Newsweek Magazine Improves Quality of Paper

Newsweek Magazine just reported it will upgrade the quality of paper used for its weekly publication. The magazine has been losing money, but felt the more expensive paper will help circulation, and hence revenue. The magazine will switch from 30# publication and SCA+ to 36# coated #4 quality. This means a 20% increase in the weight of the paper and a substantial boost in the quality of the paper. The paper will cost more and distribution will increase in cost.

NewPage and Unisource Sign a Deal!

Unisource, one of the largest distributors in USA, just inked a deal with NewPage, to replace a Chinese supplier of coated papers. NewPage is USA's largest producer of coated papers. This program could mean more than 100,000 tons for NewPage, which is approximately 20% of the mills's annual production.

Corrugated Converters Voice In

Although longer term the forecast for corrugated boxes is forecast to increase 3 to 4% per year through 2013 (to 213billion square meters), many voice short term concerns. Yes, paper boxes continue to be the environmental choice for packaging to protect and transport items; but, reusable plastic crates are providing competition.
While suppliers, to the corrugaters, biggest concern is overcapacity, followed by plants inability to pay, energy pricing, and production moved off shore – the Corrugated container plants order of concerns are energy prices at #1, followed by customers ability to pay, and increased raw material costs.
Suppliers and converters are both cutting costs in most areas with exception of sales programs.

Truckload Rates to Drop Almost 3%

Some good news for paper producer's in and outbound shipping, truckload rates will drop 2.7% this year due to continuing overcapacity in the truckload market, after steep spot truckload rate declines in the first-quarter.
Shippers reported steep declines in first quarter spot truckload rates averaging 7.5% compared with a year ago and rates are down 2.3% from the fourth quarter.
Adding to the declining truckload demand is a continuing movement of freight from the roads to the rails. In the first quarter, shippers diverted 4.7% of their volumes from truck to rail because rail rates were still 11% lower than truckload rates on average, although that gap is the smallest in recent history.
With Crude oil just raising above $60/barrel, let’s hope shipping rates will remain low.

A few pokes to the Pulp and Paper Industry

Just saw this on blog
Asking why bankers, operators, and employees are considering opening up shuttered, inefficient mills that were closed because they were no longer profitable. One man's floor is another's ceiling..... Complete article http://www.linkedin.com/news?actionBar=&sik=1242911914283&aIdx=0&articleID=35282605

First Half 2009 Ad Pages Down

Mediaweek announced that magazine advertising pages for the first half of 2009, as compared to the same period in 2008, fell 23.8%, as they did in the first quarter, at 22.8%. Some analysts think this might suggest that the decrease rate might be leveling.

What’s Happening to Market Pulp?

After we have witnessed a declining price totaling $250/ton (down 29%) over the last eight months, NBSK prices remained at $635/ton in May. Note, we recently outlined Domtar is out with a $30/ton price increase for June. While the USA markets are not exactly strong, prices have risen the last 3 months in areas such as China, despite, a huge amount of supply has been taken
out of capacity. Further, we are approaching the seasonally slow summer period, and inventories are likely building.

Update on Containerboard

notes from report from Deutsche bank
PPW pre-released its monthly estimate of containerboard prices, suggesting that prices would fall not more than $10-15/ton. This would put the price of benchmark 42-lb linerboard East grade down about $75/ton over the last 7 months. However, reports suggest a price variance of around $50-60/ton between virgin grade and recycled grade producers. Box shipments in April fell 10.9% y/y on a blended basis, in-line with the YTD blended decline of 10.8% y/y. Despite weak Apr shipments, inventories declined 115K tons m/m, against an average decline of 23,000 tons m/m, over the last 10 years. However, we think permanent supply moves by International Paper and Smurfit could alter the tone of the market. By our estimates, the NA market may have just over 4MM tons of capacity overhang.

Domtar Announces Pulp Price Increase

Domtar, following the Alberta-Pacific price increase announcement, said it would raise NBSK pup prices by $30/ton, to $680. The change is effective June 1...... we will see how successful this is.

