Paper Recycling Hits Record High

In 2007, an all-time high of 56 percent of the paper consumed in America was recovered for recycling, achieving a significant industry goal five years ahead of schedule. The American Forest & Paper Association (AF&PA) also set a new goal of 60 percent recovery by 2012.
"Industry is demonstrating a real commitment to environmental sustainability by continuing to set and achieve aggressive paper recovery goals," said AF&PA President and CEO Donna Harman. "Whether at home, school, or work, paper recovery is something we can all do to make a difference."
"While the upward trend in recovery rates is most encouraging, getting to 60 percent is an important challenge for all of us. Everyone has a role to play in our effort to sustain and grow the country's recycling programs and recover more paper," continued Patrick J. Moore, chairman and CEO, Smurfit-Stone Container Corporation. Smurfit-Stone is a longstanding AF&PA member and is one of the world's largest paper recyclers. The company collected more than 7 million tons of recyclable material in 2007.
The 54.3 million tons of paper recovered in 2007 add up to more than 360 pounds for every man, woman, and child in America. Each percentage point is the equivalent of approximately one million additional tons of recovered paper -- enough to fill more than 14,000 railroad cars.
Joining the announcement at the industry's 131st Annual Paper Week conference, Maria Vickers, Deputy Director of the U.S. Environmental Protection Agency's Office of Solid Waste applauded the paper industry's achievements in increasing paper recycling, noting that "in 2007, the US recycled over 25 million tons more paper than was recycled in 1990. This increase in paper recycling reduced emissions by more than 97 million metric tons of carbon dioxide equivalent, comparable to the annual emissions of nearly 18 million cars." She also noted that EPA and AF&PA continue to work together on projects to stimulate paper recycling across the country.
Matthew McKenna, president and CEO of national nonprofit Keep America Beautiful, a partner of AF&PA on projects to promote paper recycling in schools, praised the Association and its members for their efforts. "True environmental progress, like what we celebrate today, comes when industries work together with communities, organizations, and dedicated individuals to make things happen." Paper.com recently created a store on its website that exclusively markets thousands of environmentally friendly papers.
SOURCE: American Forest & Paper Association

SMART Papers Completes Acquisition Of Domtar's Premium FSC-Certified Writing, Text And Cover Brands

We reported on the progress of Smart's acquisition, on April 29th, the purchase was completed-

Hamilton, OH - Premium North American papermaker SMART Papers recently announced that it has completed the acquisition of seven well-known Forest Stewardship Council-certified brands of premium writing, text and cover and cotton stationery brands from Montreal-based Domtar Corporation.
The brands acquired are Feltweave, Nekoosa Linen, Nekoosa 25% Cotton, Nekoosa Bond, Skytone, Solutions and Proterra.
SMART Papers sales, marketing, customer service representatives, manufacturing and warehousing will serve all Domtar premium uncoated customers from SMART Papers' centrally located U.S. headquarters and warehouse in Hamilton, Ohio.
"We believe our customers will strongly benefit from the addition of these well-respected brands to our family of environmentally preferable and recycled uncoated and coated products," said Tim Needham, Chairman of SMART Papers. "These brands perfectly complement our strategy as the market leader for premium environmentally sustainable, best-value, text, writing, cover and cotton writing brands."
"Our newest FSC-branded papers are a good match for our manufacturing technology, our mill capacity, and our North American distribution strategy," added Dan Maheu, President and COO of SMART Papers. "They build on our focus to provide entire FSC-certified product lines to our customers."
Maheu said that SMART Papers will provide first-tier support to all of its existing and new customers. Products will be distributed from the Hamilton manufacturing center and our distribution center in Southern California.
"We planned this acquisition carefully," said Maheu. "We have started manufacturing the brands and anticipate a smooth transition for our new customers."
He added that the acquisition "is a strong complement to our premium coated paper brands—the world standard in triple-cast-coated papers, Kromekote, and our popular Knightkote Matte brand."
Paper.com is the largest source for online papers and markets all the Smart grades including the new Domtar line.
SOURCE: SMART Papers

International Paper Mill Explosion

An explosion occurred at International Paper Company's Vicksburg, MA containerboard mill. The explosion happened when the mill was restarting a recovery boiler. The mill produced 560,000 tons/year of linerboard and will be down for minimum of 2 weeks. This capacity represents 10% of IP's total production and 2% of USA linerboard supply. This product is used for making boxes.

Smart reintroduces Passport Grade

Smart Papers has recently upgraded and added four new colors to its Passport line, which now boosts 30% post consumer recycled fiber. The full product line, now offered by Paper.com LLC include 14 colors in both smooth and felt finishes. The Paper.com web site markets the complete line, ready for immediate shipment.

