Magazine article Editor & Publisher

North American Newsprint Mills Slash Inventories in September

Magazine article Editor & Publisher

North American Newsprint Mills Slash Inventories in September

Article excerpt

Newsprint suppliers appear to be getting serious about firming up markets as newsprint prices continue to erode amid sliding U.S. demand.

According to the latest report from the Pulp and Paper Products Council (PPPC), North American newsprint inventories dropped significantly in all categories last month.

Total newsprint stocks held by North American mills dropped by 85,000 tonnes in September, ending the month at 447,000 tonnes. Although this level was still 91,000 tonnes higher than a year earlier, it was the first time in a while that mills have reduced inventories enough to be lower year-over-year.

Downtime has accelerated in Canada, where newsprint mills are faced with rising costs and reduced profits,exacerbated by a Canadian dollar that keeps strengthening. In the past month, Tembec Inc. and Kruger Inc. separately announced plans to indefinitely idle newsprint capacity totaling 180,000 tonnes/year.Kruger also temporarily curtailed 25,000 tonnes of newsprint production at two Quebec mills, primarily for November.

The downtime also reduced output of supercalendered paper by 6,000 tonnes, and coated paper by 8,000 tonnes.

These are the first signs that the second and third tier players are willing to act in front of an Abitibi-Bowater merger," said Mark Wilde, industry analyst at Deutsche Bank, in an Oct. 22 report.

The merger of Abitibi-Consolidated Inc. and Bowater Inc. is expected to be completed in a few weeks, according to reports. The U.S. Dept. of Justice recently indicated that Abitibi must sell its Snowflake, Ariz., newsprint mill as one of the stipulations for the merger.

Industry analysts have indicated that shutdowns would be the only way to shore up the newsprint market due to the continued decline in demand. The industry has attempted to raise prices since late summer but transaction levels continue to decline and are currently at $550-$560/tonne, sources report.

SP Newsprint Co. is the latest to attempt a price hike, with a $30/tonne increase slated for Nov. 1. Catalyst Paper Corp. previously announced a $25/tonne increase for Oct. 1, following a failed attempt by Kruger Inc. for a $25/tonnehike Sept. 1.

"If 'needing' a price increase were ever going to actually result in a price increase, it would be now," noted Verle Sutton, editor, The Reel Time Report in the publication's October issue. …

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