The number 4 machine is expected to be back in production on May 17th.

How to Buy Paper?

We are often asked about the most efficient means for procuring paper for commercial printing jobs. Basic purchasing routes remain, online, such as Paper.com; from your printer, along with printing and distribution; a paper broker – who negotiates on your behalf; or directly from the paper mill. Typically, the way one purchases paper depends on company size and volume of paper consumed. Buying paper directly from the mill is reserved for only the big consumers with massive volume. Smaller buyers are better buying from the printer, and the mid size buyers, from a paper broker. In any case, given today’s economy, do your diligence that the supplier is financially stable.
Important attributes on paper procurement include-
-Be sure you are correct in all the specifications, size, weight, finish, shade, and quality.
-Double confirm the quantity to be ordered, the press date, and required timing for paper to arrive. Typically, the supplier will allow a ‘last date of change’.
-Compare many ‘like’ papers and specify the exact paper grade to be used for your job – you may request a trial to print to confirm quality and printing
-Do not buy from a seconds house – price is economical – but generally, there is something wrong with the quality of the paper – might even be a little as the shade or brightness not consistent throughout the order.
-If you have a choice, confirm a source close to printer – shipping factors into the price of paper.
-Negotiate the best price – paper is a commodity AND review pricing often.
-Try not to sign a contract that might commit you long term
-Remember also, you can save money in many ways with paper, reduce basis weight, smaller finished piece, lower paper quality
-Lastly, do not assume environmentally friendly papers are more expensive.

Norske Takes additional Downtime at Saugbrugs Mill

Norske Skog announced that it will take downtime at its Saugbrugs mill in Norway at the end of this month. . The Saugbrugs mill has three paper machines producing 555,000 TPA supercalendered paper. The week long shutdown will remove 11.000 tons of paper from the market

Americans go Green

KMWorld recently produced an article on being environmentally ‘friendly’. They produced a few ‘fun facts’
>If USA office worker reduces paper consumption 10% this is equivalent of 540,000 tons per year.
>Average worker prints 10,000 pages and wastes 1410 pages
>Average wasted page is $0.06
>A company with 500 employees spends $42,000 on wasted printing each year
>Only 49% of workers admit to recycling at the office
>Every ton of recycled paper saves 3.3 cubic yards of landfill.

Update for Uncoated Free Papers

Demand continues to fall off for uncoated free sheets (business papers and offset) while prices decline $10-25/ton in February. The markets are becoming over supplied (coated producers are 'lifting' the coater and marketing uncoated paper) making the market for cutsize very competitive. Shipments from traditional uncoated mills fell nearly 20% for both January and again in February versus a year ago.
Some mills continue downtime
Domtar - Plymonth, NC 295,oootons
SMART - Hamilton, Ohio shutter 2 paper machines - 48,000tons
On the other hand, Portucel reports they will EXPAND USA sales once new 500,000TPA machine starts up this summer.

Pulp Markets Continue to Decline

The price and demand for pulp continued to decrease for the seventh straight month.
>NBSK list price fell $25 to $650 (down from high of $885/MTon - August 2008)
>Hardwood - NBHK down $30 to $565; SBHK now $560
>BEK list is $585/MTon
Note, Pulp today is traded at large discounts off above list prices. Recent report outlined
>NBSK under $500/MTon
>NBHL & SBHK @$400/MTon
>BEK @$400/MTon
Even with massive downtime, inventory was near record high of over 5Million tons in November.

Paper Industry Continues to Worsen

February yielded yet another poor month for the pulp and paper industry with ALL categories sharply down. Uncoated Free shipments were down nearly 20%; Coated Free fell almost 24%;coated mechanical publication declined 37%; and, uncoated groundwood 31%. Producers continue to show discipline by taking down time to match lower demand. Many now think permanent capacity closures will begin to take place. Meanwhile, Uncoated Freesheet prices fell $10-25/ton in February.

