International Paper and Glatfelter Announce Paper Price Increases

IP and Glatfelter announced a $40/ton ($2/cwt) price increase on uncoated freesheet offset and commercial printing papers, effective with September shipments.

Printer's Sales Remain Down

Printing Industries of America states 1Q2009 printer sales down average of 9.4%. BUT, digital segment up 8.8%; Inkjet up 7.1%.

Update on Kruger's Coated Production

Kruger will permanently shut down coated production at its Trios River Mill in October. 3 paper machines and 2 coaters are included in the shut down.

Wausau Announces Price Increases

Wausau will increase the transaction price by $2.00/cwt. on the following products:
Exact® Index
Vellum® Bristol
Exact® Tag
Exact® Opaque Colors
This is effective with late September shipments.

Neenah and Cranes Announce a Partnership

Neenah Paper Company and Crane & Co. Inc. announced they have signed an exclusive partnership agreement for Neenah to manufacture, market and distribute Crane's fine business paper brands: CRANE'S CREST®, CRANE'S BOND®, CRANE'S LETTRA®, CRANE'S PALETTE(TM) and CRANE'S® Choice Papers.

Doubledown Unable to Sell Magazine Assets

We reported on Doubledown (a publisher of magazines aimed at the Wall Street elite) going out of business in February and filing for Chapter 7 bankruptcy. Updating that release,
an auction was recently held for Doubledown Media assets and most minimum bids were not met.
Examples include; the minimum bid for Doubledown’s Dealmaker was $100,000. For Corporate Leader and Trader magazines the lowest acceptable bid was $50,000. The minimum bid for Cigar Report was $25,000.
The minimum bid for all five titles was $300,000.
None of the auctions were successful – all bids too low!

A Few Optimistic Positions on Paper ....

It appears the Pulp, Containerboard, and Uncoated Wood Free papers may see some relief and gradual improvement. In the past few weeks all three markets have stabilized, and in fact, Pulp and uncoated papers has actually witnessed price increases.
Although Containerboard has not enjoyed increased demand, the price levels appears to have stabilized. This has been largest assisted by massive curtailment of supply (see my past reports on Smirfit and International Paper downtime).
Pricing for uncoated papers are enjoying modest increases in transaction prices. In fact, the major producers have formally announced a September price increase of $40/ton for Offset, Opaque and Bristol grades. Many in the industry are forecasting the deep discounts will go away and the true effect of the September increase will really be $60/ton.

SAPPI Closes Paper Mill ' forever'

One of the largest producers of paper for magazines, books and high-end advertising, Sappi, North America, will permanently close the Muskegon, Mich., paper mill. I reported in March that this mill will be idled for an undetermined amount of time. This coated fine paper mill had an annual production capacity of 170,000 TPA.
The global economic downturn and reduction in demand of 32% this year has resulted in very weak demand for coated fine paper worldwide.
Products previously made at Muskegon have been and will continue to be produced at the other Sappi mills in Skowhegan, Maine, and Cloquet, Minn.

Portugal Paper Mill Studying New Machine

Portugal’s largest pulp and paper company, Portucelis, is considering expanding in the paper market at a time when larger rivals are cutting production.
The machine will have a capacity of 500,000 tons a year, making it the world’s biggest for the production of office and graphic paper. It will increase the company’s total paper production capacity to 1.5 million tons a year.

Big 3 Paper Producers in Europe Speak about Consolidation

From Reuters Wire Service
At Reuters Paper & Packaging Summit, Chief Executives from UPM, M-Real and Norske Skog spoke about the need for consolidation in the paper industry. UPM stated that they would be an active player, focusing on costs and balancing demand-supply.

Vibe Magazine to Return

As we reported in May/June, Vibe Media Group closed their doors, blaming the poor economy and a decline in ad spending. Vibe and Vibe.com recently announced that InterMedia Partners, a private equity firm founded by Leo Hindery, Jr., purchased the publication.
InterMedia is combining Vibe with the operations of another urban lifestyle magazine it owns, Uptown.

Catalyst Paper to Restart Pulp Mill

Catalyst will restart pulp production at its Crofton NBSK kraft mill on Vancouver Island, BC in October if market conditions continue to improve. The line will add 210,000 TPA.