Early Reports for Paper Shipments

Reported by Mark Wilde of Deutsche Bank
Preliminary printing & writing paper #'s for April showed extremely weak vol's. Y/Y comps very ugly in coated papers (CFS -30.1% y/y, LWC -36.3% y/y). UFS also quite weak -13.2% y/y.

Kruger keeps Paper Machine Down

Kruger reported that No. 4 in Corner Brook, will remain idle indefinitely and its situation will be revisited on a monthly basis, but it will not begin making paper again until the paper company has enough newsprint orders on its books to make production a profitable venture.

Stora Enso Finalizes Acquisition

Store Enso has finalized the acquisition of Myllykoski Paper's remaining 49% minority shareholding in Sunila Oy.

Container Board Prices Soften

The Official Board Market report suggesting that containerboard prices had fallen $70-100/ton across the USA compare to March. Many industry reports state that pricing remains under modest pressure and has intensified in some markets.
We think prices will continue to ease; we do not see "sharp" drops in price well into the summer and possible end of year. Overseas producers are offering product at lower prices and raw materials have declined, while demand remains low – three factors to assure depressed pricing for a period of time to come.

Europe Also Reports Paper Shipments Fall

The Association of European Fine Paper Manufacturers announced a 23.3% decline, to 608,000 metric tons, in coated woodfree paper deliveries in March, as compared to the same period last year. Exports decreased by 41%. First quarter shipments were down by 27.3% and exports by 48.7%. Uncoated woodfree deliveries fell 10.1% to 506,000 metric tonnes. Export rates did not change. For the first quarter, deliveries decreased 17.2% and exports fell 26.7%

R.R. Donnelley wants to Buy Competitor Quebecor World

R.R. Donnelley has offered to acquire Quebecor World. Donnelley is offering approximately $1.35 billion for its rival; $700 million in cash, $394 million of Donnelley’s shares (based on Monday’s closing price) and $275 million of cash on Quebecor’s balance sheet.

Paper Industry Continues to Struggle

The American Forest & Paper Association (AF&PA) reported that U.S. printing and writing paper shipments of 5.4million tons through April were 24.2% lower than a year earlier. AF&PA data shows year-to-date coated mechanical paper shipments at 939,240 tons were 37.2% below 2008. Four-month shipments of coated free sheet at 999,655 tons were 28.7% lower.

Uncoated free sheet volume of 3.003 million tons through April was down 15.6% while uncoated mechanical shipments through four months at 445,678 tons were off 31.5%.

Hearst to make changes to a Magazine

Hearst Magazines will increase Good Housekeeping’s trim size to a larger format, cut its rate base and raise the cover price in an effort to update the 124-year-old title’s perception.

Over the past couple of decades, older women’s service titles have lost ground to newer, so-called women’s lifestyle publications like Martha Stewart Living Omnimedia’s Martha Stewart Living and Time Inc.’s Real Simple, whose readers tend to be younger and more affluent.

With the January 2010 issue, Good Housekeeping will increase its trim size by 10 percent to 8 ¼ by 10 7/8 inches while lowering its rate base to 4.3 million from 4.6 million. The cover price will increase to $3.49 from $2.50, keeping GH still well below the cover prices of the lifestyle monthlies, which cost $4 and up.

GH will still have the second biggest rate base among women’s service and lifestyle books after Meredith Corp.’s Better Homes and Gardens, which has a guaranteed circ of 7.6 million.

Price Increase for New York Times .. Again

notes from MediaWeek

The New York Times is raising its prices for the second time in less than a year to help the newspaper offset a steep drop in advertising revenue.

The newsstand price for the Times' weekday and Saturday editions will go up to $2 effective June 1, up from $1.50. The 33 percent increase comes just 11 months after the third largest U.S. daily newspaper last raised its prices. The price for the national edition of the Sunday newspaper will rise to $6, an increase of a dollar. In New York, the Times' Sunday newspaper will cost $5, also a $1 more.

