Newspapers went from bad to worse; they experienced a double digit drop in advertising revenue – their primary source of income. Housing markets have slumped, therefore limited real estate advertisements, and fewer classified ads. The internet is a newspapers’ public enemy #1 (with web based advertising revenues growing 20-30% a year).
Overall, ad revenue fell almost 8% last year – this year is forecasted to be over 12%. Newspapers attempt to reduce costs through fewer pages, smaller size newspaper, eliminating distribution routes, lighter weight paper, consolidating plants, and laying off labor but profit margins continue to erode.
Tuesday, July 15, 2008
Prices of packaging materials continue to rise
Prices for materials used in packaging continue to rise. Among the most recent announcements of price increases are those from Sun Chemical, the world’s largest ink manufacturer, Valéron and Michelman. The increases are the result, they say, of rising energy, transportation and raw materials costs.
♦ Caraustar Industries will increase prices by $50 per ton for all coated, recycled paperboard grades, as well as pass through certain freight surcharges to customers, effective with shipments on and after July 28. It will also raise prices on all paperboard-based converted products by 6%, effective with shipments on and after Aug. 11.
♦ Graphic Packaging International announced a $50 per ton price increase for its coated recycled board (CRB) and uncoated recycled board (URB). GPI will also set new freight allowances. These price hikes are effective with shipments on or after July 28.
♦ Rock-Tenn Co. will increases prices by $65
♦ Sun Chemical North America including Canada, will implement energy/material surcharges on inks effective July 14. A 10-cent/lb surcharge will be applied to news inks, directory inks, coldest, heatset, publication gravure, solvent packaging, and energy curing inks. Water packaging inks will be subjected to a 6-cent/lb surcharge.
♦ Flint Group announced price increases and surcharges on all packaging inks sold in North America, effective on all products billed on or after July 21.Surcharges on all solvent, energy-curable and paste products (inks, coatings, extenders/blend vehicles) is 10 cents/lb. Surcharges on water-based inks, coatings, extenders/blend vehicles and additives: 6 cents/lb. Price increases are as follows: Solvent liquid ink colors, extenders/blend vehicles and additives: 5%; solvent liquid blacks and all solvent and water whites: 7%; water-based ink colors and blacks: 4%; conventional sheetfed paste inks: 6%; all energy-curable products: 6%.
♦ Michelman will increase prices 15-25% on coatings and additives across all product categories in the Americas region, effective July 14. The supplier's products are used on flexible packaging, paperboard and corrugated boxes.
♦ Caraustar Industries will increase prices by $50 per ton for all coated, recycled paperboard grades, as well as pass through certain freight surcharges to customers, effective with shipments on and after July 28. It will also raise prices on all paperboard-based converted products by 6%, effective with shipments on and after Aug. 11.
♦ Graphic Packaging International announced a $50 per ton price increase for its coated recycled board (CRB) and uncoated recycled board (URB). GPI will also set new freight allowances. These price hikes are effective with shipments on or after July 28.
♦ Rock-Tenn Co. will increases prices by $65
♦ Sun Chemical North America including Canada, will implement energy/material surcharges on inks effective July 14. A 10-cent/lb surcharge will be applied to news inks, directory inks, coldest, heatset, publication gravure, solvent packaging, and energy curing inks. Water packaging inks will be subjected to a 6-cent/lb surcharge.
♦ Flint Group announced price increases and surcharges on all packaging inks sold in North America, effective on all products billed on or after July 21.Surcharges on all solvent, energy-curable and paste products (inks, coatings, extenders/blend vehicles) is 10 cents/lb. Surcharges on water-based inks, coatings, extenders/blend vehicles and additives: 6 cents/lb. Price increases are as follows: Solvent liquid ink colors, extenders/blend vehicles and additives: 5%; solvent liquid blacks and all solvent and water whites: 7%; water-based ink colors and blacks: 4%; conventional sheetfed paste inks: 6%; all energy-curable products: 6%.
♦ Michelman will increase prices 15-25% on coatings and additives across all product categories in the Americas region, effective July 14. The supplier's products are used on flexible packaging, paperboard and corrugated boxes.
Catalyst pulp mill closing
Catalyst Paper is permanently shutting its pulp mill near Campbell River, putting 440 people out of work.
