In a Dec. 17 report, Mark Wilde of Deutsche Bank reported that $20-$25/tonne of the fall newsprint price increase was implemented in December. He expects prices to continue to rise as they close the approximately $200/tonne gap with European prices.
In the U.S., 30-lb newsprint was selling for $555/tonne in November, according to the December issue of The Reel Time Report. Verle Sutton, editor, expected prices would rise another $5-$10/tonne in December; in January, prices are again expected to move up another $20/tonne, plus $5-$10/tonne delayed from late 2007.
Relatively low U.S. prices have fostered increased export demand for North American newsprint. However, the gain in North American offshore newsprint shipments is still not enough to compensate for the loss in domestic orders, according to the the latest statistics from the Pulp and Paper Council (PPPC).
U.S. newsprint consumption totaled 653,000 tonnes in November, a drop of 7.6% from last November. This brought the year-to-date total to 7.2 million tonnes, down 9.9% year-over-year, the PPPC reported Dec. 21.
U.S. daily newspapers consumed 504,000 tonnes of newsprint last month, 11.2% less than a year earlier. Through the first 11 months of 2007, a total of 5.75 million tonnes of newsprint was consumed by U.S. dailies, down 10.2% year-over-year.
While both Novembers had the same number of Sundays, the first 11 months of 2007 had one fewer Sunday than in January-November 2006, slightly skewering the numbers to make it look even worse this year than it actually is.
Overseas orders have helped bolster the market somewhat this year but the 222,000 tonnes additional exported through the first 11 months of this year vs last year compensates for only a fraction of the 796,000 tonnes lost in total U.S. consumption during this same period.
In November 2007, 196,000 tonnes of newsprint was exported by North American newsprint producers, just 2.2% more than a year ago, but year-to-date exports of 2.235 million tonnes was up a more substantial 11.0% year-over-year, PPPC data indicates.
The biggest growth in exports has been to Western Europe, where shipments advanced year-over-year by 57.7% in November and by 68.0% through the first 11 months of 2007. Latin America has been another robust market; although deliveries there were down 1.4% in November vs a year earlier, year-to-date shipments are 7.1% ahead of last year.
Japan and non-Japan Asia, however, have not been strong customers this year, with North American newsprint deliveries to those markets down year-over-year by 59.1% and 12.3%, respectively, in November, and off 16.4% and 10.0%, respectively, through the first 11 months of 2007, PPPC reported.
North American newsprint mills shipped a total of 919,000 tonnes to all markets in November 2007, a drop of 5.6% from last November, and year-to-date shipments of just under 11.0 million tonnes is off 5.7% year-over-year.
Production of newsprint by the North American newsprint industry was down even more substantially than shipments, falling by 6.6% year-over-year in November 2007, to 888,000 tonnes and down 5.8% through the first 11 months vs a year earlier, to 10.226 million tonnes.
North American newsprint mills operated at just 91% last month compared to 93% in November 2006, while the myear-to-date operating rate was 93% during January-November 2007, one percentage lower than the same 11 months last year, according to PPPC data.
U.S. newsprint mills, however, showed a 1% jump in the November 2007 operating rate vs a year earlier, to 96%, while Canadian newsprint mills operated at 88% last month compared to 91% in November 2006.
Newsprint inventories held by North American newsprint mills fell 30,000 tonnes last month, ending November at 356,000 tonnes. This was 11,000 tonnes higher than a year earlier, however.
In November, Canadian mills were able to reduce stocks by 36,000 tonnes while U.S. mill inventories grew by 6,000 tonnes.
Consumer stocks, however, have been falling for months and continued to drop in November.
At November's end, U.S. dailies held 618,000 tonnes, down 37,000 tonnes from a month earlier and 141,000 tonnes lower than a year ago.
All U.S. users inventories fell 15,000 tonnes in November, to 715,000 tonnes, a year-over-year decline of 157,000 tonnes.
It appears that publishers are starting to run short on inventory. According to the The Reel Time Report, some
newsprint buyers were nearly out of newsprint and seeking additional supply, the publication reported earlier this month.
Newsprint markets should continue to gain strength as more newsprint capacity is shuttered. Late in November,
AbitibiBowater Inc. announced it would take 600,000 tonnes of newsprint out of production.
Other producers have also recently announced intentions to permanently reduce newsprint capacity, for a worldwide total decline of more than 1.5 million tonnes, according to Chip Dillon, analyst with Citigroup Global Markets.