The company that owns the Times lost $74 million during the first quarter as its advertising revenue plummeted by 27 percent from the same time last year.

Lincoln Paper Idles Machine

Lincoln Paper and Tissue will idle an uncoated freesheet paper machine at its Lincoln, ME facility on Friday. The closure is expected to last for one week. The machine, PM 5, has annual capacity of 35,000 tons and has been shut down intermittently for 151 days since October of last year.

Verso’s Bucksport Mill Back Producing Paper

Verso’s paper mill in Bucksport, ME is bringing all four of its paper machines online for the first time in six months. All machines should be up and running mid May. The mill will produce a specialty grade of paper on PM 2 for a limited 2-week run.

Printers Still not Healthy

A few recent reports from the trade-
-RR Donnelley posted an alarming drop of 92 percent in first quarter net profits this week.

-A decline in orders and the dismal economy has forced Quad/Graphics hand again, prompting the nation's largest privately-held printer to lay off 140 employees

-Although not doing well in the current quarter, Quebecor World is projecting to turn modest profits over the next two years, according to bankruptcy court filing it made Wednesday. The company expects to earn $7 million in 2010, a figure that will rise to $57 million in 2011 and $74 million in 2012

Cenveo to Buy Nashua Corp

Cenveo reported a merger agreement to acquire all of Nashua for $44million. Nashua is strong in labels and specialty papers; they concentrate on point of purchase and wide format markets.

Market Pulp, maybe there is HOPE!

Spot pricing for market pulp appears to have stabilized and remained flat. Actually, we hear reports that pulp pricing may even be increasing in Asia! USA NBSK still offers spot pricing at $470-500/MT. Mills have taken much down time and global inventories have declined. Latest news is Fraser shutting down its 250,000TPA hardwood pulp mill in Thurso, Canada later in May.

Major Paper Producers Match Production with Demand

I have reported on mill ‘s curtaining production in current past releases and this continues to occur in this ‘over supplied’ market. The weak economy has reduced advertising buying space in magazines; the internet has cannibalized newspaper readers; cataloguers have become smarter with lists, hence reducing pieces; less durable good purchased means less packaging materials; more unemployment yields less copies in the office or less business papers consumed; and going ‘green’ equates to less paper.
A few current announcements to support this
-Fraser Papers curtailing production commodity groundwood paper grades at a 69,000 ton/year machine at its mill in Madawaska, Maine
-St. Marys Paper is idling two paper machines to reduce paper production by 8,500 tons in Sault Ste. Marie, Ont
-AbitibiBowater's three-machine mill shut 315,000 tons/year of supercalendered and uncoated mechanical paper capacity in Fort Frances, Ont
-Nippon Paper Industries USA idled the 165,000 ton/year uncoated mechanical mill, and taking about 6,800 tons of directory paper out of production in Port Angeles, Wash

USPS Posts $1.9 Billion Loss

The U.S. Postal Service ended its second fiscal quarter with a net loss of $1.9 billion. The Postal Service has now lost money for 10 of the last 11 quarters, and warns of a year-end cash shortfall of more than $1.5 billion. Year-to-date, the net loss is $2.3 billion, compared to the $35 million loss in the same period of 2008. Mail volume has dropped by 13 billion pieces, which translates to a revenue loss of $3.3 billion

Fraser Papers to Idle PM6 at Madawaska

Fraser Papers announced plans to curtail production of commodity groundwood paper grades at its mill in Madawaska, ME. The indefinite closure of PM6 began the week of May 4. Fraser will continue to operate the remaining five paper machines at the mill.

AbitibiBowater Still looking for Capital

Debt-laden AbitibiBowater desperately seeking capital for operations. The Canadian government will secure $100million. The company remains the largest producer in the world of Newsprint (45% market share in USA) and 16,000 employees – the firms is burning through $200million per month. AbitibiBowater acquired approximately $6billion in debt when the company bought Bowater. The sluggish demand for newspapers has hurt newsprint sales.

