FORESTWEB: Export Market Helps Offset Decline in Newsprint Use

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By: Debra Garcia

U.S. newsprint consumption remained depressed in July but another month of improved offshore orders helped bolster the North American newsprint industry, according to statistics released today by the Pulp and Paper Products Council (PPPC).

Consumption by U.S. daily newspapers fell year-over-year in July by 12.4%, to 505,000 tonnes, bringing the year-to-date total to nearly 3.7 million tonnes, down 10.0% from a year ago. Total U.S. consumption was off 10.3% in July compared to last July, and down 10.9% through the first seven months vs a year ago — a sign that demand from commercial printers is about as depressed as from newspapers.

While there were five Sundays this July and last July, the first seven months of 2006 had one more Sunday vs January-July 2007. Thus, year-to-date comparisons would be somewhat better for 2007 if adjusted to account for last year’s additional Sunday.

North American markets have been helped, however, by stronger export orders, particularly from Western Europe and Latin America.

In July, shipments of newsprint from North America were up year-over-year to Western Europe (up 35.3%), Latin America (up 52.0%), Japan (up 22%) and non-Japan Asia (up 57%). Through the first seven months, however, only Western Europe (up 68.4%) and Latin America (up 1.7%) showed year-over-year gains, while Japan and non-Japan Asia were down 21.4% and 4.4%, respectively.

North American newsprint mills exported a total of 193,000 tonnes in July, up 9.5% from last July. This brought the year-to-date total to nearly 1.4 million tonnes, up 8.9% from a year earlier, according to the PPPC.

Total North American newsprint production reached 986,000 tonnes in July, down 2.8% from last July, bringing the January-July total to nearly 6.7 million tonnes, a year-over-year drop of 4.4%. As a result, the North American newsprint industry operated at 94% both in July and through the first seven months of 2007, vs 93% last July and 95% for January-July 2006.

North American newsprint mill inventories continued to rise, reaching 505,000 tonnes at the end of July. This is the highest level in at least two years. Canadian inventories gained 35,000 tonnes and U.S. mill stocks were up 23,000 tonnes, for a total increase of 58,000 tonnes in July. This is 152,000 tonnes higher than a year earlier, the PPPC reported.

Consumer inventories, however, remain low at 838,000 tonnes for all U.S. users and at 736,000 tonnes for U.S. daily newspapers. Although all U.S. user stocks gained by 16,000 tonnes and U.S. daily newspapers inventories were up 6,000 tonnes in July, together they were 200,000 tonnes below a year ago.

U.S. newsprint producers are attempting to raise prices for 30-lb newsprint by US$25/tonne Sept. 1, but some industry analysts expect it will be only partially implemented. Don Roberts, with CIBC World Markets, indicated that getting US$20/tonne of that increase would boost the price to US$600/tonne, but it would not make up for the US$75/tonne deterioration in prices since the fall of 2006.

Further capacity reductions have been called for by industry analysts as a way to shore up the markets. Some headway has been made, with total North American newsprint closures for 2007 reaching about 424,000 tonnes so far, according to The Reel Time Report’s July issue.

More closures might be announced once the merger of Abitibi-Consolidated Inc. and Bowater Inc. is completed, as the combined company would be in a position to move forward with any restructuring plans. Recently, the Superior Court of Quebec approved the merger, but the deal still awaits the go-ahead from the U.S. Dept. of Justice.

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