North American Printing / Writing Statistics

From PaperAge
Uncoated Free sheet
2007 shipments 11,665 million tons (down 4.4% 2006)
Imports 543 million tons
Demand 11,757 million tons (down 5.5% 2006)

Total Printing and Writing Papers
2007 shipments 27,379 million tons (down 0.8% 2006)
Imports 3,298 million tons
Demand 29,457 million tons (down 3.0% 2006)

North American Uncoated Market Capacity Shrinks

Producers of Uncoated Wood Free papers have curtailed over 2million tons of capacity since January 2007. We look for additional shuttering of equipment and increased paper prices during 2008. Two price increase announcements have already occurred in first 4 months of 2008. We have noted a steady decrease in demand, and 2006 to 2007 illustrated this with a 5.5% decrease. While the uncoated capacity decreased to 13million tons, the entire Printing and Writing market also witnessed a decline to 32.5million tons (3% decrease). The reduction started in the late 1990s. Today, this reduction is greatly assisted by the substitution of electronic communication and continuous increase in postal rates. Those mills that must buy fiber (pulp) because they are not integrated were the most inefficient, and therefore the first to shut down. Many mills suffer with inability to increase pricing enough to cover the advancement of costs such as fiber, chemicals, energy, labor, and shipping.

Uncoated Freesheet Pricing

Uncoated free sheet prices continued to rise in April, this after the $60/ton price hike initiatives announced for March are all in place.
Business Papers, (copy papers) prices rose $50/ton in March and
another $10/tons announced for April. Offset roll prices rose $30/ton in March and another $20 in April. At the same time, demand appears to be
easing.

Demand for Printing Papers

While the North American market is witnessing decreased demand, emerging markets such as Brazil, Russia, India and China are enjoying increased demand. These countries have both a rising population as well as increased household incomes. As the North American manufactures’ consolidate and introduce the rationalization of assets these other countries are building new paper machines.
Worldwide, we see global demand increasing, at a decreasing rate; more color, less monochrome desk top printing; Offset printing will decrease and digital (variable) printing will increase; and, Direct mail will increase at a decreasing rate.
Our prediction is North America will look for more personalized, better quality printing. Color copiers and color laser printers as well as digital presses will become more popular.
Paper.com, a leading web based marketer of paper, has focused on high quality laser papers as well as digital papers to service this growth. The site firmly believes the future is in personalized marketing communications in color. They also offer most of the grades in an environmentally friendly version.

N.A. Printing/Writing Paper Inventories Decline

Total North American printing and writing paper mill inventories plunged -19.3% to 2.0 million tons in March compared to 2.5 million tons in March 2007, the Pulp and Paper Products Council reported. Shipments and demand for total printing and writing papers were down -4.9% and -4.7% respectively. North American mills operated at 94% (shipments-to-capacity) compared to 92% in the year-ago period. Total production dropped 6.5% to 2.25 million tonnes.

Imported Lightweight Thermal Papers may see New Duty

Recently, the US Department of Commerce announced its preliminary decision to apply a duty ranging from 5.7% to nearly 60% to certain Chinese and German producers. The study, introduced by Appleton Papers, outlines subsidies to producers of lightweight thermal papers. These are papers used for such items as gas and grocery store receipts, sometimes known as point of purchase sales receipts. Final determination will be announced later this summer.

Newsprint Pricing

April prices for 30-lb ‘standard’ newsprint raised $20/ton to $660/tons, this after,
4 of 6 consecutive $20/ton price advances were all implemented. Implementation of the last 2
installments would take prices to $700/ton by June. Further price moves may be ahead.

Oji Starts US$1.95 Billion Paper Project in China

Japan’s Oji Paper Group has begun construction on a $1.95 billon paper project in Nantong, east China’s Jiangsu Province, after five years of preparation. A joint venture company named Jiangsu Oji Paper Co Ltd was set up last year, with Oji accounting for 90% of the investment and the Nantong Corporation the remainder. The first phase of the project is scheduled for 2010 with a 400,000 tonne/yr woodfree paper machine. The startup of the mill’s second 400,000 tonne/yr fine paper machine was pushed back to 2015 from 2012.

Rising Raw Materials for Paper producers

Rising raw material costs continue to reduce paper industry margins. Domtar issued a release today warning of $35-45MM in incremental raw material costs for the corporation. Energy, fiber, chemicals and transportation costs are all on the increase. The first quarter for 2008 increase comes on top of $21MM in additional raw material costs in forth quarter of 2007. Look for more paper price increases from manufactures, just to stay whole!! Domtar, International Paper, and Boise – the 3 big producers, are already preparing end users for an announcement. Companies, such as Paper.com - the largest web based marketer of paper, often are forced to pass these price increases along. The low margins in the paper industry just does not allow for the site to absorb the new price advancements.