SAPPI's Cloquet Mill to Increae Production

Sappi reports they will nearly triple production of coated paper at the company’s 330,000 tons/yr mill in Cloquet, MN. Sappi is looking to expand the Cloquet plant by adding a new paper machine and a new natural gas-fired boiler. The mills 130,000 tons/yr PM 4 and 200,000 tons/yr PM 12 both produce coated freesheet grades.

U.S. Printing & Writing Shipments Decline 21.9% in March

Report from AF&PA
U.S. printing & writing paper shipments fell 21.9% in March and first quarter shipments were down 24.0%, the American Forest & Paper Assn. reported.
U.S. purchases (shipments plus imports less exports) of p&w papers dropped 22.8% in March versus a year earlier and fell 24.1% year-to-date.
Inventory levels for uncoated freesheet, coated papers and uncoated mechanical grades decreased 37,100 tons, or 1.6%, from February, AF&PA said.
Contraction of uncoated freesheet shipments for the second consecutive month put volume down 8.7% to 850,200 tons.
That was a sharp change from the 19.6% drop in January, followed by a decline of 19.3% in February. Because of the earlier strong declines, AF&PA noted, first quarter UFS shipments dropped 16.0% below last year.
Purchases of UFS also fell, declining 7.9% when compared to March 2008, as imports again exceeded exports. Inventories decreased 2.9% compared to last month, a decline of 32,300 tons.
Coated papers posted double-digit shipment declines for sixth consecutive month.
Coated freesheet shipments dropped 31.7% to 286,200 tons and were down 27.8% in the first three months of the year. U.S. purchases of CFS decreased 31.1% and were off 27.3% year-to-date.
Coated mechanical shipments again were the weakest of the four principal p&w grades. Shipments fell 39.5% to 248,100 tons, AF&PA said.
Year-to-date shipments of coated mechanical dropped 37.0% and purchases fell 39.8% compared to March 2008. Year-to-date demand for the grades is off 35.4%.
Inventories for coated mechanical paper rose 3.2%, or by 9,500 tons, from last month and CFS inventories decreased 1.8%, or by 11,500 tons month-to-month.
For uncoated mechanical papers, shipments fell for the seventh consecutive month after reaching an all-time high last July.
Shipments declined 27.5% to 135,200 tons, and for the first quarter were down 30.6%.
Since last July, uncoated mechanical paper shipments have risen just once more in August before the pattern of decline began as publishers cut printing of catalogs and newspaper inserts.
U.S. purchases of the uncoated hi-brites, SC grades and directory paper fell 26.4% in March and were down 26.0% for the year. Also, inventories rose 13,200 tons, or 13.4%, from February.
The Coy Paper Company monitors these markets and reports updates into these Pulp and Paper Industry new releases several times each week.

Mohawk and Wholefoods combine for 100% Recycled Papers

Whole Foods Market has recycled and reused its own paper for zero waste. The Company took its own paper waste and had it de-inked and recycled into paper pulp. The pulp was then sent to Mohawk to be manufactured into new paper for their production. Because Mohawk manufactured the paper with wind-generated electricity, an additional impact was created.

Containerboard Prices Continue to decline

List prices on both 42-lb linerboard and medium fell another $15/ton in April. Box shipments in March fell 12.1% vs March 2008 this after 10.5% February 2008 vs 2009. Some industry experts state relative improvement in April box shipments Despite weak March shipments, inventories
declined 115K tons m/m, driven by a drop in operating rates to 77% (82.7% in Feb).
Many industry experts believe North America excess capacity could be s large as large as 4million tons . Two mills, International Paper and Smurfit-Stone may be close to announcing capacity
Closures. They are the market leaders with almost 50% of combined industry capacity. FYI, Georgia-Pacific is third largest producer.

Pulp Markets bottoming Out?

