Paper Industry Perspective
2nd Quarter 2012
Prices Flat to Down
By Jesse Marzouk
Prices for most types of printing and writing (P&W) paper held
steady in the second quarter of
2012, with the exception of coated
freesheet grades, which declined
approximately $20
per ton.
For the most
part, prices held as
producers removed
capacity as demand
eroded . Year-over-year through May
2012, all four types of
P&W paper (coated
mechanical, uncoated mechanical, coated freesheet , and
uncoated freesheet) saw demand
declines in North America; the
smallest was seen in uncoated
freesheet (2.5%), while the largest
was in uncoated mechanical
(16.6%). Uncoated mechanical
grades are under pressure as
demand for paper books continues
to decline and newsprint takes
share from uncoated mechanical
grades for other applications.
Newsprint prices in the east
remained steady throughout the
quarter as capacity closures and
market share gains from other
users besides newspapers supported a weak demand environment from newspapers. Newsprint
prices in the west, however, began
to weaken and slipped $10 per
tonne in the second quarter. This
may presage a drop in prices in
the east as overall demand for
newsprint in North America has
declined 7.3% year-over-year
through February. Furthermore,
White Birch Paper is targeting a restart of its Stadacona, Quebec,
newsprint mill at the beginning of
August and Kruger’s Corner
Brook, Newfoundland, mill will
continue to operate after the union came to an agreement with management. Lastly, export market
demand, which was a source of
strength for North American newsprint producers in 2010 and 2011,
has declined 25.8% year to date
through May in 2012. The strength
of the U.S. dollar against the Indian rupee and Euro have made it
difficult for producers to ship product into these markets.
Jesse Marzouk is a vice president and forestry products specialist. He has
appraised numerous U.S. and Canadian pulp, paper, and lumber-related companies
involved in manufacturing and distribution. Jesse received his MBA in finance from
Kellogg School of Management at Northwestern University, and has a degree in
finance and accounting from Indiana University.