Paper Advance.com

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SOURCE: www.foex.fi

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Market comments May 8, 2012 :

US NBSK – The hostile bid by Resolute over Fibrek shares appears to have succeeded with over 63% of the shares now in its possession and with Fibrek’s board resigned. Over Q1, Fibrek reported a loss in its financial results. Market pulp demand in the US market remains lacklustre with declines continuing in graphic paper production. With demand pull from China also down, at least temporarily, and with difficulties in finding advantageous freight rates, supply pressure has increased in the regional North American market. Consequently, spot volumes have been offered at reduced prices even if those volumes have not been all that substantial. The downside pressures impacted also our contract price benchmark. The index value retreated by 71 cents, or by 0.1%, to 899.29 USD/ton.

US Newsprint – After a number of closures, the North American supply is expected to go back up in June with the planned re-start of the earlier closed Stadacona mill, owned by White Birch. Exports from Europe have shown a healthy increase of over 20% during Q1. Exports from North America have shown a very similar 20% drop. Within the regional demand, consumption of the US dailies continues to fall at a rapid pace but otherwise the retreat in demand has slowed down. Total North American demand of newsprint was down by “only” 1.7% in March and by 2.6% cumulatively. Both mill and publisher inventories fell in March. The PIX US Newsprint 30lb index retreated by 43 cents, or by 0.07%, settling at 621.76 USD/ton, and the 27.7lb index fell by 46 cents, or similarly by 0.07%, and closed at 662.43 USD/ton.

Paper industry –The publication sector speakers in the PWC conference in Vancouver sounded more optimistic over the future of printed media than what most of the audience had expected to hear. Maybe part of that was just pep talk in front of an audience which badly needed encouragement. Yet, there is some data that backs up that cautious optimism. The general downturn trend of the graphic paper sector has not reversed. But, it appears to have slowed down. In the US, the preliminary data from April suggests that the decline in coated and uncoated free sheet was “only” little over 2% in March. In newsprint, the total shipments to North America were down by just 0.8% in March and 2.2% on cumulative basis. Book sales were actually up in early 2012 from early 2011, in spite of the double-digit growth continuing in the sales of electronic reader devices. Ad spending is still down, though. The preliminary May numbers suggest a 6% drop in ad pages, according to PIB. In early 2012, advertising is, however up in niche areas, such as Spanish-language magazines. The printing and support index by the Federal Reserve slowed down in March but remained above the all-time lows. In April, new orders were up, even relatively strongly. In Europe, the situation is worse with the recession pushing also paper industry activity even lower. Capacity closures have been fairly substantial. But, the demand drop has been even faster. Consequently, the operating rates, instead of improving, were actually lower during Q1 2012 than what they had been in Q1 2011. At 87% for printing and writing papers, excluding newsprint, they were also a full 5 percentage points lower than the 92% operating rate recorded in North America.