A summary of Mark Wilde of Deutsche Banks recent comments-
The prices for uncoated freesheet remained flat in North America in November, with the exception of envelope papers, which rose $25-30/ton, catching up with the $35-40/ton hike on offset rolls last month. These hikes were driven by increased pulp prices, small increase in demand demand (October shipments -9.3% y/y, YTD -13.1% y/y), and slightly lower October mill inventories (-0.8% vs. October of 2008).
International Paper and Domtar recently announced 800,000TPAof permanent capacity closures by mid-2010, representing 7% of North American uncoated fresheet capacity.A recent example was International Paper just closed PM 6 — a 223,000TPA paper machine at its Franklin, Virginia mill.
Mark Wilde, senior analyst at Deutsche Bank covering the Paper & Forest Products sector, said that IP reported pick-up in demand in the direct mail and envelope converters segments.
"Outside the U.S., we understand that European producers have begun to announce price hikes for January 1. Additionally, we are becoming less concerned about the impact of tonnage from Europe, as we think the level of imports to the US will be smaller than we had anticipated."
Containerboard
shipments for November as well as prices ($525/ton for linerboard and $500/ton for corrugating medium) remained flat. Two suppliers announced a price increase for January orders.
"When coupled with large supply reductions, expiration of black liquor credits, and a falling U.S. dollar, we expect similar domestic price hike initiatives from International Paper and Smurfit-Stone," Wilde said.
"We continue to believe Smurfit will announce 1.0-1.5 million of closures around year-end. If that occurs, it would push operating rates back into the mid-90's," he added
Market Pulp
Pulp prices rose $30/ton in November, the sixth month in a row in the U.S.A. and seventh in a row in Europe and Asia. NBSK (northern bleached softwood kraft ) rose to $830/MT. The increase was driven by a sharp rise in U.S. spot prices, low mill inventories in the U.S. and Europe, strong Chinese demand, and a weaker US Dollar.
Reports suggest that an additional hike is looming for December, Wilde said.
For China, NBSK rose to $675/ton (from $645/ton). However, anecdotal reports suggest demand in China may slow down in the coming months from inventory overhang — estimated to be around 400-500,000 m/tons.
Further, higher prices are drawing high-cost Chinese pulp mills back into production — as market prices are now well above cash-cost.
Meanwhile, other supply is also creeping back, pointed out Wilde. North American mills considering restarts include: Buchanan Forest Products' 475,000 tpy NBSK mill at Terrace Bay, Ontario; Mackenzie Pulp's 220,000 tpy NBSK mill at Mackenzie, British Columbia; and Fraser Papers' 250,000 tpy NBHK (northern bleached hardwood kraft) mill at Thurso, Quebec
Monday, November 30, 2009
Paper Prices and Shipments Continue to Decline
From a Report by Tom Stundza
Fewer customers' demanding paper have continued to cause pricing to deteriorate.
The Pulp and Paper Products Council has reported that North American printing and writing paper shipments have dropped by almost 19% through October, while year-to-date market prices tracked by Purchasing.com have dropped by about 6%.
The RISI reports that the demand slide may be over in early 2010 since overall October shipments of 2,069,000 metric tons were only 9% below the industry's shipments level in September. However, coated free-sheet shipments have dropped 25% so far this year from 2008 levels while coated mechanical paper shipments are down 24%.
The RISI review of industry data shows that overall mill inventories slipped 1,592,000 metric tons at the end of October, which is 95,000 metric tons lower than at the end of September and 198,000 metric tons lower than a year ago.
Fewer customers' demanding paper have continued to cause pricing to deteriorate.
The Pulp and Paper Products Council has reported that North American printing and writing paper shipments have dropped by almost 19% through October, while year-to-date market prices tracked by Purchasing.com have dropped by about 6%.
The RISI reports that the demand slide may be over in early 2010 since overall October shipments of 2,069,000 metric tons were only 9% below the industry's shipments level in September. However, coated free-sheet shipments have dropped 25% so far this year from 2008 levels while coated mechanical paper shipments are down 24%.
The RISI review of industry data shows that overall mill inventories slipped 1,592,000 metric tons at the end of October, which is 95,000 metric tons lower than at the end of September and 198,000 metric tons lower than a year ago.