NBSK prices appear to have bottomed. USA NBSK list price decline slowed to a discount reduction of "only" $10-20/ton, with list price for April at $630-640/ton. US market pulp spot prices remained flat across all the four grades (USA NBSK spot remained at $470-500/ton). The first quarter brought extensive downtime and mill closures, and decline in global inventories (43 days of supply). Some even suggest that offshore prices are already rising.

Global Newsprint: March Inventory Data Disappoint Analysts

as reported by Dow Jones newswire
Nearly all segments of March's newsprint inventory and production data from the Pulp and Paper Products Council were disappointing for industry analysts.
"Mill inventories are out of control," said Kevin Mason, paper and forest products analyst for Equity Research Associates. "Dailies [newspapers] are cutting back and trying not to buy [newsprint], but consumption just falls off the map."
Inventories at all U.S. users of newsprint declined 4.5% in March from a month earlier to 679,000 metric tons from 711,000 tons in February and was off 15.0% from the 799,000 a year ago. This might be supportive if it weren't for the fact that total U.S. consumption fell 28.5% from a year ago, the analysts said.
As a result, newsprint price declines accelerated in April with list prices falling by as much as $40 a metric ton, said Mark Wilde, market analyst for Deutsche Bank.
Wilde and Mason keyed in on news the world's largest newsprint company Abitibi-Bowater was in chapter 11 bankruptcy proceedings.
Abitibi-Bowater controls about 40% of North American newsprint production.

"More companies can be expected to go bankrupt," Mason added.
The industry still may have 1.5 million tons of potential production idled for the rest of 2009, and more will need to come out in 2010,

Catalyst Snowflake Mill now FSC Certified

The Catalyst mill in Snowflake, AZ report that products from this mill, which has a 347,000 ton annual capacity, can now carry the widely recognized FSC label confirming that they were made from post-consumer sources. Note: this mill has always produced newsprint from 100% recycled fiber.

Katahdin Paper Mill to Restart

The Katahdin Paper Co. mill in East Millinocket will restart on May 5. The mills two 125,000TPA paper machines have been idle since April 9. The No. 6 machine, which makes directory paper, will run for a week starting May 5. The facilities No. 5 machine, which makes newsprint, will start up on May 11.

Federal Reserve States Easing of Recession

The Federal Reserve reports the recession is easing and that the economic outlook has "improved modestly" since last month (March2009).
The worst of the recession -- in terms of lost economic activity -- could be past; although, weak sales and credit difficulties have forced businesses to continue to cut spending and lay off workers.
Against that backdrop, Fed Chairman Ben Bernanke left a key interest rate at a record low of between zero and 0.25 percent.

Boise's DeRiddle Mill Idled

Boise Inc. has indefinitely idled its #2 newsprint machine at its mill in DeRidder, Louisiana, which has been idled since February. The machine has annual production capacity of 186,000 tons of newsprint. The company plans to continue to run the #3 newsprint machine at the DeRidder mill as well as a linerboard machine.

OnLine vs. Traditional Newspapers

Media Week ran a recent survey of online newspapers , results-
Online-only newspaper readership is still very low in the United States. According to Scarborough Research, the number of adults who have read newspapers online-only during the week is 4 percent.

Below is the latest list of top newspaper Web sites. The percent change compares March 2009 to March 2008.


