Kevin Conley, Senior Economist, Graphic Papers, RISI
July 6, 2011
With the exception of some minor erosion in the West, US newsprint prices have remained unchanged since last fall, despite healthy capacity utilization and rising production costs. Expectations that US prices might begin moving again were briefly raised when four of the top five North American newsprint producers (by capacity) announced plans to lift prices in July. Kruger initiated the call for higher prices in response to the persistent rise in production costs and a strong Canadian dollar, with plans to increase prices by $35/tonne in July. White Birch, Norpac and Catalyst quickly followed with similar plans. However, expectations of a successful price hike in July diminished once AbitibiBowater stated they would not increase prices next month, which in turn triggered the withdrawal of any price hike attempts by White Birch and Catalyst for July.
While US prices remained static, Asia and Western Europe have seen an upturn in newsprint prices in the first half of 2011 and further price increases are on tap for the second half of the year. In Asia, the RISI Hong Kong price index for 45 gram newsprint advanced $25/tonne to $685/tonne in the second quarter and negotiations are underway, with producers pushing for a $50/tonne increase in the third quarter of 2011.
The average Western European newsprint price in euro terms jumped 18% (Euro 80/tonne) in the first half of 2011 and producers have announced plans to implement another increase of up to Euro 50/tonne in the second half of the year for markets that have moved away from annual price contracts. In the past, European producers have been bound by annual price contracts. However, this year, most markets have shifted to six-month or even three-month contracts. A widening price differential has developed as US prices lag behind the upturn in other regions, making US prices the lowest in the world market.
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Kevin Conley, Senior Economist, World Graphic Papers, works out of RISI's Charlottesville, Virginia, office and can be contacted by phone: 434-978-2927 or e-mail: firstname.lastname@example.org.