Tuesday, November 24, 2009
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Georgia Pacific Joins Longview Containerboard Pricing
Georgia Pacific just joined Longview with a $50/ton (East Coast) and $70/ton
(West Coast) containerboard price hike for January. This gives the hike announcement more
credibility, as Georgia Pacific is large producer. The company, owned by privately-
held Koch Industries, is similar in size to Temple-Inland and trails
only International Paper and Smurfit-Stone in the North American
containerboard market.
(West Coast) containerboard price hike for January. This gives the hike announcement more
credibility, as Georgia Pacific is large producer. The company, owned by privately-
held Koch Industries, is similar in size to Temple-Inland and trails
only International Paper and Smurfit-Stone in the North American
containerboard market.
USA Pulp & Paper Producers Report on Gains
In the third quarter of 2009, 26 USA pulp and paper companies reported sales of slightly over $21billion, up 4.5% sequentially vs. 2Q, but down 16% vs. last year. They reported a collective $1.4 billion in net income, including $1.3 billion of alternative fuel credits, up 2% vs. 2Q. Fuel credits were received by 19 companies, lifting their incomes. Excluding fuel credits and other gains, more than half showed a drop in earnings or a marginal increase year over year. Also, production increased in third quater, up 4.6% to 6.7 million tons in September vs. May.
NAPL Forecasts 2010 US Commercial Print Volume Up 2-4%
The NAPL forecasts US commercial print volume to increase 2-4% to $76 billion in 2010, after declining 14% in 2009 to $73.5 billion and declining 4% in the previous two years. Commercial printing reported slightly higher volume in September with fewer printers reporting business as slowing, but the NAPL Printing Business Index still remains low at 36.4 in October. One third of total US printing and writing paper shipments will go to commercial printers, totaling 6.3 million tons, evenly split between coated and uncoated grades
US Postal Service Reports no 2010 Increases for Periodicals
The postmaster general, John Potter, has remarked the USPS will not increase prices for 2010 on First Class, Standard Mail, Periodicals, and single piece parcel post. This is indeed good news for magazines and cataloguers, and , therefore, paper producers.
A quick review of the past 10 years illustrates nearly a 40% increase.
1/2001 +10%
6/2002 +3%
1/2006 +5%
7/2007 + 12%
5/2008 +3%
5/2009 +3.98%
1/2010 -0-
A quick review of the past 10 years illustrates nearly a 40% increase.
1/2001 +10%
6/2002 +3%
1/2006 +5%
7/2007 + 12%
5/2008 +3%
5/2009 +3.98%
1/2010 -0-
UPS To Increase Pricing
UPS will raise its rates in 2010. The new rates will take effect Jan. 4, 2010.
Ground packages, air express and U.S. origin international shipment rate will jump by an average of 4.9%, according to the company. This is slightly less than the 5.9% announced for 2009 shipments.
The rate increase for air express and international shipments is based on a 6.9 percent increase in the base rate, less a 2 percent reduction in the air and international fuel surcharge index, the company said. The company’s management is concerned with this rate increase in that volume of shipments is down.
Ground packages, air express and U.S. origin international shipment rate will jump by an average of 4.9%, according to the company. This is slightly less than the 5.9% announced for 2009 shipments.
The rate increase for air express and international shipments is based on a 6.9 percent increase in the base rate, less a 2 percent reduction in the air and international fuel surcharge index, the company said. The company’s management is concerned with this rate increase in that volume of shipments is down.
Monday, November 23, 2009
Wausau Announces Price Increases
The Wausau Paper Mill just announced it will increase prices for Astrobrights (+$2.00/cwt); Exact Brights (+$2.00/cwt); and Astroparche (+$5.00/cwt).
Newspaper ad sales fall again
With the depressed state of the overall economy, newspaper advertising sales fell 28 percent in the third quarter.
Ad revenue totaled $6.4 billion, according to figures from Newspaper Association of America. It was a narrower decline than the previous period.
Advertising revenue has declined year-over-year for 13 straight quarters killing some newspapers and wiping out thousands of jobs at publications across the country. In the third quarter, print advertising sales fell to $5.82 billion from $8.19 billion a year earlier. Sales of online ads dropped 17 percent from the year-earlier period to $623 million
Ad revenue totaled $6.4 billion, according to figures from Newspaper Association of America. It was a narrower decline than the previous period.
Advertising revenue has declined year-over-year for 13 straight quarters killing some newspapers and wiping out thousands of jobs at publications across the country. In the third quarter, print advertising sales fell to $5.82 billion from $8.19 billion a year earlier. Sales of online ads dropped 17 percent from the year-earlier period to $623 million
JC Penney Transitions from Print to Web
JCPenney announced that they will discontinue the biannual "Big Book" catalog and instead will concentrate efforts on creating smaller, more targeted catalogs, online selling, and social media exposure. The current issue is JCPenney's last one.
