FORESTWEB Report: Total Newsprint Consumption Reaches Lowest Point, Year-Over-Year

By: Debra Garcia Total newsprint consumption in the U.S. plummeted 27.1% year-over-year in August, exceeding the decline year-to-date low of 25.6%, according to data released by the Pulp and Paper Products Council (PPPC).

Through the first eight months of this year, 3.415 million tonnes of newsprint was consumed in the United States. Consumption by U.S. dailies slowed down 26.3% in August and 25.2% year-to-date, to 2.682 million tonnes. Total U.S. newsprint demand fell 24.1% in August and was off 30.4% year-to-date, to 3.265 million tonnes.

As the number of Sundays for August and through the first eight months was the same in 2008 and 2009, the year-over-year comparisons are straightforward.

After improving in July, mill operating rates again fell in August. The North American operating rate was 65% in August and 73% year-to-date, compared to 97% and 94%, respectively, in 2008, the PPPC reported.

Exports down, imports up
North American newsprint production in August was down 38.6%, bringing the total through the first eight months to 4.835 million tonnes, a drop of 30.3% from a year earlier. Shipments fell 29.1% in August and were off 31.0% year-to-date, to 4.752 million tonnes.

Overseas deliveries of newsprint from North America continued to drop in August, falling 44.0% year-over-year, bringing the total through the first eight months to 1.023 million tonnes, which was off 36.9% from a year ago. All markets were down year-over-year in August and year-to-date, with most of them showing dramatic drops.

At the same time, imports are up 24.8% year-to-date compared to last January-August, with a 26.8% increase year-over-year in August. All of the North American imports of newsprint were to the U.S.

North American mill inventories of newsprint where trimmed by 42,000 tonnes in August, ending the month at a level of 403,000 tonnes, which was 4,000 tonnes lower than a year earlier, reported PPPC.

While Canadian mills reduced stocks by 5,000 tonnes during August, U.S. producer inventories fell 38,000 tonnes.

Newsprint consumer inventories, however, increased in August. All U.S. users' stocks were up 18,000 tonnes, to 621,000 tonnes, but this was still 186,000 tonnes below a year ago. U.S. daily newspapers built up inventories by 3,000 tonnes in August, to 565,000 tonnes, which was 155,000 tonnes lower than a year earlier.

Operating rates dip again
Mill operating rates fell both in the U.S. and in Canada in August from July, with both countries at about the same levels. Last month, U.S. newsprint mills had run at 78% and Canadian mill ran at 72%, but both were at 65% in August.

Last August, the operating rate in the U.S. was 97% and in Canada, 96%. Through the first eight months, Canadian mills ran at 73% and U.S. mills, at 72%, compared to 94% and 95%, respectively, in 2008.

U.S. newsprint production was off 41.4% year-over-year in August, bringing the total year-to-date to 1.918 million tonnes, which was roughly one-third (33.4%) below a year ago.

U.S. newsprint shipments fell in August by 24.6%, and were off 32.3% year-to-date, to 1.915 million tonnes, with overseas deliveries halved in August and off 49.6% year-to-date, both compared to year-earlier periods.

Canadian newsprint output dropped year-over-year by 36.6% in August and was off 28.0% through the first eight months, to 2.917 million tonnes.

Canadian shipments of newsprint in August were off by 32.1% versus a year ago, and the cumulative 2009 total through August was 2.837 million tonnes, which was down 30.1% from a year ago, the PPPC reported.

Exports of newsprint from Canada fell 41.5% in August, bringing the total through the first eight months to 830,000 tonnes, which was down 33.0% year-over-year.

Price attempts. With newsprint markets still sliding, analysts have said more downtime -- particularly permanent closures -- would be needed to firm up markets enough to raise prices. Last week, AbitibiBowater Inc. announced several indefinite shutdowns of newsprint capacity at three Canadian mills and one mill in the U.S., plus a groundwood paper mill in Canada.

According to a Sept. 21 report from Salman Partners, the recently announced AbitibiBowater curtailments and previously announced closures are expected to eliminate about 1.3 million tonnes per year of newsprint and uncoated mechanical paper production.

The August price of 30 lb newsprint in the U.S. was just US$440/tonne, according to Reel Time.

Price increases of $35/tonne each are slated for September and October in the U.S., according to reports.

Reel Time is pegging the September price at $455/tonne, down from $725/tonne in September 2008.