Major American Book Segments

Major American Book Segments
The major Book Segments by revenue include
71% Trade Book
10% Professional Books
9.5% Religious Books
6% Elementary / High School Books
2.5% College Books
1% University Books

Paper Industry Continues to Recycle

The AF&PA confirmed that in 2008, the paper industry recovered 57.4%, up from 56% in 2007. The trend has been up for years; however, the current recession is allowing for less paper demanded and therefore, less paper will be available. The value of recycled paper has also declined. Note: paper and paperboard capacity in USA has decreased nearly 1% to 96.3million tons. AF&PA forecasts capacity will drop another 1.8% in 2009.

Domtar's Pulp Mill to Restart

Following a seven-week shutdown, Domtar is restarting its 398,000TPAnorthern bleached hardwood market pulp mill in Woodland, ME. All of the Woodland NBHK output for at least the next three months has been sold to China.

China’s Largest Newsprint Producer will Produce Coated

Shandong Huatai Paper, China’s biggest producer of newsprint, has ordered an 800,000 TPA coated woodfree paper machine from Metso Paper. The machine, will be 9.9 meters in width with a design speed of 2,000 meters per minute. A late 2010 start up is planned.

Newsprint Market in Confusion

As reported in our past releases, newsprint prices have fallen around $195/ton or 28% so far this year. Demand has also steadily declined, but, Kruger, Catalyst, Tembec, and White Birch announced a $50/ton increase for August shipments, despite the weak market.
Newsprint demand in North America fell nearly 29% in May – vs. 2008 and 31.7% so far this year vs at this time in 2008. Furthermore, consumption at US dailies fell 26% and paper mills only are operated at 67% of capacity (vs. 94% in May 08).
Note: we continue to report producers continue to take downtime (693, 000tons or 27% of North America quarterly capacity during 2Q2009), the reality is that more permanent closures are
inevitable.

USPS Reports Loss for May

The U.S. Postal Service reported a $677 million net loss for May which yields a year-to-date loss total of $3.4 billion. Also, reported was a 20% drop in overall volume for May and a 13% decline year-to-date. Periodicals volume dropped 13% for the period and 7% year-to-date.

Gannett Reports more Challenges

The Gannett Co. confirmed it will reduce its workforce. The company is preparing to lay off more than 1,000 employees as the largest newspaper publisher's workforce continues to shrink along with its advertising sales. Note, we reported in past that Gannett reduced its workforce 3,600 from 2007 to the end of 2008.

Vibe Magazine Folds

Vibe, a staple of music journalism since 1993 and one of the most influential publications has folded. The company was unable to secure financial backing, or to restructure its debt. Declines in the music industry and in advertising worked against the business. It had been a tough year for Vibe, which faced a steep drop in ad pages and circulation. The magazines circulation base was 600,000 from 800,000. Vibe also had reduced its frequency from monthly to 10 times a year.

Kimberly-Clark Slims Down

The maker of Kleenex tissues, Huggies diapers and many other household items plans to cut 1,600 jobs, of its global work force, as it slims down in the tough economy.
Kimberly Clark does not plan on closing any plants.
Shoppers have cut back on spending because of the recession, high unemployment and the housing downturn. Meanwhile revenue, which had been steadily rising, began to fall late in 2008.

Top Tag and Label Converters

Although the USA tag and label segments fared better than most in the Pulp and Paper industry, with 2008 growth at 2.1% - this was down from forecasted 5%. Many believe this segment will begin to witness consolidation. Top ten converters include-
RR Donnelly
Avery Denison
CCL
WS Packaging
Fort Dearborn
Multi Color
Nashua
York
Spear
MPI Labl

Erving Paper Operates under Chapter 11

The Erving Paper Company, which has a 40,000TPA operation in Massachusetts, continues to produce recycled tissue under Chapter 11. Management sited increased competition, and an underfunded pension plan as reasons for this protection.

More Downtime for Catalyst

Catalyst Paper will extend downtime at its recycled newsprint mill in Arizona by an additional 10 days. Catalyst’s Snowflake mill consumes more than 480,000 tons/yr of recycled paper that would otherwise end up in landfills

Chicago Tribune Makes Changes

The Chicago Tribune Magazine will cease as a weekly publication after July 28, as part of a series of changes to the Sunday paper to cut costs.
In a note to readers, Tribune editor Gerould W. Kern said the magazine will "appear as a series of themed magazines throughout the year—roughly once a month beginning in September."
Kern said declining advertising and high cost made weekly publication "unsustainable."