Reasons for its demise range from the increasing costs of paper and mailing and environmental concerns about wasting paper and success on Internet sales as well as the ability to illustrate products more dramatically.
Big book catalogs have become less relevant as customers have embraced shopping online, (Note Sears stopped producing their big book in 1993 – after 106 years)
Reasons for its demise range from the increasing costs of paper and mailing and environmental concerns about wasting paper and success on Internet sales as well as the ability to illustrate products more dramatically.
Big book catalogs have become less relevant as customers have embraced shopping online, (Note Sears stopped producing their big book in 1993 – after 106 years)
Business Publications Fair Well in Down Economy
Mediamark Research & Intelligence’s fall magazine audience report shows that six business titles—Forbes, Fortune, Inc., Smart Money, The Wall Street Journal and The Economist—all enjoyed an increases in total audience and readership when compared to 2008. The thought is consumers are seeking help to navigate the current recession and are turning to business titles.
The Journal reported its audience grow 11.6%, to 3.4 million; Forbes’ grew 11.5% to more than 6 million; Fortune’s rose by 9%, to 4.1 million; and The Economist’s audience grew 6%, to 2.8 million.
However, the bad news for these publications was that although readership was up, advertising pages were down as are total pages!
Another reason for coated papers to remain depressed with respect to demand.
The Journal reported its audience grow 11.6%, to 3.4 million; Forbes’ grew 11.5% to more than 6 million; Fortune’s rose by 9%, to 4.1 million; and The Economist’s audience grew 6%, to 2.8 million.
However, the bad news for these publications was that although readership was up, advertising pages were down as are total pages!
Another reason for coated papers to remain depressed with respect to demand.
Friday, November 20, 2009
Paper Markets
The accumulated effect is all paper volume continues to be depressed, although month over month shipments and comparative figures versus 2008 appear to be declining at a decreasing rate - maybe the 'bleeding' has slowed? End user demand for coated papers appears to be stable for November and estimates for December appear stable as well. Coated Free Sheet was down 7% in October (vs October 2008) and down 23.1% for the year through October; Publication coated was down 4.2% in October (24.9% for 2009) and Uncoated WoodFree down 10.3% for October (13.6% for 2009).
Europe Seeing Pulp Prices Rise
Pulp inventories are at the lowest levels in over 10 years throughout Europe, estimated to be 750,000 tons, down 8.5% in October vs. September, and down 51% vs. 2008. As a result, price increases are happening worldwide, with NBSK pulp at $800/MT in Europe and SBSK at $760/MT. China’s increased in demand for pulp is effecting all markets.
Thursday, November 19, 2009
Pulp Market Remains Strong
Pulp prices are up, inventory is down, much equipment is still ideal,and Chinese demand continues to be strong .... all components yielding a seller's market and causing most buyers to forecast continued pricing pressure. The USA level for NBSK is $830/MT. Coy Paper continues to monitor for shuttered equipment to come back on line - once this occurs, pulp should prove to be more available.
Will Web Browsers Pay for online Information?
Excerpts from Forrest Research Study
New research from Forrester has found that while a minority of consumers is willing to pay for online content, not all pay models are considered equal.
The findings are relevant today when just about every print publisher is hunting for ways to offset declines in ad revenue by shifting their revenue burden to readers who are used to a world of free online content.
While 80 percent of consumers said they would not pay for access to online content if the publisher erects a pay wall, equal amounts—8 percent—said they preferred an online subscription and multichannel subscription. Only 3 percent said they’d prefer micro payments.
That suggests publishers should keep offering free, ad-supported products to the vast majority who won’t pay, while giving those who will pay a choice of payment methods for access to premium products, says the Nov. 10 report entitled "Publishers Need Multichannel Subscription Models."
Favorites were outlined as follows
37% Web site
14% portable devices like mobile phones
11%, laptops and netbooks
10 % print publication via an emailed PDF.
3 % e-readers like the Kindle
Notably, fully 44 percent said they preferred none of those options.
Who will pay for online content? The study found that people who are college-educated, technology optimists and higher earners are more likely to pay for online newspapers. Age was barely a factor in willingness to pay.
