Wednesday, July 30, 2008
More Paper Price Increases
Several major paper mills recently made announcements for price increase of 5-7% . Notably, the Xerox 4200 and Digital paper families will advance; as well as Smart Paper's Kromekote grades; Nekoosa Carbonless; all SBS Board C1S and C2S; and all continuous stock computer papers - all will increase. Paper.com still has some inventory for immediate shipment at the old price.
Friday, July 25, 2008
Uncoated Free Sheet Update
Although shipments of uncoated woodfree papers are down 7.3% through June, the producers have been successful with the proposed price increase. We understand $40/ton of the proposed $60/ton mid-June price hike on cut-size (copy paper) paper has gone through, with $15-20/ton of the late June offset increase showing in July. The major producers and
importers have suggested t another hike attempt in September...
importers have suggested t another hike attempt in September...
Coated Groundwood Market Update
Prices for publication papers increased $20-40/ton in July. Note: both mill & printer inventories are up sharply and consumption is falling, accordingly, the full $50/ton price hike has not passed through. USA shipments for June was unfavorable: -14.3% and July does not appear much better.
More trouble ahead for Paper Buyers
Problems continue to lie ahead for larger paper buyers for both price and availability. Several paper mills have recently announced permanent closure and others are taking ‘market’ downtime to control supply. In fact North America coated capacity has been reduced by approximately 20%. A different type of operator, the venture capitalist, is now managing the ‘new economics’.
AND, with the reduction of supply – with economics 101 – curtained supply generally generates increased revenue if demand exceeds supply.
AND, with the reduction of supply – with economics 101 – curtained supply generally generates increased revenue if demand exceeds supply.
Added Capacity by Brazil Producer
Brazilian pulp and paper producer, Suzano, is considering building an uncoated white paper machine outside of Brazil. The objective would be to forward integrate some of its
market pulp into paper, but do it closer to the final customer. One location reportedly under consideration is on/near the Texas gulf coast. Suzano would export pulp to the US for conversion into Paper. Suzano currently exports about 60K/tpy of various uncoated free sheet products into the US and has a near-term goal of moving to over 100,000/tons. Within Brazil, Suzano's estimated 2008 capacity is 1.64MM/mtons of market pulp and 1.1MM/mtons of paper.
market pulp into paper, but do it closer to the final customer. One location reportedly under consideration is on/near the Texas gulf coast. Suzano would export pulp to the US for conversion into Paper. Suzano currently exports about 60K/tpy of various uncoated free sheet products into the US and has a near-term goal of moving to over 100,000/tons. Within Brazil, Suzano's estimated 2008 capacity is 1.64MM/mtons of market pulp and 1.1MM/mtons of paper.
More Sustainable Fast Facts
-56% of paper consumed in USA was recovered and recycled in 2007.
- The 54.3 million tons of paper recovered in 2007 would add up to 360 pounds for every USA citizen.
-The paper industry has a goal of recovering over 60% of paper by 2012
- The 54.3 million tons of paper recovered in 2007 would add up to 360 pounds for every USA citizen.
-The paper industry has a goal of recovering over 60% of paper by 2012
Smart Papers Constructing Biomass Co-Gen Plant
Smart Papers recently announced they would start a new $30million co-generation plant, which will use 100% biomass fuel. This will assist the mill in producing more environmentally friendly papers by reducing greenhouse gas emissions.
International Paper purchases Weyerhaeuser’s Packaging division
International Paper purchased the packaging division of Weyerhaeuser, which included 9 container plants (6.3Million tons); 72 packaging plants (99.4billion sq. ft); 10 specialty packaging plants, 4 bag Kraft plants, and 19 recycling plants. This affected 14,300 employees.
Paper, Packaging Companies Struggle To Make Profit
By Mike Obel,
Manufacturing.Net - July 25, 2008
NEW YORK (AP) -- Profits at paper, packaging and building supply companies are getting squeezed by raw material costs and falling demand for their goods as the U.S. economy and housing market languish.
Even as these companies cut costs by shuttering mills and raise customer prices, it's not fast enough to offset inflation. And if they raise what they charge too quickly, they could see a greater falloff in demand.