Hardwood pulp prices creep higher

By Tom Stundza – Purchasing Magazine
Several hardwood pulp producers had trouble getting paper mills to accept all of a $30/metric ton price increase this month, but will continue pushing buyers in May. The purchasingdata.com survey of buyers matches data in the Pulp and Paper Week newsletter that northern bleached hardwood kraft pulp cost an average $810/metric ton in April, up just $5 from March. AbitibiBowater, Alberta-Pacific and Marubeni Pulp & Paper North had sought $835.

COATED GROUNDWOOD MARKET UPDATE

Prices have been announced to increase $60 - 75/ton in April on most coated publication grades.
The industry witnessed shipments rose over 10% so far this year illustrating strong conditions. However, current market demand illustrates more tonnage available because of high paper prices and a slower economy as well as announced reductions in some cataloguing budgets.

Newsprint Demand continues to decline at a brisk pace

Consumption of paper at the U.S. dailies for the first two months of 2008 fell 11.6% . Part of the issue is that newspaper widths continue to drop, with 44" widths now becoming common. However, a bright spot is that the 7.2% decline in total U.S. consumption for the first two months is noticeably less than the double digit declines seen in the first half of 2007. Also, overseas exports showed strong growth in the first two months of 2008 – up 25.1%.

Domtar Selling Paper Line to SMART Papers

Domtar Corp. is selling its text, cover and writing product line of papers to SMART Papers of Hamilton, OH, an independent manufacturer and marketer of premium cast-coated, matte-coated and uncoated printing papers. Closing is scheduled for April 21. Domtar grades designated by the agreement are Solutions, Feltweave, Nekoosa Linen, Nekoosa Bond, Nekoosa 25% Cotton, Proterra and Skytone. Paper.com will market all these new Smart Paper products.

PAPER OR PLASTIC?

From New York Times Magazine April 20, 2008 by CLAY RISEN

It sounds like a big step forward in environmental awareness — Whole Foods, the eco-friendly grocery chain, will ban conventional plastic shopping bags in its 270 stores. San Francisco has banned them in some places; so have Uganda and Bangladesh. But paper bags, it turns out, are hardly an ideal replacement. To ensure sturdier bags, most producers use primarily new paper, which means cutting down more trees. Then chemicals are used in the production of the bags to give them strength. According to a study by Franklin Associates, a consulting firm, plastic bags require significantly less energy than paper over the course of their life cycle, from manufacturing to transportation. Indeed, because paper bags are seven times bulkier, on average, than plastic bags, it takes a lot more energy to transport paper bags to grocery stores. Bulk matters on the other end too: paper bags take up nine times as much room in landfills, and recycling plastic uses 91 percent less energy than recycling paper. Which isn’t to say that Whole Foods has it wrong about plastic bags. Most are made from a nonrenewable resource, petroleum, and contain their own mix of toxic chemicals. They may be more energy-efficient with recycling, but only about 1 to 3 percent of plastic bags are recycled, compared with about 10 to 15 percent of paper bags. And millions of the 100 billion bags Americans throw away each year end up as litter, clogging storm drains and choking sea animals. A third way may be the only good choice. As part of its ban on regular plastic bags, for instance, San Francisco is encouraging stores to switch to cornstarch-derived plastic bags, which break down in about a month and release no harmful chemicals. And many stores have started to encourage shoppers to bring reusable cloth bags, or to offer them for sale at a cheap price.
Paper.com recently introduced a Green Store on site that carries all the popular 'earth friendly' paper grades.

SMART Papers Modernizes Synergy Writing, Text And Cover Brand With New Colors, 100% PCW Fibers And FSC-Certified Papers