White Birch again Announces more Down Time

Last week, we announced White Birch taking capacity out of the market, and this week, management has reported on more....
White Birch Paper Company said it would take market related downtime at its Stadacona L.P. Division in Quebec, Canada. The shutdown will begin March 20 and continue through April 6, resulting in 30,000 metric tons of reduced newsprint production. White Birch has approximately 1.25 million tons of uncoated groundwood production capacity.

Coy Paper Marketing Stop Light for Window and In-Store Promotions

The Coy Paper Company LLC has joined forces with Crusader Paper to market the popular Stop Light grade they sell under the Block Out brand. The laminated grade has two premium outer coated gloss sheets and a middle ply which has a carbon dye – providing a 100% opaque paper. This makes the grade an ideal candidate when both sides are printed or for window printed promotions when ‘no show through’ is required. The product is produced out of Crusader’s modern plant and is stocked in both .008 and .011 mil. The product is an immediate success for grocery stores, fast food restaurants, and convenience shops. The Block Out grade is also marketed by Coy Paper for playing card stock.

India Still Growing in Paper Consumption

Although most of the world is currently witnessing a reduction in paper consumption, India is showing growth. The demand for this growing market, is posting 10% per capita growth in 2008. This yields per capita of 8.3kg for 2008 versus 7.5kg for 2007. Meanwhile, the production is estimated to grow 7-8% over the next decade.

Paper.com Expands Box Offerings

The popular Paper.com website has recently expanded its product offerings of packaging material.
This line compliments its nearly 40,000 printing and writing items. The site now markets approximately 2000 packaging items, but has over 10,000 items available which includes thousands of stock boxes and mailers, hundreds of sizes of mailing bags, mailing tubes, tapes, poly bags, and more!

AbitibiBowater Shutters more Production


AbitibiBowater Inc. announced plans to shut down its Thorold mill in Ontario for two weeks. Closure of the 454,000 ton/yr newsprint mill. The mill will close on March 14 and resume operations on March 31.

NewPage to Idle Rumford Mill

NewPage will temporarily shut down its mill in Rumford, Maine from March 22 to March 29, removing approximately 10,250 tons of coated paper production from the market. Rumford has three paper machines that produce 533,000 tons/yr of freesheet and mechanical grades.

Kraft Paper Prices Finally Start to Fall

Multiwall sack kraft pricing has remained relatively stable at about $850/ton, but pressure with declining sales has buyers forecasting a drop of $20-25/ton. Shipments of unbleached kraft paper dropped 32.5% in January to 90,000 tons following a 15.6% year over year decline in the fourth quarter of 2008, according to American Forest and Paper Association statistics. This isn’t just a North American phenomenon, as there are news service reports of price decreases this quarter for both bleached and unbleached sack kraft paper in major European markets.

Rodale Announces Best Life Magazine to Shut Down


Rodale will stop printing Best Life magazine after the May issue hits newsstands next month. The title launched in 2004 and carried a rate base of 500,000. According to FAS-FAX figures, total circulation was actually up 6.1% in 2008. Ad pages were up 6.6% last year according to the Publishers Information Bureau. In November, the magazine cut 111 jobs, or about 10% of its workforce.

American Express to Close Publication

American Express reported that it would cease publication of its 11 year old Travel and Leisure Golf magazine. The magazine's advertising pages were down over 30% last year. The circulation decreased from 625,000 to approximately 500,000.

McClatchy Reduces Workforce another 15%

The newspaper publisher, McClatchy, announced a reduction of their staff by 15% or 1600 jobs because of declining revenue and the deepening economic recession. The company will also reduce salaries across all operations.

USA Paper Earnings Companies Hit Hard in 2008

Full year 2008 earnings of 18 publicly traded U.S. paper and forest companies fell 39.8% to $1.8 billion, compared to the year earlier. Sales for the full year declined 6.6% to $75.5 billion, or $4.7 billion less than sales in 2007. The 18 companies are those that report on a near-calendar fiscal year. For the fourth quarter, 17 out of 23 companies reported lower earnings year-over-year and seven reported losses.

