Printing and Writing Paper Shipments Decline

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

NewPage Reduces Workforce in Rumford

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

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


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

AbitibiBowater Announces 1Million Ton Capacity Reduction

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

Reader’s Digest Lay Off

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

Recent Pulp Mill Closures

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

Pulp Prices DOWN

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

Google Still King

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

Domtar Takes Downtime

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

Smurfit-Stone Files For Chapter 11

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

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

Another Magazine Folds

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

Fraser Idles Paper Machines at Madawaska

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

Verso Paper Completes Paper Machine Conversion

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

NewPage Futura Laser FSC Certified

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

Paper Producers Continue to Struggle

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

State on the Pulp Market

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

Containerboard Market Continues its Challenges

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

UPS and FEDEX look to Increase Rates

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

Publications Continue to see Decrease in Advertising Revenue

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

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

Challenging Markets Harm Mills

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

Evergreen Packaging Plans Temporary Layoffs

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