It is the third major industrial shutdown for the area this year.
Garneau said the No. 1 problem with the future of the Elk Falls pulp operation is a shortage of sawdust.
The recent shutdown of a nearby TimberWest sawmill that supplied sawdust, and the slowdown in the U.S. housing market, have meant less lumber is being milled. Less lumber means less sawdust.
In April, Catalyst announced the shutdown of one paper machine putting 145 people out of work. In February, TimberWest announced the permanent closing of its Elk Falls sawmill putting 257 people out of work.
The Elk Falls mill is the second Vancouver Island pulp mill to shut down within the last two months.
Pope and Talbot's Harmac mill closed in June when that company went into receivership. The mill remains down while the receiver attempts to sell it.
It is the third major industrial shutdown for the area this year.
Garneau said the No. 1 problem with the future of the Elk Falls pulp operation is a shortage of sawdust.
The recent shutdown of a nearby TimberWest sawmill that supplied sawdust, and the slowdown in the U.S. housing market, have meant less lumber is being milled. Less lumber means less sawdust.
In April, Catalyst announced the shutdown of one paper machine putting 145 people out of work. In February, TimberWest announced the permanent closing of its Elk Falls sawmill putting 257 people out of work.
The Elk Falls mill is the second Vancouver Island pulp mill to shut down within the last two months.
Pope and Talbot's Harmac mill closed in June when that company went into receivership. The mill remains down while the receiver attempts to sell it.
Five Mills close
This week saw closures announced for 5 recycled boxboard mills with 450,000 ton of capacity. Closures: Brownsville Specialty, Cascades, Newark Group (2) and Sonoco. Further announcements are probable.
Box makers are pushing 11% box price hike
-- Purchasing Magazine
Producers have announced a price increase of 11% on corrugated boxes, assuming that the announced $55/ton containerboard price increase for July will take effect. At least five major integrated box makers have announced the hikes, with effective dates ranging from July 14 to August 1. The subscription news service RISIinfo.com says independent box makers have been concerned about their ability to pass through the containerboard price increase in the current U.S. economic environment “and are watching closely to see if integrated producers are serious about implementing the box price increase.”
Producers have announced a price increase of 11% on corrugated boxes, assuming that the announced $55/ton containerboard price increase for July will take effect. At least five major integrated box makers have announced the hikes, with effective dates ranging from July 14 to August 1. The subscription news service RISIinfo.com says independent box makers have been concerned about their ability to pass through the containerboard price increase in the current U.S. economic environment “and are watching closely to see if integrated producers are serious about implementing the box price increase.”
Wednesday, July 02, 2008
Office paper prices continue to stiffen
Energy, raw material costs are key factors
By Maria Varmazis – Purchasing Magazine
Office paper prices were forecast to increase by 10% this year after a 7% increase last year, though the market looks poised to easily surpass that forecast. Cut size copier paper prices of $1,120/ton are 9% higher than in January. The latest Purchasingdata.com quarterly forecast shows uncoated bond will average $1,125/ton in the third quarter, up from $1,113/ton in the second quarter, while forms bond will increase to an average $981/ton from $970/ton in the April-June period It’s been a perfect storm of cost increases that have affected paper prices. Most notably, as energy prices continue to skyrocket through the first half, so do the costs for many other aspects of paper manufacturing: Higher costs for pulp, higher manufacturing costs, higher chemicals costs, higher shipping costs—and it’s all being passed down to the buyer. On top of that, the weak dollar has curtailed paper and pulp imports to the U.S., all while paper producers announce mill closures and producer consolidations, adding more pressure to the market. Paper producers are quick to point out their higher manufacturing costs as they announce price increases at previously unforeseen rates. In late May, Boise announced a $60/ton price increase on its uncoated free sheet, citing “significant cost increases in energy, chemicals, transportation and fiber” after previously hiking prices by $60/ton in February. After Boise’s announcement, other producers including Domtar, Glatfelter and Finch announced price increases, also at $60/ton, just days later. Domtar and Boise together produce 40% of all the uncoated free sheet in North America.