Smart Papers and Mohawk Papers Unite

Smart Papers announced the sale of its premium uncoated printing papers business and brands to Mohawk Fine Papers Inc., Cohoes, N.Y and that it has named Mohawk the exclusive marketer to traditional paper distributors worldwide for Smart's Kromekote, Knightkote Matte and Smart Digital premium coated papers.
Smart Papers said it will continue to sell its coated brands directly to strategic accounts worldwide, including specialty and technical converters, OEMs, label manufacturers, laminators, packaging printers, gift and box wrap printers and greeting card companies. Smart Papers will expand its primary focus on manufacturing, marketing and product development of Kromekote, Knightkote, SMART Digital and its private label brands.
The premium uncoated brands Mohawk acquired include: Pegasus, Carnival, Synergy, Passport, Genesis, Magna Carta, SMART Brights, Feltweave, Nekoosa Linen, Nekoosa 25% Cotton, Nekoosa Bond, Skytone, Solutions and Proterra.

Wausau Still Opening New Distribution Center

The opening of Wausau Paper new Midwest distribution hub continues to be part of a previously announced $6.6 million capital project that will consolidate converting capacity and streamline distribution. 

The new center will be fully operational in June within a 300,000 square foot warehouse. This center will be an addition to the Allentown, Pennsylvania east coast distribution center. Paper.com carries all the popular Wausau grades, available for immediate shipment.

Federal Reserve reports Weakness Across the USA

Not surprising that the Pulp and Paper Industry remains weak, with much capacity shuttered given poor market demand. I include quotes from recent beige book report by FED by region (very dismay reading!)
Minneapolis – The downturn continues…..
San Francisco – Economic activity slowed further…….
Chicago – The economy remains weak ….
Cleveland – The economy weakened, industry shipments down ……
Boston – The economy continued to slow …….
New York – Economic activity deteriorated..
Philadelphia – Business conditions are weak …..
Richmond – Economic activity declined further ……
Atlanta – Home sales continued to decline …..
St Louis – Manufacturing continued its decline …..
Kansas City – Economy continued to deteriorate.........
Dallas – Falling demand ……

Paper.com Green Store very Successful

Paper.com continues to be successful in marketing Environmentally Friendly papers. The site offer thousands of products from all the major producers. The extensive line of papers allows for end users to choose 100 percent post consumer, FSC papers, papers made from Carbon neutral credits, items made from alternative power such as wind to generate electricity, Papers made with process chlorine free (PCF) and elemental chlorine free (ECF) pulps and many that are Green Certified and contain the Green Seal. With all these choices, why go anywhere else but Paper.com? Shop Paper.com Green Store now!

Verso Mills Idle Machines

Verso Paper said it will temporarily shut down paper machines at its two Maine mills this month due to poor market conditions. The company will idle all four machines at its Bucksport mill for two weeks beginning March 9. Verso will also idle three of its four machines at its Androscoggin mill in Jay between March 6 and March 23 on a staggered schedule.

Release Liner and Labels in USA

The label market in USA witnessed a slight growth. World demand for labels were broken down into following markets – 50% Pressure Sensitive; 35% glue applied; 8% sleeving; and 2% in mold.
At 51% most of the release liner ended up in label stocks, 12.5% in tapes; 9.5% industrial; Hygiene 8% Graphic Arts 6%; Medical 3%; and envelopes 2%.

Kodak commited to digital print

The Wall Street Journal reported that Kodak was planning to divest its NexPress business; however, Kodak chairman and CEO Antonio Perez has stated the company has no plans to divest NexPress or Digimaster.

White Birch Mill Takes Down Time

The White Birch Paper Mill (North America’s #2 producer) announced it will take market related down time at its Bear Island Mill in Ashland, VA. The mill will shut down between March 8-30 for reduction of 15,000 tons.