With the exception of newsprint and the price of land with timber on it, product prices are struggling to keep up, says RBC Capital Markets analyst Paul Quinn.
"While forest product prices are increasing, these gains are largely the result of capacity curtailments and closures rather than rising demand," he wrote in a July 22 client note.
Meanwhile, companies are still paying for the surging cost of materials like fiber, energy, chemicals and transportation. Take natural gas, both a fuel and a component for plastic packaging makers: In the last 52 weeks its price has shot up about 54 percent, even after the effect of a dramatic sell-off over the past three weeks.
Earnings also are staggering under the worst U.S. housing construction in decades and -- for companies with significant assets north of the U.S. -- a sharp rise in the value of the Canadian dollar against the greenback. Those conditions are freezing up demand for lumber and other goods used in buildings.
"We expect the industry to report aggregate net income of just $37 million for the second quarter of 2008, down 93 percent from the second quarter 2007, despite higher product prices," wrote Citi Investment Research analyst Chip Dillon in a July 21 note.
Among building products, paper and packaging companies that will release second-quarter earnings are Louisiana-Pacific Corp., reporting July 29, and Memphis-based International Paper, reporting July 31.
Analysts polled by Thomson Financial expect, on average, that Louisiana-Pacific will report a wider loss of 38 cents per share, while International Paper will report a smaller profit of 39 cents. Analysts' estimates typically exclude one-time items.
Share prices have declined with the sector's weakened results. In the last 52 weeks, the S&P 500 Paper and Forest Products index has tumbled 34 percent.
"The sector is a long way from a sustained recovery ... significant cost inflation remains the industry's main concern," says Quinn. "On the top line, we see little sustained momentum in commodity pricing, with the exception of newsprint and groundwood paper, offering limited ability to offset higher fibre, chemical, energy and transportation costs," Quinn wrote.
Quinn also said the average estimate of 11 cents per share loss is down from the 10 cents per share average profit seen in the second quarter of 2007, but narrower than the 17 cents per share loss seen in the first quarter of 2008.
Although there is evidence of sequential price increases and sequential improvements in earnings, new threats are looming.
Deutsche Bank-North America analyst Mark Wilde said in a July 21 client note that "reliable trade sources" report Brazilian pulp and white paper producer Suzano Papel e Celulose is considering building a plant on or near the Texas Gulf Coast.
He said as the industry scrambles to close mills and plants in the face of declining demand, "the specter of new capacity coming into the market is troubling
Manufacturing.Net - July 25, 2008
NEW YORK (AP) -- Profits at paper, packaging and building supply companies are getting squeezed by raw material costs and falling demand for their goods as the U.S. economy and housing market languish.
Even as these companies cut costs by shuttering mills and raise customer prices, it's not fast enough to offset inflation. And if they raise what they charge too quickly, they could see a greater falloff in demand.
With the exception of newsprint and the price of land with timber on it, product prices are struggling to keep up, says RBC Capital Markets analyst Paul Quinn.
"While forest product prices are increasing, these gains are largely the result of capacity curtailments and closures rather than rising demand," he wrote in a July 22 client note.
Meanwhile, companies are still paying for the surging cost of materials like fiber, energy, chemicals and transportation. Take natural gas, both a fuel and a component for plastic packaging makers: In the last 52 weeks its price has shot up about 54 percent, even after the effect of a dramatic sell-off over the past three weeks.
Earnings also are staggering under the worst U.S. housing construction in decades and -- for companies with significant assets north of the U.S. -- a sharp rise in the value of the Canadian dollar against the greenback. Those conditions are freezing up demand for lumber and other goods used in buildings.
"We expect the industry to report aggregate net income of just $37 million for the second quarter of 2008, down 93 percent from the second quarter 2007, despite higher product prices," wrote Citi Investment Research analyst Chip Dillon in a July 21 note.
Among building products, paper and packaging companies that will release second-quarter earnings are Louisiana-Pacific Corp., reporting July 29, and Memphis-based International Paper, reporting July 31.
Analysts polled by Thomson Financial expect, on average, that Louisiana-Pacific will report a wider loss of 38 cents per share, while International Paper will report a smaller profit of 39 cents. Analysts' estimates typically exclude one-time items.