NYTimes.com -- 20,118,000 -- 7%
USATODAY.com -- 9,961,000 -- (-7%)
washingtonpost.com -- 9,367,000 -- 5%
Wall Street Journal Online -- 9,192,000 -- 34%
LA Times -- 8,643,000 -- 51%
Boston.com -- 5,742,000 -- 37%
Daily News Online Edition -- 5,658,000 -- 71%
Chicago Tribune -- 5,270,000 -- 38%
SFGate.com/San Francisco Chronicle -- 4,227,000 -- 11%
New York Post -- 3,827,000 -- (-18%)
DallasNews.com - The Dallas Morning News -- 3,536,000 -- 30%
The Houston Chronicle -- 3,095,000 -- 15%
Newsday -- 3,065,000 -- (-5%)
Atlanta Journal-Constitution -- 3,041,000 -- 28%
Politico -- 3,033,000 -- 45%
Chicago Sun-Times -- 2,737,000 -- 24%
MiamiHerald.com -- 2,686,000 -- 85%
Star Tribune -- 2,360,000 -- 34%
The Seattle Times -- 2,262,000 -- 70%
International Herald Tribune -- 1,984,000 -- (-23%)
The Coy Paper Company monitors the newsprint market and reports into this Pulp and Paper Blog several times each week.

Meredith quater reveals drop in Advertising

Meredith Publishing just reported on its last quarter with a drop in advertising revenue of 12%. Circulation for many titles are also down.

Conde Nast Portfolio Magazine RIP

After achieving a circulation of 449,005 Conde Nast pulls the plug on Portfolio magazine. Another negative for the magazine industry!

Label Market ‘feeling’ the Recession

2008 started off fine for the North American Market, than, like so many other sectors, demand and profit fell off the last half and especially the final quarter of 2008. In fact, early reports outline an actual decline of 1.5% for 2008 shipments (2-2.5% decline for pressure sensitive) from 2007. Most segments experienced decline in growth, beyond pressure sensitive including glue applied and in mold while film labels seemed to hold their own. Two best end user categories were beverage and household chemical.
Note, North America is approximately 27% of world demand, placing it as the third biggest market behind Europe and Asia. Future forecasts include label growth to follow GDP.

Newspapers report down demand

The average daily circulation of U.S. newspapers declined 7% in the six-month period ending March 31, according to the latest data from the Audit Bureau of Circulations, reflecting an increased rate of decline over the last two measured periods.
Some Highlights-
USA Today down 7.5%
Wall Street Jr up 0.6%
New York Times down 3.6%
LA Times down 6.6%
New York Post down 21%
Boston Globe down 14%
San Francisco Chronicle down 16%

Weathering the Paper Storm

Printing papers continue to suffer with decreased advertising, fewer readers and letter writing, acceleration in substitutes (more economical papers and electronic communication), and a poor economy.
Despite capacity curtailment and reduced prices, demand remains weak and supply high. Newsprint is especially affected with reduced demand with the greatest cannibalism of readers to the internet and falling circulation. Book publishers may also witness additional attrition with introductions such as Kindle. With fewer purchases – containerboard and packaging is down. Fewer products being sold yields less packaging plus, consumers are satisfied with reduced layers and reduced lightweight material – still allowing for a ‘sturdy’ container – but less paper. The Tissue market has not felt the same reduction in demand, but given the poor economy, end users are now picking the more economical private brands, which typically use less paper.
Raw materials such as fiber, energy, chemicals and transportation has declined and helped, but sales prices continue to slide. PPI reported that 5.7million (5% of paper production capacity) has been taken out of market in 2008. This should assist. Big challenge is the capital-intensive paper industry attaining credit for capital projects. Limited funds are available for growth and acquisitions. Most paper producers are in a survival mode – cash management and Balance Sheet strength is key.
The Coy Paper Company monitors current events in the Pulp and Paper Industry and reports into this Blog several times each week.

St Francisville, LA Mill May Restart

Tembec announced the sale of its St. Francisville mill, closed in 2007, to PanAmerican Capital Group for $6 million in cash and $10 million in interest bearing notes last week. Now, published reports say that the mill, which produced 240,000 tons per year of NBSK pulp and 340,000 tpy of coated paper, may be restarted; possibly even this year. The new owners have yet to disclose the product that might be manufactured. The state of Louisiana has offered substantial incentives, $6 million if the company creates at least 200 jobs by early 2010; with more to follow if employment goals are met.

NewPage to sell Kimberly, Wisconsin Mill

NewPage reported it would sell its Kimberly, WI paper mill, which produced coated paper, with the intention of trying to find a buyer who will not produce the same paper grades.