Catalyst Cuts Production at Crofton, Elk Falls

Catalyst Paper said it would indefinitely curtail production at its Crofton kraft mill, and remove about 400,000 tons of annual pulp capacity. The company also announced a five-week curtailment at its Elk Falls mill. The Elk Falls mill’s PM 2 and PM 5 have been idle and were scheduled to resume production March 31, but will now remain closed. The indefinite curtailment on Elk Falls 3 paper machines will remove about 526,000 tons of newsprint and uncoated mechanical paper capacity on an annualized basis.

Market Pulp

Markets remain oversupplied and worldwide shipments declined 14.5% in January, NBSK inventory increased by 3 days to 43 days of supply and BEK increased by 4 days to 56 days of supply.

Quick Newsprint update

Market remains weak with domestic newsprint consumption declining
21.6% in January. The US dailies report down -22.6% January 2009 versus 2008 and exports are down 40%. Newsprint price decline accelerated in February, with list prices down $20/ton. In the prior three months, list prices
declined $10/ton/month

Appleton Coated Joins other Producers with Reduced Tonnage

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

Box Shipments

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

Fraser Paper Reduces Capacity

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

AbitibiBowater Takes Downtime at Catawba

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

International Paper Announces more Down time

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

Update on the Paper Market

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

Kruger Takes Down Time

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

Tembec Mill for Sale

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

Domtar Announces Uncoated Downtime

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

Wausau Restarts Paper Machine

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

Verso Announces cutback for 2009

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

Catalyst Continues Down Time

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

Georgia Pacific Shuts Down Machine

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

Store Enso Announces closing several assets

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

Fraser Plans Downtime at Edmundston Mill

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

AbitibiBowater Closes Grand Falls-Windsor Mill

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

Top Printers by Category

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

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

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

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

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

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

Catalog Postal Rates Rise 2.3%, Periodicals rise 4%

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

Finnish Paper Mill Lays Off 1200 Workers

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

Coy Paper Company Introduces new Website

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

Paper Machine Sets New Speed Record

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

Cereal Boxes Shrink

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

Katahdin Paper Mill to Take Downtime

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

Largest InPlants

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

What’s Black & White and Red all over?

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

National Envelope to Close Plant

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

Wall Street Analyst Surveys ‘The Street’

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

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

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

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

NYTimes Profits Decline

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

Top Printers Winning bids to GPO

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

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

PaperBoard Output Declines 19%

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

Printing and Writing Paper Shipments Decline

Total North American printing and writing paper shipments dropped 21.6% in December to 1.675 million tons, according to the Pulp and Paper Products Council (PPPC). Total N.A. shipments for all of 2008 were down 8.7% at 24.14 million tonnes. Coated mechanical shipments declined 3.9% in December to 280,000 tonnes, and fell 16.3% to 4.18 million tonnes for the full year. Coated freesheet shipments dropped 28.0% to 263,000 tonnes and were down 9.2% to 4.15 million tonnes in the 12-month period.

NewPage Reduces Workforce in Rumford

NewPage Corp. will permanently let go 100 hourly employees and 30 salaried people or 13%.
The Rumford mill has higher costs than other NewPage mills around the country. 

 This staffing reduction is one action among many the mill is taking as well as additional initiatives to address the recent cost inflation in raw materials, wood, chemicals and energy. In other recent news, the No. 12 machine went down for a week on Jan. 19, then went back on stream Tuesday. The No. 15 machine is down now, due to be back on stream next week. The No. 10 machine then will go down for a week. 


The central NewPage office in Miamisburg, Ohio, issued a downtime release last week that said 150,000 tons of product would be reduced during the first quarter of 2009. All 10 NewPage mills are expected to be affected by the product reduction. Other mills are located in Kentucky, Maryland, Michigan, Minnesota, Wisconsin and Nova Scotia.