International Paper certifies most Plants with FSC

International Paper announced the expansion of its Forest Stewardship Council (FSC) Chain-of-Custody certification to include a majority of its U.S. pulp and paper mills. The company will be the largest FSC manufacturing platform across the globe..
With its expansion, International Paper's FSC Chain-of-Custody certification worldwide includes: three Coated Paperboard mills and its six converting facilities; four Pulp operations; six Industrial Packaging mills; seven Printing Papers mills and its sheeting operations; and a number of Foodservice and Shorewood manufacturing facilities.

Less Discounting for Uncoated Free Sheet

Although Coy Paper Company continues to witness price corrosion for Uncosted Free, the price declines appear to be leveling off. So far, for June, we only hear $5-10/ton discount from May. This results in 50lbs roll price $810-855, with spot pricing slightly below $800/ton,. Cutsize office paper transacts $120-1080/ton (spot below $1000). The two major producers of this grade, International Paper and Domtar, continue to take down time. May demand was down nearly 15% from May of 2008.

Containerboard Prices Remain Stable

Recent reports on market pricing for Containerboard point to staple pricing of approximately $540/ton for June shipments. The major manufacturers are closely monitoring inventory levels (actually down 96,000 tons) and lower production to keep pricing in check. Further, industry analysist Mark Wilde comments, additional permanent closures appear inevitable given the the weak domestic demand and estimate of over 4Million tons of excess capacity. He also reported box shipments declined 10.7% .
Producers continue to take extensive downtime. Coy Paper estimated 1.4Million tons in Q2
(1.7million tons in Q1). Smurfit recently announced 524,000 downtime at its Jacksonville, FL plant.

Tembec Cancels Downtime

Tembec canceled plans to take market related downtime at its Skookumchuck pulp mill in Canada. The mill was to be shutdown for a two-week period beginning June 29. Reversed decision was based on modest improvements in pulp pricing.

Crain’s New York Business Reduces Issues

Crain’s New York Business is reducing its print issues to 46 times this year from 51. They join the other publications on searching for efficient ways to cut costs.

Reader’s Digest Makes more Changes

Reader’s Digest Association will reduce the publication frequency of its magazine to 10 times a year from 12 beginning with the February 2010 issue. It will also reduce its rate base to 5.5 million from 8 million over the next 10 months.

AF&PA Reports on First Quarter

The AFPA released figures showing that the value of pulp and paper produced by its mills in the first quarter was $292.1 million versus $373.2 million in the corresponding period last year – a 22% decline.

Fraser Paper Seeks Bankruptcy Protection

Fraser Papers Inc. announced restructuring for both Canada and the United States. Fraser said weak lumber and pulp markets have led to losses and offset profits in its paper business. The company also cited a pension-funding shortfall as a reason for the Chapter 15 bankruptcy filing. The company's two paper mills in Madawaska, Maine and Gorham, N.H. will continue to operate without disruption, manufacturing specialty paper products for existing customers.

Newspapers looking at New Models

The forecast for printed newspapers continues to be doom and gloom and many publishers are exploring alternative business models. Most now offer the news in an electronic version – for free. This will change. Newspapers are reviewing applications that allow a charge to end users. The companies are also designing personalized emails that forward focused news along with banner ads and RSS feeds for additional fee based programs.

More Newspapers Join Yahoo

Five more newspapers have joined the Yahoo Newspaper Consortium, according to Reuters. The new additions bring the consortium to 814 newspaper members, which Reuters says accounts for 51 percent of all Sunday newspaper circulation.
The Yahoo alliance has been one of the few bright spots for newspapers. A recent estimate by Ad Age found that the two-and-a-half year-old consortium sold $50 million in Yahoo ad inventory, with about 'several million' dollars in sales being added each week."
FYI. 592 newspapers in the consortium rely exclusively on Yahoo's HotJobs for help-wanted ads.

