Latest Newsprint Stats 'All Negative'

By: Debra Garcia With the exception of exports leveling off and producer inventories rising, April newsprint statistics released this week by the Pulp and Paper Products Council (PPPC) were all negative.

However, the most telling statistic was the 9.8% year-over-year drop in April?s U.S. daily newspaper consumption, which brought the year-to-date total to just under 2.2 million tonnes, down 9.1% from January-April 2006.

Total U.S. consumption, which includes commercial printers, declined even more significantly. For April, it was down 12.3% from a year ago, and the year-to-date total of just over 2.6 million tonnes was 11.9% below last year?s first four months, according to the PPPC.

The year-to-date totals, though, are somewhat skewed by January-April 2006 having one additional Sunday compared to this year?s first four months. Both Aprils had five Sundays.

With demand dropping, North American newsprint mills accumulated inventories. In April, stocks rose by 32,000 tonnes and were 173,000 tonnes higher than at the end of April 2006, the PPPC reported.

Consumer stocks, though, fell 35,000 tonnes in April and were 91,000 tonnes lower than a year ago. In terms of days of supply, all U.S. users had 39 days on hand, the same as a year earlier, while U.S. dailies had 43 days in stock, one day less than a year ago.

Capacity changes. Despite declining demand, North American newsprint capacity remained relatively unchanged this year until May, when Blue Heron Paper Co. was slated to indefinitely shut down it 140,000 tonnes/year newsprint mill in Pomona, Calif.

However, two new newsprint projects have since been announced for the United Kingdom. Each is a 400,000 tonnes/year machine and both plan startup in 2009.

?These two machines, if completed during 2009, have the potential to significantly reduce North American exports to Europe starting in earnest in 2010, contingent on wastepaper raw material costs and current relationships,? stated Chip Dillon, industry analyst with Citigroup, in a May 18 report.

Meanwhile, Atlanta-based SP Newsprint Co. indicated last week that it was looking at strategic options for the company, which could include its sale.

?One step forward ? and one step back?? noted Deutsche Bank in a May 18 report commenting on the recent developments. ?What am I missing??

Exports to Europe strong. North American newsprint exports to Europe are one of the only positive factors in the current export market. For April, total North American newsprint exports were about flat (down 0.5%) year-over-year.

Exports to Western Europe, however, were up year-over-year by 81.8% in April and 61.6% year-to-date. Exports to Japan also gained in April (up 12.8%), but were still down 19.7% through the first four months, according to PPPC data. Also declining in April were exports to non-Japan Asia (down 7.5%) and Latin America (down 29.6%), and these regions were off 15.6% and 9.4% on a year-to-date basis.

With domestic consumption down and exports relatively flat, North American newsprint production fell, dropping by 6.5% year-over-year in April. This brought the total for January-April 2007 to just over 3.8 million tonnes, a drop of 5.0% from a year earlier, PPPC reported.

The North American operating rate in April was 2% below a year earlier, at 93%, and, for the first four months, ran at 94% of capacity, 1% lower than a year earlier.
The Canadian operating rate for April was 95%, the same as a year ago, but U.S. mills ran at just 90%, down from 96% last April. On a year-to-date basis, the U.S. operating rate decreased from 96% to 93% while the Canadian operating rate increased from 94% to 95%.

Total North American newsprint shipments fell 7.7% year-over-year in April, bringing the total for January-April 2007 to just over 3.6 million tonnes, a drop of 8.9% from a year earlier.

U.S. prices still falling. U.S. newsprint prices continue to follow the downward trend in the market. The Reel Time Report has steadily dropped its price for 30-lb newsprint by $5-$10/ton each month since last September, when it was at $655/tonne. The publication recently reported a May 1 price of $585/tonne.

According to FOEX Ltd., U.S. newsprint indexes are down by 8% from their highest level, reached last August. In its report for last week, FOEX?s newsprint indexes for both 30-lb and 27-lb newsprint remained unchanged from the previous week, at US$588.84/tonne and US$627.55/tonne, respectively.

FOEX?s European index lost 28 cents last week, dropping to ?537.95 tonne for 45 g/m2 newsprint, but this was due to the strengthening of the Euro rather than weakened markets. The index has gained by 3.5% or ?18.32/tonne since the beginning of the year. European newsprint markets are healthier than in the U.S., FOEX indicated.