Posted on 03/28/2007 1:47:30 PM PDT by abb
Steeper Decline in Newsprint Data Reported in February February newsprint statistics released Mar. 22 by the Pulp and Paper Products Council (PPPC) indicated a sharper drop in U.S. newsprint consumption than in the preceding two months, but various market factors could lead to an upturn later in the year, according to one industry analyst.
By Debra Garcia
LOS ANGELES (March 28, 2007) -- February newsprint statistics released Mar. 22 by the Pulp and Paper Products Council (PPPC) indicated a sharper drop in U.S. newsprint consumption than in the preceding two months, but various market factors could lead to an upturn later in the year, according to one industry analyst.
One of the variables is a fast run-up in prices for old newspapers (ONP) in recent weeks. This added to the change in outlook for North American newsprint producers because of their reliance mostly on virgin pulp for their furnish, whereas the rest of the world produces primarily recycled-content newsprint.
"Based on relatively firm global markets and this jump in ONP costs, we see U.S. newsprint prices 'bottoming' (if that's what we should call it given the relatively slight recent correction) this spring and then rising starting in about June," noted Chip Dillon, paper and forest products analyst with Citigroup, in a Mar. 23 report.
Last month, though, newsprint consumption weakened at an increasing rate. Total U.S. consumption fell 13.7% year-over-year in February vs. a year ago, and both months had equal number of Sundays. This represented a sharp drop in the rate, which had been a 6.3% consumption decline for all of 2006, based on PPPC data. For U.S. dailies, the consumption rate in February was 9.4% vs. 7.1% for full-year 2006.
"Given the slowing North American economy and changing consumer preferences, we do not see any reason for a short-term reversal in these negative consumption figures," said Paul Quinn, paper and forest products analyst with Salman Partners, in a Mar. 22 report.
The bright spot in the PPPC's numbers was for North American newsprint exports, which increased 10.1% in February vs a year earlier. This included improved shipments to Western Europe (up 87.3%) and Japan (up 46.1%).
With U.S. newsprint prices steadily dropping since last summer, they are now below levels seen in Europe and in parts of Asia, noted Dillon. "Given tightness in global newsprint markets and rising ONP costs (mainly affecting non-North American producers), we see stable-to-rising prices in most regions in coming months."
Citigroup projects that North American newsprint prices will start to improve by the end of 2007, as last year's capacity additions in China are absorbed by the global market. In addition, global newsprint demand is expected to grow by close to 2% vs approximately 1% in 2006. Projections were adjusted on Feb. 22 and now call for 2008 U.S. newsprint prices to reach $700/tonne from the previous forecast of $645/tonne.
In the March issue of The Reel Time Report, 30-lb newsprint in the U.S. dropped another $10/tonne in February, to $610/tonne vs $620/tonne in January. Transaction levels have fallen steadily since last September, when they reached a high of $655/tonne.
FOEX Indexes Ltd.'s Mar. 20 report indicates that 30-lb newsprint dropped just 17 cents last week, to $604.42/tonne. The last high point for this index was June 6, 2006, when it topped out at $643.88/tonne; it has since fallen by 6.1%, or $39.46/tonne.
North American newsprint capacity now exceeds orders, resulting in a declining market. Salman Partners indicated that the majority of newsprint producers are waiting to see what will happen after the merger of Abitibi-Consolidated Inc. with Bowater Inc. later this year before making any decisions on shutdowns.
However, recently Blue Heron Paper Co. announced it would indefinitely idle its 140,000 tonnes/year 100% recycled newsprint mill in Pomona, Calif., due to high wastepaper and energy costs and declining newsprint consumption. The shutdown is slated to begin about May 6.
Prior to that, Abitibi's 145,000 tonnes/year Fort William newsprint mill in Thunder Bay, Ont., was closed Feb. 25 for an indefinite period. Although the production is mostly 65 and 70 hi-bright newsprint, it is expected to be reported as newsprint, according to The Reel Time Report.
U.S. daily newspapers continued to trim their inventories in February, reducing levels by 8,000 tonnes and ending the month with 802,000 tonnes, the PPPC reported. All U.S. users inventories dropped 1,000 tonnes, to 879,000 tonnes. Compared to a year ago, U.S. dailies had 52,000 tonnes less in inventory and all U.S. users stocks were down 94,000 tonnes.
North American newsprint producers, however, experienced a 67,000-tonne growth in inventories during February, to 460,000 tonnes, up 104,000 tonnes from a year earlier. North American newsprint production reached 905,000 tonnes in February, a drop of 4.2% from a year earlier. This brought the year-to-date total to 1.9 million tonnes produced, down 4.3% from January-February 2006.
According to the American Forest & Paper Assn., U.S. newsprint capacity has dropped from an all-time high of 6.77 million tonnes in 2000, to 5.02 million tonnes in 2006, a reduction of 26.0% for the six-year period. It is expected to fall a further 0.7% in 2007 due to a machine conversion to printing and writing papers, drop another 3.1% in 2008 due mainly to grade shifts into uncoated mechanical grades, and then stabilize in 2009. Basis weight reductions are also contributing to the decline.
