By: Debbie Garcia
North American newsprint shipments in July reached just over 1 million tonnes, a sharp drop of 7.8% compared to last July, as a 20.1% year-over-year drop in exports added to the continued slide in U.S. demand.
According to the latest statistics from the Pulp and Paper Products Council (PPPC), newsprint consumption by U.S. daily newspapers continued to decline in July — at 634,000 tonnes, this was 3.9% lower than a year earlier.
Although the rate of decline was slightly slower than in previous months, there was one additional Sunday this July compared to last July. For the first seven months of 2005, U.S. dailies consumed a total of 4.44 million tonnes of North American newsprint, down 4.4% from a year ago. For this period, there was also one additional Sunday in 2005 versus 2004.
?With North American newsprint producers still waiting for something positive in the monthly PPPC statistics on which to hang their hats, the July figures continue to disappoint,? noted Paul Quinn, industry analyst with Salman Partners.
Total U.S. consumption and total U.S. demand showed even steeper drops than consumption by U.S. dailies, both for July and year-to-date, compared to the same period a year earlier.
Total U.S. consumption in July totaled 775,000 tonnes, down 5.9% from last July, bringing the year-to-date total to just under 5.47 million tonnes, 4.8% below a year ago. Total U.S. demand in July reached 788,000 tonnes, off 5.1% from last July and, for the first seven months, totaled 5.47 million tonnes, down 6.5% from a year ago.
Of July’s total overseas shipments of 187,000 tonnes, all markets were down, although Western Europe showed just a 0.3% year-over-year decline, to 52,0000 tonnes. Sharper drops were recorded in Japan (-35.4%), Latin America (-24.5%), non-Japan Asia (-20.1%), and other markets (-8.1%).
However, through the first seven months of 2005, total overseas shipments of 1.49 million tonnes was still 3.6% higher than a year ago. For the period, shipments to Western Europe (381,000 tonnes) were up 11.0% and shipments to non-Japan Asia (457,000 tonnes) were still ahead by 29.2%. However, shipments were down by 4.5% to Latin America (425,000 tonnes), by 22.4% to Japan (185,000 tonnes) and by 28.2% to other countries (41,000 tonnes).
July production at North American newsprint mills fell year-over-year by 4.8%, to just under 1.1 million tonnes, bringing year-to-date to nearly 7.46 million tonnes, a drop of 4.7% from a year ago.
?With the declining consumption, North American newsprint producers continue to curtail production by either taking downtime at existing newsprint mills, closing them completely, or converting them to specialty paper-grade production,? said Quinn.
Production in Canada reached 661,000 tonnes in July, down 5.2% from a year ago, and was off 5.1% through the first seven months (4.57 million tonnes) from a year ago. July production at U.S. mills was 427,000 tonnes, down 4.2% from last July, while the year-to-date total of 2.9 million tonnes, was 4.0% lower than a year earlier.
The PPPC reported that, so far this year, North American mills’ production-to-capacity ratio stands at 96% if the indefinitely idled capacity is excluded. However, in its statistics, the July operating rate was reported at 93% versus 96% a year ago, and the year-to-date operating rate was 95% versus 96% a year earlier.
In the U.S., operating rates are higher than in Canada. U.S. mills ran at 96% of capacity in July and through the first seven months of 2005. This was the same as last July but 1% higher than the year-to-date ratio in 2004. For Canada, however, operating rates declined year-over-year. In July, they fell by 4%, to 92%, and for January-July 2005, were down 2%, to 94%.
By month’s end, North American mill stocks had risen by 49,000 tonnes, to 344,000 tonnes, due mostly to an increase in stocks designated for the domestic market, the PPPC reported. ?At current levels, however, inventories remain 7.7% below the five-year average,? it was noted.
Canadian mills inventories increased by 47,000 during July, reaching 301,000 tonnes, while U.S. mill stocks rose just 1,000 tonnes, to 43,000 tonnes.
Consumer inventories were also up in July. U.S dailies stocks increased by 29,000 tonnes for the month, to 898,0000 tonnes (59,000 lower than a year ago). The PPPC indicated that this was in line with the five-year average of +36,000 tonnes.?This inventory level, given the seasonal slowdown expected in August, meant that stock levels climbed to 45 days of supply,? the association indicated.
Inventories held by all U.S. users rose by 13,000 tonnes in July, to just over 1.0 million tonnes, but this was 77,000 tonnes below a year ago.
In July, the mean grammage for North American domestic shipments was 47.2 g/m2, while June grammage was revised to 47.4 g/m2, the PPPC said. After seven months, newsprint grammage averaged 47.6 g/m2.
Quinn noted that the grammage average has declined from 48.3% in 2003. He also indicated that the reduction in this year’s grammage versus year ago grammage effectively reduces the year-over-year comparisons in shipments by approximately 0.5%.
The sharp 7.8% year-over-year decline in total North American newsprint shipments in July, brought the year-to-date total to 7.44 million tons, 4.4% below a year ago.
In July, U.S. shipments were down year-over-year by 2.7%, while Canadian shipments fell 11.0% from last July. On a year-to-date basis compared with a year earlier, U.S. shipments reached nearly 2.9 million tonnes, off 4.0%, while Canadian shipments totaled over 4.5 million tonnes, down 4.6%.