SMART Papers has modernized and expanded its high-value, premium uncoated Synergy writing, text and cover brand with four new fashionable colors and new heavyweight papers. Selected papers feature 100% post-consumer fiber and Forest Stewardship Council certification.
Synergy is the fifth major brand improvement by SMART Papers in the last year, underscoring the U.S. premium papermaker’s expanded commitment to designers and printers who specify writing, text and cover papers. The company’s other brand upgrades are Genesis, Pegasus, Carnival and Passport.
SMART Papers is the largest independent North American manufacturer and marketer of premium cast coated, matte coated and uncoated printing papers. Synergy, with hundreds of options combining colors, textures, weights and sizes, is one of the company’s many high-quality uncoated brands. It provides graphics professionals a contemporary color palette, distinctive finishes, cotton sheets and environmentally responsible options.
sheet. Weights range from 24-pound writing, 70- to 100-pound text and 80-pound cover to 130-pound double thick cover.
Synergy is also meeting growing demand for environmentally responsible papers with a 92-bright White and elegant Natural, which are 100% PCW and FSC certified. These colors are available in seven basis weights, including two new cover weights and multiple sheet sizes. The remaining Synergy colors are manufactured with 30% PCW or 25% cotton fiber.
Synergy’s four new fashionable colors include the rich earth tones of Squash, Toffee and Sienna, as well as the cool, pale-blue Wisteria. The majority of the 16 colors, from 95-bright Pure White to Serious Black, are available in Smooth and Felt finishes. The new Squash and Toffee also are available in Linen.
Synergy’s elegant 25% cotton sheet is available in three colors, two basis weights and Smooth and Light Cockle finishes. The cotton sheets feature a random watermark with the universal recycled symbol.
The Smooth and Laid text finishes and 25% cotton sheets are guaranteed to run on copiers, laser and inkjet printers. All sheets are acid free and archival, process chlorine-free and elemental chlorine-free.
Selected Synergy cover stocks are certified for use on HP Indigo presses and available through the recently announced i-Xpress for HP Indigo Paper Program. The HP Indigo-compatible sheets are available for shipment within eight business days from date of order. Minimum order is two cartons.
Synergy applications include annual reports, invitations, stationery, brochures, packaging, craft and hobby, greeting cards, business cards, pocket folders and hang tags. Envelopes are also available.
Paper.com has all the Smart Paper items, in stock and ready for immediate shipment.
SOURCE: SMART Papers

South American Paper Industry

Report form Deutche bank after visit to Latin and South America

No signs of a looming surge in South American white paper exports.
There are only 2 major Latin uncoated white paper producers:
International Paper and Suzano.
Both are focused on producing for the local (Brazil) and regional (South America) markets. All other Latin players are focused on expanding market pulp capacity for exports. A constant message was, "produce pulp in low-cost locations, produce paper close to the customer."
The falling US$ has been "good news/bad news" for many Latin companies.
The bad news? Most firms produce US$-denominated commodities, typically with most costs in local currencies. Thus, as the Brazilian and Chilean currencies have appreciated, production costs have risen in US$ terms. The good news? The Latin producers still enjoy among the lowest costs in the world. At the same time, rising currencies and other issues are forcing high-cost producers in Canada & Europe to shutter capacity. This is resulting in higher-than-expected prices.

Smart Labels

Today's smart labels come in many forms and functions, not just RFID.
by Leah Genuario

Smart label sales are expected to double from the 2006 estimate of 5,000 million units to 10,000 million units by 2011, according to Labels, a study published in December 2007 by The Freedonia Group. The study defines smart labels as devices capable of incorporating data and manufactured with read/write capabilities. It places emphasis on RFID labels, stating that the technology “promises to revolutionize applications from supply chain and inventory management to health care, libraries and air travel.” In addition, “dramatic gains are thus expected, both in extant and emerging uses.”

Quebecor World Signs Contracts

Quebecor World continues to operate under bankruptcy protection, and it will likely remember those entities who continued to support the printer. . .as well as those who turned their backs on the venerable printer.

That turnaround faces a treacherous road, for now. Quebecor World has opted to close its Maggot, Quebec facility. The plant produced magazines and retail inserts for the U.S. and Canadian markets. About 300 full-time jobs will be lost, including 200 positions already on temporary layoff, which will be made permanent.

They received final approval for US$1 billion debtor-in-possession (DIP) financing. The financing is comprised of a term loan of $600 million and a revolving loan facility of $400 million.

In other company news, Quebecor World has been awarded a new contract with The McGraw-Hill Companies extending into 2014. The new agreement is valued at approximately US$285 million over its term and covers a wide range of educational textbooks, ancillary products, professional learning tools and catalogs.

The printer’s Magazine Group signed renewal and new business agreements that will add 33 new titles to the company’s Targeted Publications platform. Included is a multi-year agreement to print 16 magazine titles for Meister Media Worldwide, a leading agricultural publisher based in Cleveland. The printer also secured a new multi-year pact to print 100 percent of a nine-title portfolio of magazines published by Stamats Business Media of Cedar Rapids, IA.

Other pacts include a multi-year renewal agreement with Affinity Group to print all of the publisher’s 30 magazine titles. Quebecor World also reached a multi-year deal to print two weekly magazines for Amos Publishing of Sidney, OH—Coin World and Linn’s Stamp News.

However, its own parent, Quebecor Inc., may switch to another printer to handle some of its magazine titles. Publications TVA, Quebec’s largest consumer magazine publisher, is considering entering into printing agreements with rivals of Quebecor World for a handful of publications, says a Quebecor spokesman. The spokesman cited “practical and logistical reasons” being mulled. No decision has been made, and the vast majority of TVA publications will continue to be printed by Quebecor World.

