Newsprint markets in North America are still not robust, but the year-over-year decline has slowed dramatically and pricing in the U.S. has steadily improved through the first six months of this year.

As reported June 24, total North American newsprint demand dropped 1.8% year-over-year in May to 465,000 tonnes, according to statistics released June 23 by the Pulp and Paper Products Council (PPPC). Through the first five months, total North American newsprint demand of 2.325 million tonnes is off 1.2% from a year earlier.

Publishers’ consumption in May fell 8.1%, which was the best performance since January 2007, according to the July issue of The Reel Time Report. The publication projects that year-over-year data for year-to-date daily newspaper consumption will improve to a single-digit decline by year-end, compared with 12.5% for January-May 2010.

European demand improves

In Europe, newsprint demand has turned up in 2010, but only by 1.2% so far, according to the Reel Time Report. Prices for 45-gram newsprint in Europe moved up by about US $40-US $50 per tonne to $630/tonne in the third quarter for the accounts for which negotiations finished early, while those concluding talks more recently settled prices as high as $660/tonne.

In the U.S., pricing has been strongest in the east, while lagging in the west, where producers are more fragmented. The Reel Time Report projects that pricing in the west will move up another $10-$20/tonne in July, which should reduce the gap between the two regions. The publication calls for U.S. newsprint prices to rise through the third quarter, while fourth-quarter market conditions could turn either way but are unlikely to cause prices to fall. In June, the average U.S. price for 30-pound newsprint was $605/tonne, which was up $25/tonne from May. The RTR’s posted prices have increased by $10-$25/tonne each month since January.

The high prices of recovered paper used as a feedstock in producing recycled newsprint, as well as high pulp costs for virgin-fiber newsprint, are a factor in European producers’ efforts to recoup rising expenses, at least partially, by charging €50/tonne (US$63) more for extra orders after July 1, according to the June 30 issue of EUWID Pulp and Paper.

Chances that European producers will succeed with the surcharge are viewed as good, as newsprint suppliers are receiving inquiries about non-contractual quantities, EUWID Pulp and Paper reported.

FOEX Indexes Ltd. reported that the European benchmark for newsprint in the previous week fell by 0.1% to €411.62 (US$524.15) per tonne. U.S. newsprint indexes, however, inched up by .08% for both 30-pound and 27-pound newsprint, to $593.06/tonne and $630.94/tonne, respectively.

North American exports up

North American newsprint exports to Europe have not picked up so far this year, being down 22% January through May versus a year ago, according to the Reel Time Report. However, exports to non-Japan Asia and Latin America through the first five months are up 218% and 39%, respectively, year-over-year.

Total newsprint shipments from North America to overseas were up 59.6% year-over-year in May to 213,000 tonnes. This brought total overseas shipments of newsprint from North America year-to-date to 967,000 tonnes, which is up 52.6% from January-May 2009, the PPPC reported; however, this is just a 2.7% increase compared with 2008, the Reel Time Report noted.

Domestic North American newsprint shipments were down 1.1% year-over-year in May to 458,000 tonnes. This brought the total for January-May 2010 to 2.288 million tonnes, which is also off 1.1% from a year ago, according to the PPPC.

Adjusted for idled capacity, North American newsprint mills operated at 92% in May. This was the best rate all year, beating the previous high of 90% in February, and bringing the rate year-to-date to 89%.

Despite higher operating rates and a slight dip in North American shipments, North American newsprint mills trimmed inventories by 15,000 tonnes in May, ending the month with 298,000 tonnes, which was also 217,000 tonnes less than a year earlier, when stocks totaled 515,000 tonnes.

All U.S. users’ inventories were reduced by 19,000 tonnes in May to 534,000 tonnes, which was 73,000 tonnes less than the year-ago level of 608,000 tonnes, reported the PPPC.

Inventories comfortable

Inventories held by U.S. daily newspapers declined by 18,000 tonnes and two days’ supply in May, but were still at comfortable levels at 48 days, according to the Reel Time Report. The publication said that inventories of both producers and consumers could be a little lower but should not cause much of an effect on the market due to 2010 shipment levels.

North American imports from overseas declined 32.1% in May to 8,000 tonnes, bringing the total through the first five months to 36,000 tonnes, which was down 10.2% year-over-year.

Newsprint supply and demand are not in balance, according to the Reel Time Report. Considerable capacity contraction has occurred, and continues.

In early July, Catalyst Paper Corp. announced it would permanently close its specialty paper and newsprint mill in Elk Falls, British Columbia. The operation has been indefinitely curtailed since February 2009, according to the company.

Meanwhile, AbitibiBowater Inc., which has closed or idled 3.4 million tonnes/year of paper capacity since 2007, including trimming newsprint capacity by 36% to 3.6 million tonnes/year, is looking to emerge from bankruptcy protection on Oct. 1, if its unsecured creditors approve a detailed restructuring plan in a vote scheduled for Aug. 26.