Web Browser's Ranking

Since my other company is Paper.com, I thought I would share recent ranking of web browsers. In order of popularity-
Microsoft – Internet Explorer
Mozilla Firefox
Apple Safari
Google Chrome
Netscape
Opera
Other
AOL

Trends for Paper and Film Converters

PFFC recently released the results from a survey with included converters and suppliers of Flexible Packaging (30% of respondents); Unprinted Paper (24%); Labels, Tapes, Tags (24%); Paperboard Pkg, (14%).
Expectations for 2009
45% believe volume of orders will be down and 53% report order size down
46% forecast receivables will advance
49% predict selling prices will increase; while 55% thought profitability would decrease
35% will spend more on expanding product line into new markets
Only 19% stated an increase over 2007 for CAPEX allocated for new equipment
A whooping 84% believe materials will increase (forecast 8.8% increase)
62% felt plant capacity and backlogs would decline over 2008.

North American Printers Post First Quarter Loss

We reported, in this section, earlier this year on printer's financial results, PPI just released the following:
A composite of seven major commercial printing companies in North America posted a first quarter loss of $30 million, according to a PPI Pulp & Paper Week survey. It was the group’s first quarterly loss in more than five years. Combined sales for the seven firms declined 19% compared with first quarter 2008 and by 15% from the fourth quarter 2008.

Publishers Continue to Reduce Weight of Paper

In an effort to reduce the overall cost of a publication, publishers continue to reduce the size of the piece and the basis weight of the paper. Consultants fear that although these reductions could result in lower mail costs and more economic yield savings – BUT beware of the consequences. Most paper producers will price the lighter weight paper at a greater price. Although there is still a postage savings; further disadvantages include less opacity and rigidity in the lighter weight paper – yielding a ‘cheaper’ looking printed publication. This diminished appearance could tarnish the image of the company and the company’s products and overall branding.
I note, one other important attribute of lowering the weight and size generates less paper consumed, thus, better for the environment. Coy Paper Company can assist with any sourcing challenges for a lighter weight paper.

Canada to Subsidize Paper Mills

The federal government is set to announce a $1-billion package to help Canada's pulp and paper industry by countering a U.S. subsidy for using alternative energy.
The funding will be in the form of grants over a three-year period available to all 71 Canadian pulp and paper mills that make capital improvements to reduce their dependence on traditional energy sources.
The aid is in response to counter the so-called "black liquor'' subsidy to pulp mills in the U.S., which has been estimated at between $6 billion and $8 billion.

Growth in Demand for Labels

Notes from Freedonia Group survey
World demand for labels is projected to expand 4.3 percent per year through 2013 to 49 billion square meters to $105 billion. The pressure sensitive segment (which overtook the wet glue segment in importance at the global level in the late 1990s) will continue to see above-average gains, accounting for almost 55 percent of global label demand by 2013.
More trends: Wet glued products will not fare as well as PS labels, with demand even declining in many developed food and beverage markets. Other favorable outlooks include shrink sleeve, wraparound film and in-mold labels. Through 2013, plastic labels will continue to register much faster gains than paper labels, which are largely used in wet glued applications.

The Asia/Pacific region will expand its share of the world label market from 32 percent in 2008 to 36 percent in 2013. China and India will account for much of this increase, while Japan will see weak growth. The US will see below-average gains through 2013, but remain strong relative to other developed markets. Western Europe will see a noticeable deceleration in its label market growth, with some highly intensive (relative to population) users of labels in the region such as Ireland, Scandinavia and the United Kingdom expected to see outright declines. Latin America, Eastern Europe and the Africa/Mideast region, which combined accounted for less than 20 percent of global label demand in 2008, will all see above-average gains through 2013.

Among the various market segments, the smaller pharmaceutical sector will register particularly strong gains, aided by improving health care in the developing world and an aging population in the developed world. The food and beverage sectors will see weaker gains as a result of market maturity and stagnant population growth in the developed world, combined with the increasing penetration of cans, pouches and other packaging media that utilize printed product descriptions rather than labels. Label products with strong growth will include counterfeit deterrence labels, retail sector RFID tags that allow labels to assume inventory control and management as well as convey information, and tamper-evident labels.

More on Pulp Pricing

Tembec informed customers it would increase the price of northern bleached softwood kraft (NBSK) pulp by $40/ton to $700/ton effective July 1. Earlier, we reported Canfor Pulp, Northern Pulp Nova Scotia, West Fraser and Domtar announced an NBSK list price hike to $700/ton in North America.
Most buyers now feel North American NBSK prices will actually rise (first time in 11 months) Perhaps ‘real’ June increase felt will be $25/ton to $660/ton, driven by reduced supply from production downtime and closures and continued strong demand from China. Spot USA NBSK prices for big purchases might rise $15/ton to $510-530/ton. Reports suggest that most of the major producers are planning to increase prices again by $30-40/ton for July shipments.

