| By Chuck Berky Without a doubt,
we are once again in a tight newsprint market that could get even tighter by the fourth
quarter.
North American consumption through June remained high and
production at several mills was adversely affected by longer than planned downtime for
annual maintenance. Some shipments have been delayed and several companies are limiting
their customers to monthly allocations that reflect previous commitments or ordering
patterns. The largest suppliers are reportedly "sold out" for the remainder of
the year and will not accept any incremental orders over and above such current
commitments.
There is little doubt that the September price increase will be
fully implemented by most of the newsprint industry. This increase will be $50 per metric
ton for 30# paper. (We should note that the PAGE annualized pricing for 2000 –
including the September increase – will be about 9% higher than the annualized price
for 1999.)
Some analysts are already projecting an additional increase for
April 2001. I think this may be a bit premature because of the unknown general economy and
the massive conversion to 50-inch web, both of which could moderate the demand.
Although there are signs that the economy is softening and some
newspaper companies are reporting advertising linage shortfalls, several things could keep
the market tight well into next year. They include:
· There are
promised newsprint capacity reductions being implemented. Abitibi Consolidated’s
Lufkin (TX) mill is being converted to value-added grades, and this new giant company has
promised to remove an additional 400,000 tons of newsprint by shutting down – or
converting – the high cost machines. These changes are anticipated over a 15-month
period, but could start before the end of this year. Also, as previously announced, the
former Bowater newsprint mill in Maine will be converting to other grades in early 2001.
· The Asian
market continues to strengthen with some prices reportedly running well ahead of the
current North American prices. And, imports from that region are almost non-existent. The
rest of the global market appears to be strengthening as well, so global demand may once
again influence the North American market.
Berky is general manager of PAGE, Publishers Associated to Gain Economy, a
non-profit purchasing cooperative of small and medium size newspapers. |