By Maria Varmazis – Purchasing Magazine
Office paper prices were forecast to increase by 10% this year after a 7% increase last year, though the market looks poised to easily surpass that forecast. Cut size copier paper prices of $1,120/ton are 9% higher than in January. The latest Purchasingdata.com quarterly forecast shows uncoated bond will average $1,125/ton in the third quarter, up from $1,113/ton in the second quarter, while forms bond will increase to an average $981/ton from $970/ton in the April-June period It’s been a perfect storm of cost increases that have affected paper prices. Most notably, as energy prices continue to skyrocket through the first half, so do the costs for many other aspects of paper manufacturing: Higher costs for pulp, higher manufacturing costs, higher chemicals costs, higher shipping costs—and it’s all being passed down to the buyer. On top of that, the weak dollar has curtailed paper and pulp imports to the U.S., all while paper producers announce mill closures and producer consolidations, adding more pressure to the market. Paper producers are quick to point out their higher manufacturing costs as they announce price increases at previously unforeseen rates. In late May, Boise announced a $60/ton price increase on its uncoated free sheet, citing “significant cost increases in energy, chemicals, transportation and fiber” after previously hiking prices by $60/ton in February. After Boise’s announcement, other producers including Domtar, Glatfelter and Finch announced price increases, also at $60/ton, just days later. Domtar and Boise together produce 40% of all the uncoated free sheet in North America.
School Paper Grades all Experience Price Increase
We would like to make you aware of recent changes in pricing that have taken place. As you are aware, manufacturers and publishers in our industry announce price increases at various times throughout the year. School Products do not normally make a point to communicate each individual price change. However, this year a large number of suppliers have announced mid-year price increases. Most of these became effective Tuesday, July 1st. Undoubtedly, these increases are the result of the well-documented increase in the costs of production and transportation worldwide.
The website Paper.com has negotiated the very best prices available for school papers, most will be effected due to cost pressures.
Tuesday, July 01, 2008
Coated Publication papers ..... in Trouble??
Recent reports on the coated paper consumption as well as inventory figures are troubling.
These reports raise questions about further industry pricing gains and could open the door to discounting. Please note important coated vendors to Paper.com’s website include NewPage, Sappi and Verso and are the largest North American coated paper producers.
The report outlines inventory figures for lighter-weight coated Groundwood (LWC – publication papers) were especially troublesome. Inventories have increased (up 37%) and currently sit at 59 days of consumption. Consumption has fallen 22% from May, 2007
levels and is off 17% on YTD basis.
These reports raise questions about further industry pricing gains and could open the door to discounting. Please note important coated vendors to Paper.com’s website include NewPage, Sappi and Verso and are the largest North American coated paper producers.
The report outlines inventory figures for lighter-weight coated Groundwood (LWC – publication papers) were especially troublesome. Inventories have increased (up 37%) and currently sit at 59 days of consumption. Consumption has fallen 22% from May, 2007
levels and is off 17% on YTD basis.
Neenah, the Specialty Mill
Neenah has successfully sold it’s Pictou Pulp mill to Atlas Holding and Blue Wolfe Capital. With this sale, Neenah no longer produces any pulp.
Neenah Paper will become a pure premium paper and specialty products manufacturing company and no longer owns any pulp mills.
Neenah Paper is a leading global manufacturer of premium, performance- based papers and specialty products used in a variety of applications including filtration, printing and writing, and as backing and component materials for many specialized industrial and consumer applications. Paper.com markets many Neenah products under well-known brands such as CLASSIC®, ENVIRONMENT®, STARWHITE®.
Neenah Paper will become a pure premium paper and specialty products manufacturing company and no longer owns any pulp mills.
Neenah Paper is a leading global manufacturer of premium, performance- based papers and specialty products used in a variety of applications including filtration, printing and writing, and as backing and component materials for many specialized industrial and consumer applications. Paper.com markets many Neenah products under well-known brands such as CLASSIC®, ENVIRONMENT®, STARWHITE®.
Crude Oil Prices Push Up Ink Costs
Rising crude oil prices continue to put pressure on ink makers to find ways to recoup cost increases. Imposing a surcharge of $0.10/lb. on all heatset, coldset and news inks, is the approach being taken by the Flint Group North America Publication and News Inks divisions. Central Ink is implementing a range of price increases, including $0.12/lb. on all non-heatset black inks and 8 percent on colors, as well as a flat 6 percent for all heatset inks. Additionally, Sun Chemical’s Performance Pigments division is raising pigment prices by 10 to 30 percent. All of these increases are effective July 1.