Palm Paper's Newsprint Machine Starts up

The industry’s newest paper machine started up three weeks ahead of schedule. Palm Paper’s facility, on the River Great Ouse in the UK, will produce up to 400,000 tons of newsprint paper each year.

Reader's Digest Officially Files

As we reported late last week, Reader's Digest was evaluating a move to file for bankruptcy. This just became official. The filing will assist in reducing the $2.2billion in debt to $550million.

Another Reason for Fewer Newspapers

Just reading a piece from Jeff Jarvis (past editor of NY Daily News) and he outlines the fact that coupons are now available on line for free and listings for movies are now easily attainable online - this has hurt newspaper demand. He believes there was a large population that purchased newspapers for only the coupons. Many would also purchase a newspaper for the local movie listings – all now available online – for free. Certainly, two more factors leading to fewer newspapers is less disposable income for purchases such as a newspaper and electronic news seems to be picking up readers.

Pulp Shipments continue to Increase

Perhaps the only shinning star in the industry is market pulp; whereby, reports for July shipments confirm an increase of nearly 4% from July of 2008. China continues to buy pulp and is certainly assisting the demand.
Worldwide inventories have decreased and we hear pulp is now under 30 days (versus 36 days at this time in 2008). Pulp prices are witnessing increases as a result from companies such as Canfor Pulp, Domtar, Aracruz, Suzano, Arauco, Botnia, Donghae Pulp, Mercer Intl, Tembec, VCP, Sodra, West Fraser and Winstone (price inceases ranging from $30-50/ton).

Is Digital Better?

I just saw an interesting report on the International Paper website comparing the ‘green’ factor of digital / electronic media and traditional paper. The document confirms paper being more environmentally friendly.
A few highlights
-Sustainability – Paper industry plants 3 trees for every one forested – trees are renewable. Computers are made from environmentally unfriendly materials that cannot be recycled.
Energy – Most paper producers today have power supplied from carbon neutral resources. Powering up a PC comes from electricity, which is produced from nonrenewal fossil fuel.
Recyclability – Paper is completely biodegradable and the paper industry recycles and reuses nearly 60% of paper that has been returned from the market. Computers, servers, cables, and monitors continue to end up in landfill......and are not recyclable.

Update on Newsprint Market

Difficult for me to report an optimistic future for the Newsprint Market. I suppose one glimmer of bright light is that the balance of the world has not experienced as deep nor as fast a decline in Newsprint demand. Newspaper advertising in the USA continues to fall, and the trend does not appear to be stopping (FYI, advertising down 30% in the first quarter alone!).
USA newsprint demand for 2009 is forecast to be 5.3million tons. Production for North American producers was 10.4million tons in 2008 - the forecast 2009 is 7.6million tons.
Individual companies are particularly hurt; AbitibiBowater (world's largest producer of newsprint) lost $100/ton on its current shipments. Mr. Mark Wilde reported average selling price was $581/mton, while AbitibiBowater's average cost of manufacture was $688/mton. Note, larger buyers are reported to actually be purchasing paper at less than $400/mton. Again, not a rosy picture!

Market Pulp Prices Continue to Increase

Pulp prices in North America continue to increase with the latest announcements for NBSK list price in August heading north for the third month in a row, up $30/ton to $730/ton.
Currently, this market is witnessing reduced inventories - given strong demand from China and shuttered equipment reducing over all capacity.
Note, SBSK list price also increased $30/ton to $680/ton

More College Students Using Digital Texts

Notes from a report by Jim Milliot of Publishers Weekly

Many anticipate that 40,000 college students at over 400 colleges will use open source digital textbooks from Flat World Knowledge this fall. Flat World went live in spring 2009 with 1,000 students from 30 colleges using its offering.
The Flat World’s pricing/business model students allows access entire textbooks for free online; pay $19.95 for a PDF download; pay $29.95 for a black and white printed version or $59.95 for a color version, or pay $39.95 for an audio version. Books are available by the book or by the chapter. Study aids or also available for purchase.
Eric Frank, a cofounder of Flat World believes a quantum leap will occur for fall 2010 when he thinks the number of students could be between 120,000 to 200,000.
If more books are read digitally, this means less text paper sold ..... another challenge for the paper industry.