FORESTWEB Report: North American Newsprint Industry Still Declining, But Latest Drops Not as Dramatic

By: Debra Garcia

While the North American newsprint industry is still declining, the drops continue to moderate — and the most dramatic contractions in year-over-year decreases are in the U.S., according to December data released by the Pulp and Paper Products Council (PPPC).

Although less dismal than before, the current declines still represent further erosion from year-ago figures that themselves were down sharply year-over-year and continue a long-standing decline in the newsprint market.

North American newsprint shipments were down 14.8% in December, bringing the total through 2009 to 7.406 million tonnes, which is down 27.7%, or about 2.8 million tonnes, year-over-year.

Between 2001 and 2009, total North American newsprint shipments have plummeted by 47.5%, or 6.7 million tonnes, from 14.110 million tonnes in 2001.

Domestic North American shipments alone for full-year 2009 were off by about two million tonnes from those of 2008, to 5.712 million tonnes, reported the PPPC.

Newsprint shipments from the U.S. in December fell a relatively modest 5.2% from a year ago, bringing the year’s total to 3.022 million tonnes, which was down 27.7%, or about 1.16 million tonnes year-over-year.

Canadian newsprint shipments were off 20.7% in December versus a year earlier, bringing the total through 2009 to 4.384 million tonnes, which was off by 1.68 million tonnes, or 27.7% year-over-year.

North American newsprint shipments to overseas fell 11.0% in December compared to December 2008, while the year’s total of 1.695 million tonnes exported was down 33.5% from 2008, according to the PPPC statistics.

While there was a sharp year-over-year increase in December in North American newsprint shipments to Asia (up 70.0%), all other markets remained below year-earlier shipment levels.

For full-year 2009, North American newsprint shipments to all overseas markets were down by double-digit amounts, including Western Europe (off 17.6%), Latin America (off 28.7%), Japan (off 61.6%) and non-Japan Asia (off 45.5%).

U.S. overseas shipments up 7.2%.
Helped by a weak currency, U.S. overseas newsprint shipments were up 7.2% in December versus a year earlier, bringing the year-to-date total to 323,000 tonnes, which was down 46.7% year-over-year, PPPC data indicated.

Overseas newsprint shipments from Canada fell 14.1% in December compared to December 2008 and were down 29.4% for full-year 2009, to 1.372 million tonnes.

Newsprint imports into North America from overseas doubled in December from a year earlier and were up 38.6% for all of 2009, but still represent a relatively small percentage of the market at a total of just 86,000 tonnes for the year.

Newsprint consumption continued to fall in December, with total U.S. consumption down 11.7% and consumption by U.S. daily newspapers off 15.6%, both compared to December 2008.

For full-year 2009, U.S. newsprint consumption by all users totaled 5.174 million tonnes and dailies consumed 3.996 million tonnes, which were off 23.3% and 23.8%, respectively, year-over-year.

Total U.S. newsprint demand fell 17.5% in December versus a year earlier and was down 26.9% year-over-year to 4.978 million tonnes, reported the PPPC.

North American newsprint producers have attempted to counter the decline in newsprint consumption by shutting down capacity.

Adjusted for idled capacity, the North American newsprint operating rate was 81% in December, which was down from 88% a year earlier, and the full-year 2009 operating rate was 75% versus 93% in 2008.

The adjusted U.S. operating rate reached 86% in December, which was up one percentage point from a year ago, but the full-year rate of 75% was down from 93% in 2008. In Canada, the December adjusted operating rate was 77% versus 90% a year earlier and 74% for all of 2009 compared to 93% in 2008.

North American newsprint production fell 13.9% in December from a year earlier, bringing the total for the year to 7.37 million tonnes, which was down 27.8%, or 2.8 million tonnes, year-over-year, according to the PPPC.

Between 2001 and 2009, North American newsprint production has declined 47.9%, or 6.77 million tonnes, from 14.143 million tonnes in 2001.

Canadian newsprint output in December fell 20.3%, bringing the total for 2009 to 4.378 million tonnes, which was down 27.0% year-over-year; while U.S. newsprint production fell just 3.6% year-over-year in December, but full-year output of 2.992 million tonnes was still down 29.0% compared to 2008.

Mills keep inventories in check
North American newsprint mills cut their inventories by 28,000 tonnes in December, ending the year at a level of 284,000 tonnes, which was 36,000 tonnes lower than year-end 2008, reported the PPPC. Most of the inventory drawdown occurred at Canadian mills, where stocks fell by 23,000 tonnes versus a decline of 5,000 tonnes at U.S. newsprint mills.

Inventories held by all U.S. newsprint users were up 1,000 tonnes in December, to 576,000 tonnes at the end of the month, but this was 195,000 tonnes below year-end 2008. U.S. dailies, however, reduced stocks by 8,000 tonnes in December to 508,000 tonnes, which was 141,000 tonnes lower than a year earlier.

Closed capacity and production curtailments have enabled the industry to push through some price increases to recoup some of their rising costs.

Credit Suisse reported on Jan. 24 that the price of 30-pound newsprint in the Eastern U.S. was up US$15 per tonne in January, reaching a level $95/tonne higher than when prices hit their most recent bottom in August 2009.

On Jan. 26, FOEX Indexes Ltd. reported that its benchmark for 30-pound newsprint in the U.S. advanced by $2.74 in the previous week compared to the week before, to $531.89/tonne. Its 27.7-pound grade was up $2.86 to $565.95/tonne.

The Reel Time Report posted its Jan. 1 weighted average U.S. price for 30-pound newsprint at $520/tonne, which was up just $5/tonne from Dec. 1.

The industry’s attempt to raise newsprint prices in January and February by $25/tonne each month was modified to a $50/tonne hike in March, reported TD Newcrest on Dec. 23, adding ?We expect a protracted implementation.?

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