Newsprint, Containerboard Makers All Pushing Prices for 2010

Dec. 10, 2009 - The newsprint market has turned. All the major producers have announced price hikes for the coming months, though the timing and amount vary among producers, say analysts for Deutsche Bank.

AbitibiBowater, White Birch, Kruger, and Tembec have announced a $25/metric ton price hike for both January and February.

Norpac announced a single $50/mton bump for January. Catalyst Paper also announced a $50/mton price hike for February after it deferred its December $50/mton price hike to January.

According to Mark Wilde, senior analyst at Deutsche Bank covering the Paper & Forest Products sector, reports suggest that price hike implementation has been partial and uneven. However, it appears that over time, producers will be able to implement the full hike.

North American newsprint list price in November increased $20/ton to $500/mton (East), Wilde said.

Demand remains very weak — consumption at U.S. dailies fell 23.6% in October and mill operating rate in October was 82%, he said.

Reports suggest that a slight uptick in demand has prompted AbitibiBowater to continue operations at its Clermont, Quebec and Liverpool, Nova Scotia mills, adding about 55-60,000 mtons of output through year-end.

“Meanwhile, we're aware of a number of situations where newsprint producers are trialing alternative grades of paper,” Wilde noted.

All the major North American containerboard producers have announced a $50/ton price hike in the East with most pushing for $70/ton in the West. The price hike is driven by large supply reductions, expiration of black liquor credits, improving export markets, and a falling US dollar, Wilde said.

The biggest issue? Domestic corrugated box demand remains weak. The prospects for a domestic hike would be enhanced by further supply rationalization, Wilde explained.

“We continue to believe Smurfit-Stone Container will announce roughly 1.0 million tons of closures around year end. If that occurs, it would push operating rates back into the mid-90's,” Wilde said.

In Europe, several major producers have announced a EUR 50-60/ton price hike on unbleached kraftliner for shipments beginning Jan 1.

SOURCE: Deutsche Bank

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