Boston Globe For Sale!

The Boston Globe reports three are interested in acquiring the paper. Announced parties that are in discussions include Stephen Pagliuca, a private equity executive and co-owner of the NBA's Boston Celtics; Jack Connors, cofounder of a Boston advertising firm and chairman of Partners HealthCare; and Stephen Taylor, a former Globe executive whose family sold the paper to the New York Times Co. in 1993 for $1.1 billion.

Growth Still Seen in Food Packaging

If the forecast by The Freedonia Group is right, by 2013, Americans will use a staggering 300 billion food containers each year. The Group predicts that US demand for food containers will grow by 2.5 percent annually over the next five years to a total value of $25 billion versus $22 billion in 2008.
Demand for bags and pouches has grown by a robust 5.9 percent annually, from $6.9 billion a year in 2003 to $9.3 billion last year. Despite an anticipated drawnout economic recovery, the demand growth for bags and pouches is expected to be a steady 3.3 percent annually over the next five years.
He says the proliferation of convenience and single-serving food packaging has been a trend that has been gathering steam. Several factors have made such packaging popular, including smaller average household sizes, the increasing maturity of the US population and rising numbers of dual-income and single-parent households. Coy Paper Company LLC markets many products into the food and be

The Paper Market Continues its Challenges

More reports confirm May shipments on Printing & Writing papers remain weak. Uncoated free sheet down 14.7% (YTD -15.8%), Coated Free sheet decline of 30.4% (YTD - 30.4%), Light-Wt (publication) Coated off 27.5% (YTD -36.5%).

Update on Market Pulp

Notes from Deutsche Bank Conference, Brian McClay
>Spot pricing and demand for market pulp has been increasing for past 60-90 days (formal price increase announced June 1).
>Most of rally caused by increase in Chinese demand (up 60% YTD +2.3million tons - through May). Advanced price also driven by most pulp mills taking down time and mill closures (2Q2009 – 20% idled / 5.4million tons out of market last 12 months).
>Why China up? Buying lower cost imported pulp (vs. domestic); willing to inventory higher level of finished paper; pulp inventory high.
>Forecast is for additional 2million tons of pulp production curtailed by end of 2009; BUT, new capacity from Brazil (VCP) and Chili (Arauco).
>Conclusion, McClay believes pulp rally will stall out. Watch for seasonal summer depressed demand. China most likely not continue to stock pile. USA and Europe demand remains weak.

Domtar to Restart Maine Pulp Mill

Domtar Corp. said it will reopen its 398,000 ton hardwood pulp mill in Baileyville, Maine, which has been idle since March. Domtar said its decision to reopen the mill was the result of reduced pulp inventory levels and the recent increase in demand and pricing.

Quebecor Rejects New Donnelley Offer

As follow up to our past releases, Quebecor World has turned down R.R. Donnelley’s latest offer of $1.825 billion to acquire the rival printer. Quebecor said it will proceed with its restructuring plan and expects to emerge from bankruptcy by mid-July.

USA Today introduces Digital Program for News

Like other Newspapers, USA Today has witnessed aggressive competition from the web. The newspaper recently announced it is working on a digital reading devise and mobile applications to compliment its paper version. USA Today will charge for this service.

Trucker Rates may Start to Increase

Current overcapacity and aggressive pricing for both truck and inter model freight may start to witness firmer pricing. Diesel fuel continues to advance ( an important cost for truckers) and many truckers are shuttering operations. Experts forecast rate increases in early 2010 and gradually continuing throughout year. The paper industry, such as Coy Paper Company, ships the majority of its products by truck; accordingly, this is an important cost to watch.

More on Pulp Prices

FOEX’s index for northern bleached softwood kraft (NBSK) pulp jumped by $12.35/ton to $607.05/ton this week as a result of capacity cuts and closures, as well as a weak U.S. dollar and strong shipments to China. In fact, shipments of market pulp to China are up 71% in the first four months of this year.

Printing Companies Post First Quarter Loss

First quarter results for seven major North American commercial printing companies were significantly lower than the previous-year quarter due to reduced advertising and print orders. These companies combined posted a loss of $30.1 million, compared to a profit of $72.9 million in the first-quarter 2008. Quebecor World, which filed for bankruptcy protection in January 2008, reported a loss of $103 million, which greatly affected the first quarter composite. Quarterly sales for the seven firms declined 19% from the first quarter last year to $4.9 billion.