Share prices have declined with the sector's weakened results. In the last 52 weeks, the S&P 500 Paper and Forest Products index has tumbled 34 percent.
"The sector is a long way from a sustained recovery ... significant cost inflation remains the industry's main concern," says Quinn. "On the top line, we see little sustained momentum in commodity pricing, with the exception of newsprint and groundwood paper, offering limited ability to offset higher fibre, chemical, energy and transportation costs," Quinn wrote.
Quinn also said the average estimate of 11 cents per share loss is down from the 10 cents per share average profit seen in the second quarter of 2007, but narrower than the 17 cents per share loss seen in the first quarter of 2008.
Although there is evidence of sequential price increases and sequential improvements in earnings, new threats are looming.
Deutsche Bank-North America analyst Mark Wilde said in a July 21 client note that "reliable trade sources" report Brazilian pulp and white paper producer Suzano Papel e Celulose is considering building a plant on or near the Texas Gulf Coast.
He said as the industry scrambles to close mills and plants in the face of declining demand, "the specter of new capacity coming into the market is troubling
Tuesday, July 15, 2008
Mohawk Paper wins HP Award
Mohawk Fine Papers was named a Hewlett Packard Indigo Preferred Partner. Mohawk’s Digital products all have the proprietary i-tone finish for superior reproduction.
Digitally printed page counts are exploding 40+% and the quality of papers improves every year. Websites such as Paper.com have focused on marketing all the popular digital papers including Mohawk Fine Paper.
Digitally printed page counts are exploding 40+% and the quality of papers improves every year. Websites such as Paper.com have focused on marketing all the popular digital papers including Mohawk Fine Paper.
Uncoated Free Sheet
Although the uncoated woodfree shipments are down over the past few months, the $60/ton mid-June price hike on cut-size business paper as well as a late June offset increase seems to have been implemented with 100% success.
A number of major producers and importers have hinted about the prospect of yet another hike attempt – look for Fall announcement.
A number of major producers and importers have hinted about the prospect of yet another hike attempt – look for Fall announcement.
Digital Producer Expands Line
Wausau Paper now offers its new line of improved Exact Digital papers. The new line, marketed by Paper.com, includes a wide range of finishes, sizes, and basis weights. All 44 Digital items are FSC certified
Baltimore becomes Largest Paper Port
When the paper mill M-Real of Finland opened its new warehouse in Baltimore, and increased its shipments into USA, the seaport effectively became the largest port for paper imports. US Forest product imports have grown from 185,000tons a year six years ago to 1.4million tons a year today. M-Real reports it now ships between 1000 – 1400 truck loads of paper every year from Baltimore.
Market Pulp
DB Research Paper
Pulp appears to have reached a near-term top and prices are under modest pressure in some regional markets. The trade papers have yet to reflect this easing. The July price hike initiative on NBSK achieved only partial success, with the list price increasing by $10/mton to $890/mton. Other grades showing higher prices: SBSK (+$10 to $850), SBHK (+$15 to $820), and fluff (+$15 to $915). Trade reports suggest that the softwood market in Europe remains still over-supplied. In the European market, NBSK slipped by $5/mton to $895/mton. CTMP and hardwood prices have reportedly slipped in Asia.
How much could prices ease? With the US$ and costs rising, we think it won't take much of a price decline to trigger more capacity closures in CN & Europe.
Pulp appears to have reached a near-term top and prices are under modest pressure in some regional markets. The trade papers have yet to reflect this easing. The July price hike initiative on NBSK achieved only partial success, with the list price increasing by $10/mton to $890/mton. Other grades showing higher prices: SBSK (+$10 to $850), SBHK (+$15 to $820), and fluff (+$15 to $915). Trade reports suggest that the softwood market in Europe remains still over-supplied. In the European market, NBSK slipped by $5/mton to $895/mton. CTMP and hardwood prices have reportedly slipped in Asia.
How much could prices ease? With the US$ and costs rising, we think it won't take much of a price decline to trigger more capacity closures in CN & Europe.
Brookfield Investments changes Fraser Paper Name
Fraser Paper Inc.’s owner, Brookfield Investments Corp, recently announced it will change the name of the company from Fraser to Brascade Corporation.
NewsPapers Facing Worst Year
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.
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.
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.”
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