Some Good News for Quebecor World

Quebecor World Printing just signed a multi-year contract with Boardroom Inc. for over $100million for printing. The printer also filed for a plan of reorganization with US Bankruptcy court to emerge from creditor protection by this August .

Kraft Paper Shipments Down 3.3% in March

Some notes taken from session with American Forest and Paper Association
>Kraft paper shipments decreased by 3.3% compared to February 2009, a decline of 3600 tons.
>Total Kraft paper inventory increased 10.3% in March, 7300 tons higher than February.
>Total Unbleached Kraft shipments dropped by 3.7% from last month, and 29.5% compared to March 2008.
>The total Unbleached Kraft inventory increased 15.5% from last month.
>The total shipments of Unbleached Kraft Bag & Sack decreased 16.3% compared to February 2009, and 32.8% decrease compared to the same month of last year.
>Unbleached Kraft Converting shipments increased 4.5% in March compared to February 2009. The total year-to-date of 2009 shipments had an increase of 2.5%.
>Total Bleached Kraft shipments had a slight increase of 0.9% compared to last month, and a drop of 30.7% compared to March 2008.
>The total Bleached Kraft inventory dropped 7.5%, 1200 tons lower than February 2009.

Domtar Adds FSC Certification to Four Mills

Domtar Corp. has achieved Forest Stewardship Council (FSC) Chain-of-Custody certification at four additional paper operations. The newly certified mills include a coated groundwood mill in Columbus, MS and three uncoated freesheet mills in Hawesville, KY, Kingsport, TN and Marlboro, SC.

Cenveo Merges Two Operations

Cenveo has merged Anderson Lithograph and ColorGraphics into a single business, which will operate at the ColorGraphics location as part of the corporate initiative for executing a cost cutting and consolidation plan since 2005.

Nippon Paper Group Reduces Capacity 875,000 tons

Nippon Paper Group plans to curtail its annual production by 875,000 tons by the end of September in response to a sharp decline in demand. The company will shut down a total of 12 paper and paperboard machines as well as 3 coating plants, reducing its production capacity by 575,000 tons. Approximately 442,000 tons of that will be comprised of various paper grades. The remaining tons will be board.

New York Times Reduces Pages

Joining the crowd, the New York Times has announced several initiatives to reduce costs for the newspaper – all yielding fewer pages, which mean less paper, printing, and ink. The management reports eliminating several sections (out of both daily and weekend editions as well as their Sunday Magazine), also they will reduce staff salaries, cut spending on freelance work, and reduce number of pages.

Containerboard Prices Down

The list price for linerboard and medium fell $15/ton this month. I understand shipments have stabilized somewhat for April ... so far, but March was down 12% from March of 2008.

Newsprint Continues Downward Trend

The price of newsprint continues to decline with April 'list price' reduced by $40/ton. Inventory levels are not much help either - over 65 days. Producers have confirmed additional down time amounting to 400,000 tons for second quarter - hoping this will help.

AbitibiBowater Files for Bankruptcy Protection

AbitibiBowater filed for bankruptcy protection, siting the weight of the two recent acquisitions and a collapsed demand from newspapers for newsprint, as primary challenges. In addition, the recession has reduced the amount companies spend on newspaper ads, and rising newsprint prices have caused newspaper publishing companies to take such cost-savings measures as trimming the width of their pages. Further, declines in advertising and circulation have resulted in fewer pages printed overall, and in dozens of newspapers one or more of their print publication days have been eliminated. The impossible credit markets also provided challenge for the company to find financing.
The company insisted operations will continue as normal during its restructuring.

No layoffs, closures or pay cuts were announced with the bankruptcy, though such moves may be forthcoming as the restructuring progresses.

AbitibiBowater also said it arranged with Fairfax Financial Holdings Ltd. and Avenue Management LLC for debtor-in-possession financing of about $200 million.