Prices Still Down for Uncoated Papers

Uncoated Freesheet pricing has continued to decrease, but at a declining rate. Recent report by Deutsche Bank reveals 50lb Roll Offset now transacting at $820-865/ton (spot price below $800); Cut size business papers $1025-$1085/ton (spot believed to be below $1000). Market leaders, International Paper and Domtar are suspending production in an effort to control supply (and pricing). Read more on Coy Paper Web Site.

Could Pulp Pricing Really be rising ?

Assisted by marketing related equipment curtailment and hence less pulp flooding the market – AND a realized reduction in inventory – the theoretical price increase for June 1 could have legs. It has been confirmed, markets like China have been experiencing increased prices. More to follow after we confirm North America buyers are actually paying more.

AbitibiBowater Awarded Additional Financing

AbitibiBowater received U.S. bankruptcy court approval for $600 million from Fairfax Financial Holdings to finance operations during its reorganization. AbitibiBowater sought protection in Quebec last month, where a court approved $100 million in debtor-in-possession financing backed by the provincial government.

RRDonnelley Increases Bid for Quebecor World

R.R. Donnelley & Sons Co. has increased its offer to acquire rival printer Quebecor World Inc. to an amount equal to $800 million and cash on the balance sheet at $335 million.

Coy Paper now on Twitter

Coy Paper Company LLC in now updating the Twitter account daily with all the current trends on the Pulp and Paper Industry. You may wish to follow Coy Papers at http://twitter.com/CoyPaper.

Newest IPhone .. .one more Challenge for Newspaper's Survival

Apple announced newest IPhone and many new applications. The new technology will allow the browser to locate the user and deliver local news, also local advertisements. The new applications will also allow the reader (IPhone viewer) to subscribe to exclusive video of local events and interviews. Real threat to the very existence and purpose for a regional newspaper.

RISI reports ''price concessions'' are in play

RISI confirms solid bleached sulfate (SBS) folding carton paperboard grades continue to witness price concessions because of weakened demand. The spot price has been stuck at $995/ton for the past seven months, but prices of SBS board for cartons for large volume is now $100-110/ton cheaper.

Tembec Continues Downtime at Newsprint Mill

The shutdown will be for a minimum of three weeks due to poor market conditions. The curtailed operations at its Pine Falls, Manitoba will mean 11,000 tons of newsprint out of market.

Domtar Achieves FSC Certification

Domtar Corporation announced it has achieved Forest Stewardship Council (FSC) Chain-of-Custody certification at four more of its paper mills. Its coated groundwood mill in Columbus, MS, and uncoated freesheet mills in Hawesville, KY, Kingsport, TN, and Marlboro (Bennettsville), SC are now FSC-certified

Another Magazine to Trim Size

The New York Times Magazine is cutting its size by 9 percent; this will save money due to less paper and less ink. Note, the size will decrease from 9 ½ x 11 ½ to 8 15/16 x 10 7/8” – making it more square. This cost saving move is a result of less advertising revenue. We have reported in past on several other publications trimming the magazine size to save money.

Pulp Prices Actually are on the Rise!

Inventories for worldwide pulp are down – mainly due to stronger than expected China demand and the devalued USA Dollar is helping exports to both Asia and Europe. All the major
producers such as Domtar, Abitibi-Bowater, Sappi, Alberta-Pacific, Sodra, Tembec, Canfor Pulp, and West Fraser have now announced NBSK price hikes for June shipments.

Containerboard prices Down

It's official, the price for 42 lb linerboard and corrugated medium declined $10/ton in May; note, we reported reduction of @$15/ton between March and April. The new $10 reduction nets a total of $70/ton reduction from its recent high or a current market price of $470-490. Large spot orders are known to sell at less. Stay tuned, inventory levels are declining and manufactures are committed to take down time, but still plenty of capacity.

Paper/Forest Products Companies’ Q1 Profits Deteriorate

Report from PPI Weekly
Earnings for 27 publicly traded U.S. paper and forest product companies plunged 96.9% in the first quarter 2009 compared to a year ago, according to PPI Pulp and Paper Week. The decrease was on top of an 87% drop in fourth quarter 2008, versus fourth quarter 2007. Eleven publicly traded Canadian pulp, paper and forest product companies posted a first quarter loss of C $640.8 million. The loss was nearly double the C $385.5 million loss in last year’s first quarter.