Age was a bigger factor among those who are willing to pay for online magazines. That group also is more likely to be college-educated and favoring technology. Income is barely a factor among this group, though.
New research from Forrester has found that while a minority of consumers is willing to pay for online content, not all pay models are considered equal.
The findings are relevant today when just about every print publisher is hunting for ways to offset declines in ad revenue by shifting their revenue burden to readers who are used to a world of free online content.
While 80 percent of consumers said they would not pay for access to online content if the publisher erects a pay wall, equal amounts—8 percent—said they preferred an online subscription and multichannel subscription. Only 3 percent said they’d prefer micro payments.
That suggests publishers should keep offering free, ad-supported products to the vast majority who won’t pay, while giving those who will pay a choice of payment methods for access to premium products, says the Nov. 10 report entitled "Publishers Need Multichannel Subscription Models."
Favorites were outlined as follows
37% Web site
14% portable devices like mobile phones
11%, laptops and netbooks
10 % print publication via an emailed PDF.
3 % e-readers like the Kindle
Notably, fully 44 percent said they preferred none of those options.
Who will pay for online content? The study found that people who are college-educated, technology optimists and higher earners are more likely to pay for online newspapers. Age was barely a factor in willingness to pay.
Age was a bigger factor among those who are willing to pay for online magazines. That group also is more likely to be college-educated and favoring technology. Income is barely a factor among this group, though.
Paper Companies Asking for Bigger Trucks
Another paper producer, AbitibiBowater, has joined International Paper and others in a request to allow the Federal Government to allow larger trucks on USA highways. The bill being reviewed is called the Safe and Efficient Transportation Act, a bill that would allow trucks outfitted with an extra axle to carry more weight on interstates.
In AbitibiBowater's case, just for its one mill in Calhoun, TN, it would eliminate 58 trucks per week and save $3 to $3.5million each year. The bill would also reduce the amount of trucks and, therefore, pollutants emitted.
In AbitibiBowater's case, just for its one mill in Calhoun, TN, it would eliminate 58 trucks per week and save $3 to $3.5million each year. The bill would also reduce the amount of trucks and, therefore, pollutants emitted.
Tuesday, November 17, 2009
Kraft Linerboard Price Increase
Longivew Fiber, a smaller producer (#12 at 600,000TPA), just announced a $50/ton price increase for shipments after January 1 on kraft linerboard and corrugating medium. The industry requires International Paper and Smurfit-Stone to follow for this new price level to occur. The mills have been disparate for a price increase because fiber costs are up and the black liquor credit will be gone. The challenge is soft demand - October box data show continued weak volumes.
Shipments were down 5.8%, although inventory down as well.
Shipments were down 5.8%, although inventory down as well.
More Newspapers Consider the Web
A recent American Press Institute survey found that 58% of newspaper respondents are considering initiating paid access for currently open/free news and information online, and nearly 25% expect to implement a paid strategy in the next six months. This is a big change, considering that 90 % of the responding newspapers currently do not charge for content, and only 3% currently have a paid-only site.
But in Publishers Need Multichannel Subscription Models Forrester finds that “most consumers (80%) say they wouldn’t bother to access newspaper and magazine content online if it were no longer free (no surprise), and the rest are split about how they’d like to pay for content.
But in Publishers Need Multichannel Subscription Models Forrester finds that “most consumers (80%) say they wouldn’t bother to access newspaper and magazine content online if it were no longer free (no surprise), and the rest are split about how they’d like to pay for content.
AbitibiBowater decides NOT to curtian Equipment
AbitibiBowater will delay curtailment of newsprint and uncoated mechanical paper production in three facilities, adding 60,000TPA through year-end. Management reported on improved demand.
-Clermont, QC, the 125,000TPA newsprint PM #4 will operate through December, instead of being idled Oct. 31st.
-Fort Frances, ON, the 70,000TPA uncoated mechanical (SC-B paper)PM #6 will run an added 4-6 weeks.
-Liverpool, NS, the 250,000TPA Bowater Mersey newsprint mill will run at full capacity through 2009, instead of at 50% capacity.
-Clermont, QC, the 125,000TPA newsprint PM #4 will operate through December, instead of being idled Oct. 31st.
-Fort Frances, ON, the 70,000TPA uncoated mechanical (SC-B paper)PM #6 will run an added 4-6 weeks.
-Liverpool, NS, the 250,000TPA Bowater Mersey newsprint mill will run at full capacity through 2009, instead of at 50% capacity.
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