U.S. Forest Service Survey Reveals Positive Impacts

The most recent United States Department of Agriculture (USDA)
Forest Service data confirms that United States forestland is roughly as abundant today as it was 100 years ago. The Forest Service’s Resource Planning Act 2007 (RPA) data reveals both state and regional increases in forestland across the country.
Key findings in the report -
There are 750 million acres of forestland in the U.S. today, about the same as in 1907.
11 states had increases of more than 25 percent over the last century, nine had increases of in excess of 30 percent.
Overall, forestland in the northern U.S. has increased by nearly 30 percent.

Pulp Mills Boost Prices ….. Again

Pulp producers are informing customers it will increase northern bleached hardwood Kraft (NBHK) pulp prices by $30 per ton, reports RISI, the forest products news service. New list price on NBHK would rise to $835/metric ton in North America. NBSK prices remained flat in March at $880/mton. At $900/mton, fluff prices are now up $170/mton over the last 18 months. As pulp costs increase, paper prices will also advance

Coated FreeSheet market Update

Coated Freesheet are those papers used for higher end publications. These grades are generally chosen for their brightness and gloss characteristics. The top producers in USA include (Mill / capacity 000 / Market Share%)

NewPage / 2,235 / 40%
SAPPI / 1,390 / 25%
Verso / 595 / 10.5%
Appleton / 315 / 5.5%
Tembec / 310 / 5.5%
This market continues to be very tight. The producers have consolidated and rationalized assets with shuttering equipment to generate operating rates of 98%. Demand is actually down nearly 6%.

Marcal Paper Mill Purchased by Fund

The bankruptcy court approved a $160million purchase price for Highland Capital to purchase Marcel Paper Company.

Staples ends Relationship with Asia Pulp and Paper

After many years of importing ‘economical’ copy paper from Asia Pulp and Paper, Staples announced it would not longer purchase product from this source. This accounted for nearly 10% of the the paper Staples used for their private “red box’ brand. The company was pressured to stop supporting this vendor because of the lack of adherence to environmental mandates.

Fraser curtails two Paper Machines

Fraser will indefinitely curtail production on two paper machines (#13 and #14) at the Groveton, NH mill on April 13th. These two are in addition to the #12 machine shut down in late 2007. Fraser’s management sited poor economics.

Printing Sales up in 2007

PIA/GATF reported on their survey results for forth quarter of 2007 that printer sales increased 2.35%. The survey confirmed that larger printers grew faster than printers with fewer than 50 employees. Printers continued to site energy as the #1 cost increase for 2007 (followed by employee benefits and paper costs).

UNCOATED FREE SHEET Market Update

Demand for uncoated, business papers, increased slightly so far this year. A substantial portion of the $60/ton price hike initiatives on Uncoated free sheet grades were implemented in March. Business paper prices rose $50/ton, while Offset roll prices rose $30/ton.

COATED GROUNDWOOD Market Update

Publication paper prices remained flat in March, but producers have announced a $60/ton price increase for early April. Due to tight markets, NewPage announced it would delay closing its Niagara, WI, mill, with 215,000 tons of capacity, until the Fall. Production costs on components such as pulp, energy, chemicals, and shipping costs continue to increase.

White Birch Purchases SP Newsprint

We reported that White Birch and SP Newsprint were in discussions on an acquisition; White Birch just announced $350million purchase of SP Newsprint.

Linerboard price hike flops

By Tom Stundza – Purchasing Magazine
North American $50/ton containerboard price increase has failed to stick in March because of deteriorating demand for boxes, according to RISI, the forest products news service. All seven major containerboard mills had fallen in line with the price hike but this month’s buyer surveys by Purchasingdata.com confirm that the market price average for 42-lb Kraft linerboard remains at $555.
RISI says there has been strong resistance from independent box converters, who believe they would be unable pass through any increase in finished box prices. Some linerboard producers may try again in April or May--although weak box demand and growing containerboard inventories in a worsening U.S. economy could make that difficult, says analyst Ross Gilardi at Merrill Lynch & Co. He says he expects box demand to remain weak for some weeks, “which could make it challenging for box producers to pass a price increase through to customers.”

The Push for a Greener Industry

Publishing Executive News
When the mayor of New York, a high-ranking city commissioner and other Big Apple bigwigs gather at the Empire State Building for a press conference, you can usually expect the announcement of some big public works project, such as a new skyscraper. What brought these dignitaries together, however, was a different sort of public works: a campaign to encourage recycling among the city’s 8 million residents, led by a $3 million advertising blitz that will put
posters on buses and subways, as well as commercials in movie theaters and on Time Warner cable channels.
Paper.com introduced a Green store last year http://paper.com/department/green/ with thousands of environmentally friendly products to support citizens that seek sustainable forest initiatives.

