Newsprint costs in North America grow in August as supply and demand remain tight
Newsprint prices up $25 in August in North American producers’ fourth move this year
Newsprint prices climbed $25/tonne in August from July’s level in North America, industry contacts told Fastmarkets’ PPI Pulp & Paper Week. This increase is part of a $50/tonne adjustment planned by domestic mills over the months of August and September.
All newsprint mills told customers they would implement a $25/tonne increase effective with shipments on Aug. 1 and a second $25/tonne would also be attempted on Sept. 1, including Resolute Forest Products, White Birch, Kruger, Alberta Newsprint, Inland Empire, GreenFirst Forest Products, Catalyst, and Norpac, industry contacts reported.
“All the producers are firm on the $25 + $25 increases,” a large newsprint buyer said.
August is loaded, and we’re confident September prices will be going up, too. There is no discussion on pricing, but if paper can be delivered.
“Our newsprint price is $25 higher this month, and, with the September increase, they’ll be [up] $50/tonne in total,” another buyer said.
“Prices on both newsprint and uncoated mechanical papers are up,” a third buyer confirmed.
This month, prices for 27.7-lb (45 g/m2) newsprint are at $895/tonne on the East Coast and at $905/tonne on the West Coast, according to the P&PW survey.
UM high-bright prices up
P&PW also found higher prices for uncoated mechanical (UM) high-bright papers in August. Sources reported 35-lb MF offset, 65 bright, paper prices are $70/ton higher this month, while 45-lb offset substitute, 83/84 bright paper prices climbed $100/ton.
“We still have more orders that we can take, and we don’t know how to do it,” a UM paper producer said. “Prices are very solid, our order book is very solid.”
North American UM paper mill shipments through July of 2022 increased 14.9% over the same period of 2021, the Pulp and Paper Products Council (PPPC) reported. Mills operated at an average 92% of their capacity in January-July of 2022 and produced 9.8% more paper than a year ago. Demand for UM was 8.9% higher in the period.
Newsprint supply and demand conditions remain tight
Even though newsprint demand continues in a secular decline, the market supply/demand condition remains tight due to mills shutting down or converting capacity, and buyers continuing to worry about receiving enough paper.
In July, North American newsprint shipments declined 14% to 118,000 tonnes, compared with the same month of last year. Year-to-date, shipments are 7.2% lower, at 846,000 tonnes, when compared with January-July 2021 shipments. The newsprint mill operating rate was at 89% in July and averaged 91% for January-July, according to the PPPC report.
For the first seven months this year, newsprint demand declined 7.2% to 847,000 tonnes when compared with demand in January-July of 2021, while production dropped 5.6% to 1.2 million tonnes. Mill inventories in North America continue at low levels, at 61,000 tonnes in July, according to PPPC figures.
Newsprint PM restarts?
Sources told P&PW of a former newsprint producer that might restart an idled machine, if market conditions remain favorable for producers, and of another supplier that “seems to be re-introducing themselves to the newsprint market.”
“High prices might be attracting new entrants to the newsprint market,” a contact said.
In July’s Fastmarkets’ Paper Trader, Fastmarkets’ Director for North American paper and packaging, Derek Mahlburg, noted that North American newsprint producers are unlikely to shut down more capacity in the near term.
With newsprint price/cost ratios at a healthy level, we expect it will take some time for producers to make permanent capacity adjustments even after demand erodes enough to put substantial downward pressure on operating rates and prices.
Mahlburg also noted that producers in other parts of the world are moving away from newsprint more aggressively, which should continue to attract shipments from low-cost Canadian newsprint mills.
“Although some of the most important export markets in Asia are not participating in sanctions on Russia, which has greatly increased its exports to China, we expect North American producers to successfully pivot to other destinations and gain market share,” Mahlburg said.
Last month, Norske Skog permanently shut a 125,000 tonnes/year newsprint machine at its Bruck mill in Austria in preparation for the conversion of the line to recycled containerboard production, PPI Europe reported. Norske Skog is also moving forward to convert 558,000 tonnes/year of newsprint capacity at its Golbey mill in France to recycled containerboard. Stora Enso and UPM may also convert newsprint capacity in Europe to packaging grades in the coming years, according to PPI Europe reports.
But North American exports in 2022 still remain at lower levels than last year, according to PPPC statistics. Overseas exports through July fell 11.5% compared with offshore exports a year ago.
Discover the latest trends and outlook for graphic paper at Fastmarkets Forest Products North America Conference, running September 27-29, where Derek Mahlburg will be presenting his latest forecast for global graphic paper.