AbitibiBowater Announces 1Million Ton Capacity Reduction

We have reported on the various announcements throughout the 2H08 with AbitibiBowater curtailing production. Adding up all the actions results in nearly 830,000 tons of newsprint, 110,000 tons of specialty grades and 70,000 tons of coated publication grades – all removed from the marketplace through beginning of 2009. We note, AbitibiBowater is the largest producer of newsprint and groundwood specialties in North American.

Reader’s Digest Lay Off

Reader’s Digest Association said it would eliminate 8 percent of its overall workforce of 3,500, or approximately 280 employees. Management reported that they have no immediate plans to close any of their USA publications.

Recent Pulp Mill Closures

A few notable shuttered pulp mills
Botnia – Kaskinen, Finland – BHK/NBSK 450,000tons
Buchana Forest – Terrace Bay, Ont. Canada – BHK 125,000tons
Catalyst Paper – Elk Falls, BC, Canada – BSK 200,000tons
Borregaard – Riedholz, Switzerland – Dissolv 120,000tons
Stora Enso – Norrsundet, Sweden – NBSK 250,000tons
International Paper – Bastrop, LA – BSK 410,000tons
SSCC – Quebec – BHK 230,000tons
UPM Tervasaari, Finland - NBSK 210,000tons (sometime in 2009)
Pope Talbot - Mackenzie, BC, Canada – NBSK 200,000tons
Stora Enso – Kemijari, Finland – NBSK 250,000tons

Pulp Prices DOWN

According to FOEX, NBSK pulp index continues to trend downward, falling $7.40/ton to $608.11/ton.

Google Still King

With the advent of most paper companies introducing a website, thought I would comment on search engine platforms. Through 2008, Google accounted for 72.07% of all USA searches, according to Hitwise. Others such as Yahoo(17.79%), MSN(5.56%) , and Ask.com (3.15%) were pale in comparison. Note, the next 44 largest only accounted for 1.42%. Paper.com continues to have the most paper items on site, at nearly 40,000. The site advertises on all the major search engines, and agrees, Google is the king.

Domtar Takes Downtime

Domtar recently announced it will take a two week shutdown at its Espanola's Pulp and Paper Mill. Domtar is North America's largest producer of Uncoated WoodFree paper and sited poor market conditions as the reason to this closure.

Smurfit-Stone Files For Chapter 11

Smurfit Stone Container Corp, the largest manufacturer of containerboard and boxes in North America filed for Chapter 11 bankruptcy protection.  

This company operates 150 facilities in  North America.  Management sited the challenge of repayment of $3.5Billion in debt (nearly half the annual revenues of $7.5Billion).  The poor economy has hurt both demand for their products and created frozen credit markets to allow for restructuring its debt.  

Another Magazine Folds

Hearst announced it will fold TEEN Magazine, a magazine focused on teenage girls. Meanwhile, Garden & Gun, a regional title aimed at affluent Southerners, is threatened with folding unless it can shore up a buyer or investors in the next several days.
Teen is the smallest of and the latest in a string of teen titles to fold in recent years, following Hachette Filipacchi Media’s Elle Girl, Time Inc.’s Teen People and most recently, Hearst’s CosmoGirl!, which folded with the December issue.

Fraser Idles Paper Machines at Madawaska

Fraser Papers temporarily shut down an uncoated freesheet paper machine at its Madawaska, ME mill. The mill’s 64,000 tons/yr PM7 was closed on Jan. 19 and will remain idled until Jan. 26. Additionally, the facilities 70,000 tons/yr PM6 groundwood machine will be shut down Jan. 26 for seven to ten days.

Verso Paper Completes Paper Machine Conversion

Verso’s newly converted #1 paper machine at the Bucksport, Maine facility is currently producing trial runs. The machine had been producing coated publication paper and will now manufacture specialty papers for packaging in the food industry.

NewPage Futura Laser FSC Certified

NewPage reports their Futura Laser paper for digital applications is now FSC certified. This grade is known as an all around functional grade that online marketing companies such as Paper.com sell to digital printers.