Uncoated Free Sheet Update

Uncoated white paper prices continue to push upward - trade sources suggest that overall price levels are up $40-60/ton since beginning of year. The cut-size (desktop and copier papers) market remains the strongest. Domtar, International Paper, Georgia Pacific and others are out with a $60/ton March price hike on 50-lb offset rolls, with other Uncoated Free Sheet grades set to follow. The increase comes shortly after many producers announced a $60/ton
increase on cut-size paper for February.
Paper.com still has products available on site that have not been increased, subject to availability.

The declining North American UFS market – causes and future trends

By John Maine, Vice President, World Graphic Papers, RISI

The North American uncoated freesheet market used to be a high growth market. It consistently outpaced the growth in the economy by 1-2% per year as business copiers, home printers, faxes and a myriad of other end-uses expanded rapidly, fueled by technological development and plummeting prices for business machines.
This trend ended abruptly in 1999. Almost overnight, the uncoated freesheet market morphed from a profitable high-growth business, to one that has been plagued by declining demand and lackluster profitability. It took the industry years to recognize the change in trend, and chronic oversupply dampened profitability in the market.
What Caused the Market to Decline?
There were two broad factors that led to the decline in the market:
1. The loss of print markets to electronics
2. The loss of market share to alternative grades of paper
When discussing the decline in the uncoated freesheet market, most people refer to the primary cause as the shift to electronic technology.
This was indeed the primary driver behind the declines in demand for tablet, envelope, stationery, carbonless paper, technical papers and form bond.
However, a very important and often overlooked fact is that a third of the market share loss since 1999 was caused by a shift to alternative grades of paper. The introduction and successful growth of uncoated mechanical offset substitutes in particular has displaced about 840,000 tons of uncoated freesheet demand in North America since 1999. Furthermore, the rapid growth of cheap, mostly Asian, coated sheets has also displaced about 250,000 tons of uncoated freesheet sheets, mostly in the “cover, text and bristol” category.

Major Newspapers continue 4-Year Decline

In just four years the top newspapers in the U.S. have collectively lost about 1.4 million copies in daily circulation. But since the reported numbers come out every six months, the overall decline for individual papers may not hit home formany. Each fall off is usually in the low- to mid-single digits -- but it sure adds up. The industry has lost about 10% of circulation overall in the past
four years among the leading papers.

Hewlett Packard adds Inkjet Printer to Products

HP is the largest printer maker and has introduced a faster Indigo Press as well as
a wide format inkjet press.
The Indigo 7000prints 120 four-color pages a minute, while the inkjet press can print newspapers, books and signs.
The Indigo Press models have captured 49% of the entire digital press market share for high volume business. Xerox’s IGen has 36%, and Kodak’s NexPress enjoys 15%.
Paper.com has an entire section on site with all the major digital and inkjet paper grades.

U.S. cotton prices are surging ahead

By Tom Stundza – Purchasing Magazine
U.S. cotton prices are rising this month, as global prices are the highest in a decade because world demand is exceeding supply for the second consecutive crop season. The Cotlook A Index of world cotton prices has averaged 70¢/lb so far in 2007-2008 .The price average is 11¢ higher than during the first seven months of the previous year.
As a result of the gap between world production and consumption, world cotton ending stocks are projected to decline this crop season by 9%, or 1.1 million tons, to 11.5 million tons. But some analysts say it could slide as low as 10.7 million tons, further boosting spring and summer prices.

What does this mean for Paper? All our premium 25-100% cotton grades are directly affected by this increase in cost for this fiber. Paper.com tries to maintain level prices, but when raw material costs escalate like this, it becomes nearly impossible

Paper Mills close and Paper Demand decreases

We often report on the paper industry’s recent initiative of asset rationalization whereby mills are shuttering capacity or consolidating with other manufacturers. This trend is forecasted to continue into the foreseeable future. Recently, we outlined NewPage, Domtar and Fraser papers curtailing production equipment. StoraEnso consolidated its North American facilities with NewPage, as did Bowater with Abitibi. Internet is certainly taking a piece of printing demand and the higher cost of postage makes mailing
printed material more expensive. Even FSI (Free Standing Inserts – those promotions you get in the newspaper) have declined 5% from 2006. One expert commented that even Television advertising is no longer a leading influencer and loosing its effectiveness.
Most paper prices have increased; this certainly has not assisted with demand. One comment on all the sudden paper price increases is these advances have not kept up with the cost increases for such expenses as fiber, energy, shipping and chemicals. Look for more paper price increases and less paper consumed in 2008.
One industry expert stated that although demand for paper is decreasing approximately 2% a year, the producers are shuttering 6% of capacity each year.