Containerboard Demand Drop Cuts Output, Capacity

By Tom Stundza

The economic slowdown has continued to reduce demand for linerboard and slowed manufacturing at North American containerboard facilities. At the same time, U.S. capacity to produce paper and board moved down slightly in 2008 to 96.3 million tons -- continuing an eight-year fall, according to the American Forest & Paper Association's annual survey.

Capacity is expected to drop by about 2% in 2009 to 94.5 million tons, which will be well off the peak of nearly 104 million tons in 2000. In 2008, 41 paper machines as well as 18 entire mills were shut permanently, the AF&PA survey reveals. The capacity to make paperboard for boxes is expected to decline at least 2.6% from 2007 to 2009, according to RISI, the Bedford, Mass.-based forest products information service.

Meanwhile, Smurfit-Stone Container Corp., the largest producer of cardboard box materials in North America, is closing a mill in Missoula, Mont., for 10 days from April 20 due to shrinking demand for cardboard products. The plant already has had another linerboard machine shut since last November.

A RISI market review says that over the past six months, North American containerboard companies have taken downtime of some 2.15 million tons, or 32.5%, of annual linerboard capacity.

The researchers also say that companies have temporarily stopped production of 719,000 tons, or 28.1% of capacity, of corrugating medium volume in the fourth quarter of last year and first quarter of 2009. Some 31.3% of recycled containerboard capacity, or 2.87 million tons, also saw some downtime. RISI tells clients that these tonnages reflect “known downtime” reported by local media or released in company statements.

Quebecor Reaches Agreement with Creditors

Quebecor, which filed for Chapter 11 bankruptcy in January of 2008, announced an agreement with its creditors. Details were not available, but the firm said the accord will “substantially deleverage” the company. Quebecor said it will file an official reorganization plan by the end of April and is on track to emerge from bankruptcy perhaps as early as mid-July.

Containerboard Shipments Slows

Downtime and production cutbacks continue with Q1 downtime estimated at 1,500,000 tons. There is a great deal of excess capacity globally. With a flattened global cost curve and low freight rates, lower prices could spread rapidly.
List prices of both 42-lb linerboard and medium fell $15/ton in March. Reports suggest discounts to list prices have now spread to major integrated suppliers. Note - February's box ship's fell 10.5% February 2008

Has Pulp Bottomed Out?

The pricing for NBSK pulp decline for USA producers slowed to a further reduction of $10-20/ton, with list price for April at $630-640/ton. However, the hardwood pulp market remains oversupplied with effective list prices declining $30/ton in April and reports suggesting that prices may fall again next month.

Magazine Newsstand Sales Continue to Sink

Magazine newsstand sales fell 12% in the first quarter, according to Magazine Information Network (MagNet). The decline was largely due to a wholesale disagreements that led to disruptions in deliveries. Magazine newsstand sales fell 11% in the second half of last year, as reported by the Audit Bureau of Circulations.

New magazines for 2009

A total of 110 new magazines were launched in the first quarter of 2009, according to MediaFinder.com. The top three categories were health/fitness, home/furnishings and family, with eight new titles launched in each. On the other hand, 95 magazines folded in the first quarter, including Domino, Travel + Leisure Golf and Hallmark. The regional and lifestyle categories topped the list of ceased publications.

AbitibiBowater Announces Additional Downtime

AbitibiBowater has announced that it will continue taking downtime on the Catawba, SC coated mechanical paper machine for at least an additional 30 days. The machine had been out of operation for all of March. Production will be reduced by an additional 14,000 tons of paper.

AF&PA Reports on 2008 shipments (vs. 2007)

USA figures-
Segment / shipments/year over year
Uncoated Free 10,985,000tons down 8%
Coated Freesheet 4,512,000 down 9.7%
Coated Mechanical 4,165,000 down 10.7%
Uncoated Mechanical 2,196,000 up 5.0%
Total (incl other grades) 23,025,000tons down 7.5%

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.