Paper Producers Continue to Struggle

Preliminary figures are in for December 2008 shipments and it appears volumes are still under pressure. Printing and writing declined over 20% from December of 2007. Production for Uncoated freesheet is estimated to be down 12%; coated free- down 25%; publication coated Groundwood – down 35%; and uncoated Groundwood – down 27%. Clearly, manufacturers must evaluate curtailing even more tonnage to prevent a flood of unwanted paper. Newspaper readership, magazine ad pages, and catalogues all declining. Major printers such as RR Donnelly and Quad are taking presses off line.
Prices are following demand with Publication Coated down $35-70/ton and Uncoated Free down $5-15/ton.

State on the Pulp Market

Deutsche Bank conference on pulp (Mark Wilde and Brian McClay)
>World demand for pulp estimated to decline 5% in 2009 (Note: 2008 and estimates for 2009 call for first decline in pulp since 1970’s)
>Decline for 2008 estimated to have been nearly 3%
>Pulp prices continue to decline; Europe new list price NBSK $605 and BEK $525 – while spot prices reported to be $500 for NBSK and $400 for Hardwood.
>Softwood may recover before hardwood given reduced supply and stabilized demand. However, no recovery for either before 1H2010.
>Many pulp mills (especially Norscan) operating below cash cost.
>Current pulp inventories are higher than normal (5.2million tons); this level, after 3milion tons of shuttered equipment.

Containerboard Market Continues its Challenges

Operating rates for producers of containerboard were at its lowest level in December of 2008 at almost 70%. Demand is undoubtedly low due to the poor economy and lack of sales on products that require boxes. Capacity announcements for reducing production will be out soon.

UPS and FEDEX look to Increase Rates

Now that DHL will exit the USA domestic market, and fewer options exist for small package shipments, United Parcel and Federal Express will increase shipping rates. These two carries will inherit one million packages per day; given the DHL withdrawal and websites, such as Paper.com, have fewer alternatives. UPS recently announced one of the highest increases in history (5.90%) for ground shipments. One bright spot is the reduction of fuel surcharges, which peaked at 34.5% in September. The current surcharge (December 2008) is 6.75%. The increase in shipping fees will hurt the Internet business somewhat, adding costs in a challenging economic time.

Publications Continue to see Decrease in Advertising Revenue

Fr Media week -By Lucia Moses
Official numbers from Publishers Information Bureau (PIB) out Jan. 13 confirmed the pain that publishers have been feeling for the past 12 months. Rate-card reported ad revenue declined more precipitously as the year went on, dropping 13.8% in the fourth quarter and 7.8% for the year. Ad pages fell 17.1% in the quarter and 11.7% for the full year.

Paging falloffs were especially severe in automotive (down 25.8% for the fourth quarter and 24.3% for the year), reflecting the auto industry’s longstanding woes and causing sharp pain to men’s magazines; and financial, insurance & real estate (down 36.5% for the quarter and 17.3% for the year), which fell off a cliff in the fourth quarter amid the markets’ meltdown, to the detriment of business titles.
Also down sharply was the home furnishings and supplies category, reflecting the soft housing market; pages there fell 22.8% in the fourth quarter and 17.9% for the year.

Challenging Markets Harm Mills

Container manufacturer Smurfit-Stone announced it is evaluating Chapter 11. Most believe mill will succeed if the company can raise DIP financing. Smurfit-Stone has about $3.5 billion in outstanding debt, and has been shuttering and restructuring operations, including layoffs, as part of a multi-year plan to improve performance.
I note, AbitibiBowater also highly leveraged, like all other paper mills and is most likely also reviewing restructuring its financing.

Evergreen Packaging Plans Temporary Layoffs

Evergreen Packaging, formerly Blue Ridge Paper, announced it would lay off 138 workers from its Canton, NC mill for one week as part of a cost-cutting plan. Employees have been given the option to either take paid vacation time or file for unemployment. The plants capacity is approximately 300,000 tons/yr of uncoated freesheet and about 300,000 tons/yr of SBS.