Abitibi Outlines 18% Newsprint Hike

By: James McLaren, special from Forestweb (Forestweb) Newsprint market giant Abitibi-Consolidated Inc. has set a new pricing plan that outlines an overall 18+% rise over the March-August timeframe, industry sources said Wednesday.

Abitibi said it informed customers that it will lower current standard newsprint price levels by $15/tonne effective June 1, and then raise prices an additional $50/tonne in August.

The moves reflect an overall $35/tonne average price increase in the industry since March 1. Abitibi's lower June price was not made retroactive to prices in March through May, which the supplier insists were higher by $50/tonne.

Based on a $35/tonne increase, price levels published by The Reel Time Report show newsprint will increase about 7+% from $455/tonne in February to an expected $490/tonne in June.

The second planned price hike on Aug. 1 would potentially push up prices another 10+% to $540/tonne. That is an overall 18.6% increase in the five-month period.

The Reel Time Report pegged May newsprint prices at $480/tonne, reflecting a slow implementation of the March 1 increase.

Buyer contacts today said they were not aware of any early support for a new price initiative by other newsprint producers.

Abitibi said it was also increasing prices by a range of $50-$75/tonne in South America, the Middle East, and Asia. The timing of the increases depends on local market conditions, the company said.

Abitibi noted in a recent financial presentation it is the world's leader in newsprint, with global capacity for 5.687 million tonnes. It holds a 31% share of the North American market followed by Bowater Inc. (19%), Kruger Inc. (7%), and Norske Canada Ltd. and SP Newsprint Co. (both 6%).

It told analysts that newsprint consumption is trending better, noted that inventory levels were staying low, and emphasized the permanent shutdown of 1 million tonnes of capacity over the past few years.