Paper Industry continues to see GREEN Initiatives

Simone and Schuster, a large trade book publisher, just announced a new paper policy that requires at least 10% of the papers they purchase must originate from FSC Certified forests by 2012. The policy also calls for increase in recycled content from 10% to 25%.
In another news related event, Domtar recently shipped a newly developed specialized lightweight bible paper that is FSC Certificated. RRDonnelley will publish the bible for publisher Thomas Nelson. This is the first FSC bible.

NewPage confirms Plans for mills

NewPage confirmed its plans for the new capacity acquired with the purchase of StoraEnso.
No11 Paper Machine – Rumford, ME will close permanently
No 43 and 44 and pulp mill in Niagara, WI will be closed permanently.
No 95 in Kimberly, WI will be permanently shut down
Converting mill in Chillicothe, OH will be shut down permanently

Heidelberg outlines Growth by Printing Process

Heidelberg outlined sales growth rates by Primary printing process as
Flexography 5.5%
Combo sheet-web 5%
Digital 3.8%
Sheetfed 1.7%
Coldset Web 1.3%
Heatset Web .12%

Update on Coated Publication Groundwood Papers

The major publication producers such as Kruger, Myllykoski, Catalyst, AbitibiBowater and NewPage have announced a $60/ton LWC price increase for early April. UPM and Verso are
expected to follow. The current market is very tight, with backlogs of 10 to12 weeks.
We reported prices rose $30-60/ton in January. The price on 40# LWC have risen $190/ton between June of 2007 and January of 2008.

US Pulp and Paper Industry Posts 4Q Results

Earnings for U.S. paper and forest companies fell 1.5% in the fourth quarter, compared to the year-ago quarter. The collective profit margin totaled 4.2%. It was the second consecutive quarter above 4% for the group of 21 publicly traded companies. Fourth quarter sales for the group increased 1.0%, driven by higher prices and increased volumes for most pulp and paper products.

RR Donnelley Fourth Quarter Loss Widens

R.R. Donnelley & Sons reported a fourth quarter net loss of $293.3 million, compared with a year-ago loss of $1.2 million. The results included pre-tax charges of $477.2 million. Quarterly net sales increased 25% to $3.09 billion, boosted by multiple acquisitions Donnelley made over the past year.

2007 Reduction in Uncoated Capacity

Mill Location tons
Inter’l Paper Pensacola, FL 350,000
Dirigo Gilman, VT 70,000
Georgia Pacific Wauna, OR 110,000
Boise Wallula,WA 135,000
Fraser Madawaska, ME 70,000
Domtar ME,WI,QC 240,000
Dryden, ON 315,000
Neenah Housatonic, MA 15,000
Urbana, OH 40,000
Wausau Groveton,NH 105,000
Valentine Lockport, LA 35,000
2007 total tonnage reduction 1,425,000 tons

Some Recent Notable Acquisitions

Acquiring Company Purchase year
Domtar Weyerhaeuser 2007
Abitibi Bowater 2007
Investor Group St Marys 2007
PaperlinX Cascades 2006
NewPage StoraEnso NA 2008
Aldabra2 Boise from Madison Dearborn2008
Brookfield Longview Fibre 2007
Rank Blue Ridge 2007
International Paper Central Lewmar 2007
Neenah Fox River 2007
Atlas Finch 2007
Apollo / Versa Int’l Paper coated 2006
Glatfelter NewPage Carbonless 2006
Koch Georgia Pacific 2005
Kohlberg Inter’l Paper Industrial 2005
Mohawk Inter’l Paper Specialty 2005
Smart Paper Fraser Wisconsin mill 2005

China’s Paper Industry continues to Grow

China may pass the USA as the world's leading producer of paper and board. RISI just reported on a survey that outlines in 2007, USA produced 84million tons compare to China at 65million. But China’s capacity continues to grow.

White Birch Completes Acquisition of SP Newsprint

White Birch Paper has bought the fourth largest newsprint producer, SP Newsprint, for $350million in cash. White Birch is now the second largest newsprint North American producer with AbitibiBowater as #1. (FYI. #2 largest in world is Norske Skog out of Norway). This acquisition increases White Birch capacity to 2.1 million tons or 18% of USA market share. The market leader, AbitibiBowater, has 47%, and #3 is Kruger with 10%. The top 3 North American producers have 75% of the domestic market share.
Note on Newsprint market: AbitibiBowater announced another $60/ton price hike increase for the second quarter. Just like the $60/ton increase for the first quarter

Another Wave of Price Increases

On the uncoated front, Domtar, International Paper, Georgia Pacific and Evergreen have all announced a $60/ton March price increase on 50lb offset rolls, with other uncoated freesheet grades set to follow. The increase comes shortly after many producers announced a $60/ton increase on business papers for February
Note: demand for uncoated is actually weaker; however, the market remains tight because capacity is shrinking (reduced by 1.4Million tons in ‘07), with further capacity reduction scheduled in 2008.

