Magazine article Editor & Publisher

1Q Newsprint Profits Fall, Data Shows Continued Market Decline

Magazine article Editor & Publisher

1Q Newsprint Profits Fall, Data Shows Continued Market Decline

Article excerpt

While North American newsprint producers were releasing dismal returns for first-quarter 2007, the latest available market data reflect a continuation of the steady drop in U.S. newsprint consumption.

Statistics released today by the Pulp and Paper Products Council (PPPC) show U.S. daily newspapers consumed 8.7% less newsprint year-over-year in both March and throughout first-quarter 2007.

Total U.S. consumption was even worse, dropping 12.4% in March and 12.2% year-to-date. March had the same number of Sundays in both 2006 and 2007, but there was one additional Sunday during this year's first quarter vs last year, the PPPC reported.

In recent days, first-quarter results posted by newsprint producers Catalyst Paper Corp. and Bowater Inc. reflect the grim condition of the market. Through the first three months, profits fell year-over-year by C$25.6 million (US$22.9 million) for Catalyst and by US$35.4 million for Bowater.

"The continued decline in newsprint consumption...led to price declines during the quarter," noted David J. Paterson, Bowater chairman, president and CEO. Increased recycled fiber costs and production curtailments also adversely effected profits.

Exports improve again.

The weakening of the loonie vs the U.S. dollar, however, provided some relief for Canadian producers, noted Catalyst. At the same time, a drop in value for the U.S. dollar boosted exports. Overseas buyers were also attracted by lower North American newsprint prices.

Overseas shipments of North American newsprint increased 7.0% in March vs a year earlier, the PPPC reported. Together with the 10.1% year-over-year hike in February, the two months' total just offset January's 17.2% loss and brings year-to-date even with a year ago, at 525,000 tonnes (down 0.1%).

The biggest year-over-year jump in March's overseas shipments was to Western Europe (up 82.6%), while Latin America grew by 6.2%. Japan and non-Japan Asia, however, fell by 34.7% and 16.3%, respectively. Through first-quarter, only Western Europe was ahead of a year ago, by 52.8%.

FOEX Indexes Ltd.'s latest report indicates that 30-lb newsprint in reels dropped just 26 cents, to US$595.87/tonne, for the week ending Apr. 17, indicating a slowing down in the rate of price erosion. …

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