“The majority of ink products are derived from crude oil and news ink, itself, consists of 50 to 70 percent crude oil,” noted Bradley J. Dahleen, Central Ink’s vice president of sales and marketing.
“The majority of ink products are derived from crude oil and news ink, itself, consists of 50 to 70 percent crude oil,” noted Bradley J. Dahleen, Central Ink’s vice president of sales and marketing.
Boston Herald Outsourcing Printing
Layoffs for some 130 to 160 printing plant workers are expected as a result of the Boston Herald deciding to outsource printing of the daily newspaper, according to published reports. The expense required to modernize its presses, some of which are 50 years old, was cited as a reason for the move. Contracts reportedly are still pending, but the Herald is now expected to be produced by a Dow Jones Co. plant in Chicopee, MA, six days a week and the seventh edition printed by Boston Offset in Norwood.
Thursday, June 26, 2008
Increased Costs Continue to Pressure Margins
Rising costs continue to squeeze paper and packaging companies.
As energy, transportation, fiber, resin and chemical costs surge, firms are faced with attempting to pass along these higher costs in the midst of sluggish downstream demand. Stuck in the middle of the supply chain, producers in both sectors find their margins under pressure as they race on a financial treadmill.
As energy, transportation, fiber, resin and chemical costs surge, firms are faced with attempting to pass along these higher costs in the midst of sluggish downstream demand. Stuck in the middle of the supply chain, producers in both sectors find their margins under pressure as they race on a financial treadmill.
Coated mechanical inventories surge as battle lines are drawn for upcoming price hikes
By John Maine, Vice President, World Graphic Papers, RISI
RISI has been predicting a major reversal of the trend in North American coated mechanical paper "apparent" consumption, and the new data that was just released by the PPPC show that the turnaround showed up with a vengeance in May. The year-to-date figures had been up 3.4% though April, which was perplexing given all of the weakness in the major end-use markets such as magazines and catalogs. Despite this weakness, these end-users continued to buy paper, amassing a sizable inventory, while their true consumption of paper plunged.
The statistics released in May were shocking: North American demand declined a whopping 13.5%. End-users had finally run out of room for inventory and started cutting orders sharply to match the performance of their true consumption of paper, which has been very weak all year.
The result of the slump in orders for May was a sharp rise in mill inventory of paper. Up until the last two months, all of the inventory build had been at the printer or end-user level, while mill inventories declined and remained very lean. During April and May, mill inventories jumped 85%, rising from 155,000 tons in March, to 289,000 tons in May. These inventories are still below year-ago levels, so they are not out of line. However, the speed with which these inventories are rising (2 months) is dramatic, and the fact that end-user and mill inventories are now both high while demand is weak is very disturbing to the market.
RISI has been predicting a major reversal of the trend in North American coated mechanical paper "apparent" consumption, and the new data that was just released by the PPPC show that the turnaround showed up with a vengeance in May. The year-to-date figures had been up 3.4% though April, which was perplexing given all of the weakness in the major end-use markets such as magazines and catalogs. Despite this weakness, these end-users continued to buy paper, amassing a sizable inventory, while their true consumption of paper plunged.
The statistics released in May were shocking: North American demand declined a whopping 13.5%. End-users had finally run out of room for inventory and started cutting orders sharply to match the performance of their true consumption of paper, which has been very weak all year.
The result of the slump in orders for May was a sharp rise in mill inventory of paper. Up until the last two months, all of the inventory build had been at the printer or end-user level, while mill inventories declined and remained very lean. During April and May, mill inventories jumped 85%, rising from 155,000 tons in March, to 289,000 tons in May. These inventories are still below year-ago levels, so they are not out of line. However, the speed with which these inventories are rising (2 months) is dramatic, and the fact that end-user and mill inventories are now both high while demand is weak is very disturbing to the market.