Publication Papers to Increase in Price

Recently, both Kruger and Myllykoski have announced $60/ton price increase for publication papers for early April. These two suppliers are smaller, but we think other producers will follow with the magazine and catalogue market remaining extremely tight. Deutsche Bank - Equity Research reported that price on 40lb coated papers have risen $190/ton between June of 2007 and January of 2008.
Shipment volumes rose 11.5% this December versus 2006 (+2.9% YTD).

Packaging Grades also see Increased Pricing

According to Mark Wilde of Deutsche Bank
The 7 largest producers (75% of North American market) have announced a $50/ton price hike for early March. Inventories remain lean, operating rates are high, and fiber costs are rising. The big obstacle will be making a containerboard price hike "stick" in the wake of sluggish box demand. December 6.8% drop in box shipments appears an "overstatement" on the downside, but it does raise a yellow caution flag. Smurfit-Stone plans to install six new
corrugators (one per month) in the first half of '08 to create "super" plants, which will be capable of replacing as many as 2-3 existing plants.

Saving Money on that Printed Piece

The power of the printed word and personalized promotional direct mail pieces continue to grow. Direct Magazine just reported that printed material could cost a marketing department 1-4% of a company’s revenue. A few suggestions to assist with keeping the cost down (note postage increase was just announced for May2008)-
-Adjust the size of your printed piece to a common press size – using irregular designs, even if you are off ¼ inch will cost you money
-With over 40,000 printers in USA it important to research and negotiate with the printer that have the proper equipment and a history of dealing with jobs similar to yours.
-Coordinate printing with other departments in your company – awarding more work to one printer allows you more leverage
-Split up and evaluate each piece of the job, printing and distribution equates to half the
cost of the job, paper, the other half. You may be better supplying paper to the printer. Web sites such as www.paper.com has over 35,000 papers all at competitive pricing. They will ship directly to your printer.
-Consider a lighter weight paper if piece is to be mailed.
-Do not be afraid to work with a printer away from a major city; printers farther away are generally more economical and produce excellent work.
-Ask about the different types of printing –digital, offset, letterpress, and flexography all generate different results at different prices.
-Talk to several printers for competitive bids, remember, the cheapest bid may not produce the best results – but a minimum of 3 bids keeps everyone honest.

AbitibiBowater sells Snowflake Mill

As part of the antitrust agreement, allowing Abitibi and Bowater to consolidate, the Snowflake, Arizona mill was sold. It was sold for $161million dollars, which most industry experts thought was low. Perhaps because the mill’s only product was newsprint, a shrinking market demand.

Paper.com as one of the World’s Largest Paper Websites Introduces Environmentally Friendly Papers

P. Scott Vallely, a paper industry executive; and John Engel, an expert in web design and internet marketing have announced the introduction of a new store on the Paper.com. website to market environmentally friendly papers. This section of the site has nearly 800 papers focused on a clean world. Many grades are produced with 100% recycled fibers, or completely tree-free, as well as Chlorine free. The site also markets papers that are manufactured with alternative energy. Dozens of the grades are FSC certified, and carry the Green seal certificate. Visit the “green Store” at Paper.com http://paper.com/department/green/
The site boosts to have the greatest assortment of ‘green papers’ and they are all available for immediate shipment and offered at competitive prices.

The website has nearly 50 vendor warehouses throughout the United States and ships within 24 hours after receipt of order – from a single sheet of paper to multi truckloads. The site now enjoys nearly 8000 unique visitors every day clicking onto www.paper.com

The company has recently made the list of top 500 retail websites in USA as reported by Internet Retailer.

Fraser Shutters Paper Making Equipment in New Hampshire

Fraser Papers Inc. says it is curtailing production at its paper mill in Gorham, N.H. "for an indefinite period" laying off 167 staff and 109,000 tons of paper production due to rising input costs, "particularly oil and market pulp."
The mill is curtailing production of commodity freesheet paper grades on two paper machines starting April 13. Production on another machine at the mill was suspended late in 2007, as reported by Paper.com. The company said it expects to continue operating two of the five paper machines in Gorham that produce specialty printing papers, namely principally light-weight opaque papers, and industrial towel.

Stora Enso Converts Paper Machine

Stora Enso will convert a coated magazine paper machine at its Anjala, Finland to produce both coated and uncoated book papers. This is estimated to be complete by October 2008. The project will increase the mill’s book capacity to 320,000 tons (up from 65,000 tons).