Digital Future for Newspaper Industry

Some interesting comments from "Mr. News", himself-
Murdoch restated his position on paid content, noting that people are soon going to have to pay to read newspapers online versus simply downloading for free.
Murdock went on to state, "Instead of an analog product printed on paper, you may get it on a panel which will be mobile, which will receive the whole newspaper over the air, and be updated every hour or two."
He thinks it's two or three years away before digital news is introduced in a big way, and then it will probably take 10 to 15 years for the public to swing over.

One Magazine Cuts Adv Rate Base

Magazines such as New York Magazine will start to promote their remaining readers as more engaged and presumably more valuable to marketers. The magazine will lower its rate base 6 percent to 400,000, while hiking its introductory subscription price 25 percent to $24.97.

RH Donnelley goes for Bankruptcy

RH Donnelley, the publisher of nearly 600 directories, including the yellow pages, files for bankruptcy protection. The company sited losses from operations due to declines in advertising because of economy, new competition from local directories, and the competition from the web.

USA Dollar continues to decline

The United States Dollar continues to be weak against major foreign currencies. This trend will begin to support USA based manufacturers of products such as paper. Export of paper products should improve.

Printers Crying the Blues

Total revenue for most major printers are now back to 2005 levels. The decline in sales was larger than expected due to the number of printers that closed their doors.
Sales revenue, prices, and profitability all suffered because of the poor economy. Some costs also declined, but not enough to support reduced pricing.

Ad Pages Continue their Decline

Advertising pages for business-to-business magazines plunged 31.54% in February and declined 29.70% during the first quarter (down 26.95% in January). Consumer magazines saw ad pages plunge 25.9% during the first quarter, according to the Publishers Information Bureau. Fewer ads means less paper consumed.

Oil Prices Increase

Although demand has not increased significantly, the price for a barrel of oil continues to hover above $60. Note, oil hit a recent low of $35 in March of 2008 (and a high in 2008 as well of over $145). Oil is a large cost factor in the production of paper; accordingly, a price increase in raw materials while finished paper products are offered at a discount, adds more profit pressure to those marginal mills.

Boise adjusts Newsprint Pricing Down

Boise shocked the market with their announcement to reduce pricing for newsprint. In an effort to stimulate demand with mill operating rates currently below 70% (actually closer to 60%) Boise is selling 30lb standard news for $430/MT ($460/MT for 27.7lbs). This represents a drop of $150 for June East Coast deliveries. The world’s largest producer of Newsprint, AbitibiBowater, immediately matched this price. RISI just forecasted that another million tons of capacity would be curtailed in next quarter.

Uncoated Papers Continue to be Sluggish

Demand for May on commodity rolls and cut size business papers remains low and all buyers are price sensitive. Prices eroded $10/Ton to $820- $865 for 50lb rolls. Spot pricing is as low as $800/Ton for large orders.

Paper Council Reports on Paper Shipments

The Pulp and Paper Products Council reported Printing & Writing paper shipments fell 21.1% in April, as compared to the same month in 2008. Coated mechanical shipments decreased 32.8%, coated woodfree declined 30.8%, uncoated mechanical shipments fell 21.3% and uncoated woodfree was down 12.2% SC-A and SC-A+ shipments decreased 26.9% in April, while SC-B and SNC+ shipments increased 13.1%. These figures are consistent with our previous news releases.

Pulp Producers to Raise US Prices

West Fraser and Canfor Pulp have both informed North America customers that they will increase northern bleached softwood Kraft (NBSK) pulp prices to $660/ton effective June 1. The moves follow previous announcements by Domtar and Northern Pulp that they will raise NBSK pulp prices to $680/ton.

NewPage Sends Message to Competitors

Currently, about a third of coated paper equipment is down, or has been turned off at some point, during the first half of 2009. Most of this down time has been at the NewPage facilities. The company has closed five machines and sold nearly 45% less tons in the first quarter. NewPage has given up market share as a result, and is growing frustrated that competitors keep their machines running. NewPage feels USA market has over a million tons of excess capacity. They think mills such as Verso and Kruger should now do their pro rata part (which is more than past curtailment from respective mill).

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.