Capital Spending of North American Paper Producers to Remain at 2007 Levels
As more companies focus on controlling energy costs and arriving at the most profitable grade mix, RISI predicts that 2008 capital spending will decrease slightly or remain at the same levels as in 2007. Last year, capital spending was markedly lower than it had been a decade ago and, right now, the likelihood is that 2009 will not see appreciable change. Projects that address energy costs or that restructure machines for value added grades or that will change the grade mix are the most probable options as they serve the interest of improving profitability.
NewPage Takes Additional Downtime
NewPage announced it will take approximately 34,000 tons of coated paper downtime next month in addition to the 25,000 tons the company announced on June 5. The two coated freesheet machine at the Kimberly, Wisconsin mill will account for approximately 18,000 tons of the 34,000 tons of downtime. The balance will come from closure of the Niagara mill on June 21, which produces lightweight coated (LWC) groundwood papers.
Business Papers Price Increase
A $60 per ton price hike on cut-size uncoated free sheet (business papers) is
here to stay. Other portions of uncoated market such as offset rolls are not enjoying same demand, so the new price will not hit all market segments equally. Most producers continue to warn about an additional "cost- driven" price increase attempts later this year.
here to stay. Other portions of uncoated market such as offset rolls are not enjoying same demand, so the new price will not hit all market segments equally. Most producers continue to warn about an additional "cost- driven" price increase attempts later this year.
UPM Launches Carbon Footprint Calculator
UPM has launched a new tool to calculate the carbon footprint of its paper products. Customers can now estimate their own carbon footprint based on the ten elements of the Carbon Footprint Framework for Paper and Board Products, which was developed by the Confederation of European Paper Industries (CEPI). The tool is accessible through the Paper Profile on UPM’s Web site.
COATED GROUNDWOOD UPDATE
• Notes from Deutsche Bank
Watch this space - - - the presence of large private owners appears to be changing behavior. Earlier this month in announcing market downtime, NewPage pointed to rising inventories as well as slower demand from advertisers. We have reason to believe that other players may be quietly taking downtime as well. It also makes a current pricing initiative interesting to watch since demand is slowing, but costs are surging. A host of players, domestic and offshore, have announced coated paper increases over the past
several weeks. In the US, Verso announced a series of $50/ton price increases for June 1 on light-weight coated (LWC) and other coated grades. AbitibiBowater and others have also announced hikes.
Watch this space - - - the presence of large private owners appears to be changing behavior. Earlier this month in announcing market downtime, NewPage pointed to rising inventories as well as slower demand from advertisers. We have reason to believe that other players may be quietly taking downtime as well. It also makes a current pricing initiative interesting to watch since demand is slowing, but costs are surging. A host of players, domestic and offshore, have announced coated paper increases over the past
several weeks. In the US, Verso announced a series of $50/ton price increases for June 1 on light-weight coated (LWC) and other coated grades. AbitibiBowater and others have also announced hikes.
NEWSPRINT Update
June prices for 30-lb newsprint rose $20/mton to $700/mton - - - a 12 year high. Furthermore, Leading producers have announced a $60/ton price hike for later this summer. Many publishers are bracing for a $20 increase in late Fall.
Additional hikes will likely be dependant on the willingness of industry leaders to take a hard-line with customers in addition to removing capacity. The industries largest producer, AbitibiBowater suggested that it would look at further supply reductions as we approach year-end. On the demand side, consumption at USA dailies fell
13.7% over last 12 months.
Additional hikes will likely be dependant on the willingness of industry leaders to take a hard-line with customers in addition to removing capacity. The industries largest producer, AbitibiBowater suggested that it would look at further supply reductions as we approach year-end. On the demand side, consumption at USA dailies fell
13.7% over last 12 months.
Tuesday, June 17, 2008
SMART Papers Appoints New Sales VP
SMART Papers has named Don Butts vice president of sales for its Merchant Channel. Mr. Butts will be responsible for sales to all paper distributors in North America. He will be based out of the company’s Hamilton, OH headquarters. Butts spent 11 years at Domtar, six of which he held the position of vice president of sales. Prior to that, he worked for Boise Cascade in a variety of management positions. Before joining Boise, Butts worked as a national account manager for Mead Paper and handled the RR Donnelley account.
Paper.com markets all the Smart Paper products, all items ship within 24 hours after order placed.
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