However, Dillon sees some bright spots ahead. He expects newspapers will stop "nickel-and-diming" readers in 2007 and focus more on retaining circulation, resulting in the decline in consumption moderating. However, this does not appear to be happening yet.
Recent figures from Gannett Co. Inc. and The McClatchy Co. show that average paid circulation declined 2.4% in February vs a year ago, according to Salman Partners. This, combined with a 6.8% year-over-year drop in newspaper ad lineage during February, has a large impact on profitability, noted Quinn.
Debra Garcia (letters@editorandpublisher.com)
Ping
This is a direct result of man made carbon emissions. It's part of algore's slideshow. There's a graph of CO2 levels increasing and newsprint consumption decreasing.
Soon, global warming may make newspapers extinct! They need to be protected by the government or it will be a catastrophe!!!!!!
Boy ain't that the truth.
Very good news. The sooner these liberals destroy themselves the better off we'll all be.
I don't know about where anyone else lives but around here we have about a half dozen free independents which ought to take up some of the slack. Actually I think the local papers will be forced to become free and possibly that will save them.
Another American institution destroyed by liberalism. There are literally too many to count. This one however is most enjoyable.
"The sooner these liberals destroy themselves the better off we'll all be."
I see. You think they are tied to paper news products?
I suspect they are bright enough to migrate to electronic/internet news products.
Therefore I see it as wasted time and energy to celebrate the demise of the print news/advertizing industry.
Thanks to Woodward and Bernstein, most "journalists" believe they have to destroy a public official to get a Pulitzer. The more Republican the better.
Our local newspaper is unfortunately liberal too.
But we have a website for news in our neighborhood, run by my son-in-law's brother-in-law, with weekly emailings and reports on such matters as town meetings, rooms for rent, cars for sale, photos from people's trips, sports winners, pot luck dinners, and stuff like that, and it does the job just fine.
If your in-law keeps this site up consistently pretty soon it will turn into a paying proposition.
Yes, possibly. He's a shrewd fellow. At the moment it's a community service, and Steve is that kind of guy, but he also has a knack for making money.
In case anyone is curious, here's the central page, giving various places to go or to sign up:
http://www.songseek.com/maplecorner/greetings.htm
One motivation behind the website originally was a drive to raise money to repair the community center, which was done by selling a calendar, The Men of Maple Corner. It made it onto the Today show a couple of times, and raised enough cash to fix everything that was needed, I think around a $300,000 endowment.
the news business "is broken, and no one knows how to fix it." ("And if any other paper says they do, they're lying.")
Newspaper, Magazine Publishers: Very Few Making More Than 3 Percent Of Sales Online
The overwhelming consensus among 350 global magazine and newspaper executives at a global media conference last week, Magazine 2.0, at the Hannover Congress Centrum in Germany: there is no profit in going digital.
Reinsurance Abuses At End, Buffett Says
...
Buffett said declines in circulation result from readers turning to alternative sources , such as free Web sites and television. And he said owning the dominant news Web site in a region is not enough to guarantee sustained profitability for newspaper firms.
As an example, he cited Buffalo, where Berkshire owns the Buffalo News and Buffalo.com, which he described as the most popular news Web site in the city. "We've got the best position, but it isn't remotely like owning the paper 30 years ago."
Buffett said buying newspapers was once an excellent investment because the dominant paper in any city could count on steady advertising revenue and could raise ad rates, often as much as it wanted, every year. With circulation dropping, that is no longer the case, Buffett said.
"Journalistic integrity" -- There's an oxymoron for you.
I bet those guys throw the craziest parties...
I think it is their diminshed status as an authoratative source that is being celebrated.
While the NYT/LAT/WAP/AP/Reuters oligopolizes the print media, they have much stiffer competition on the internet.
They can't, at least not in anything like their current form; the money just isn't there on the electronic/internet side.
In print form, every individual purchased copy is part of their circulation, and cash in the paper's pocket ... and that's on top of all the advertising in the paper (which they get to charge more for based on their circulation). On the net, there's no purchasing of a physical product at all, so that entire line of income goes stone cold dead. On top of that, if a given person goes to their web site, sees only a single article worth reading and leaves immediately after reading it, the paper can't get away with convincing advertisers that person is a true voracious "reader of the paper", because the data's right there proving otherwise. So the advertiser only pays based on how many people they know are actually viewing (and, usually, actually clicking on) their ads. Result? Profits so low that the paper can't function.
This makes us happy because the MSM has spent many decades either ignoring or actively attacking 50% of its potential audience (i.e. all conservatives of any stripe), because they made profits so huge that they could afford to put their ideology over their immediate business needs. Now that their business model is collapsing, and they're still not willing to even attempt to start being fair and unbiased in their coverage when it could potentially lead to a doubling of the number of people willing to read/watch their products ... well, yeah, there's a whole lot of Schadenfreude going around on our end.
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