Pulp and Paper Canada

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North American production down 6.5% Y/Y


June 1, 2007
By Pulp & Paper Canada

On a y/y basis, North American production was down 66,000 tonnes (6.5%) for April, after decreasing 800,000 tonnes (6.3%) for the full year 2006. The April decrease was comprised of a drop in U.S. pro…

On a y/y basis, North American production was down 66,000 tonnes (6.5%) for April, after decreasing 800,000 tonnes (6.3%) for the full year 2006. The April decrease was comprised of a drop in U.S. production of 42,000 tonnes (10.2%), and a smaller drop in Canadian production of 24,000 tonnes (3.9%). Total North American newsprint shipment volumes were down 77,000 tonnes (7.7%) y/y. The decrease in shipments was made up of U.S. shipments, down 38,000 tonnes (9.1%) and Canadian shipments, which were down 40,000 tonnes (6.7%). Canadian mills ran at 95% of capacity during the month, while their U.S. counterparts ran at 90%. Excluding the indefinitely idled capacity in Canada, we estimate that the overall North American mill operating rate was 95% in April. Overseas shipments from North America were flat in April. While we note that month–ver-month changes in shipments are largely a timing issue based on sailing schedules, we continue to expect overall exports to Asia to trend downwards as the significant Chinese newsprint capacity additions displace North American exports. However, we expect to see an increase in export volumes to Europe with the high Euro aiding these sales. An additional problem with new Asian newsprint capacity is that these recycled mills are also responsible for pushing North American old newspaper (ONP) prices up almost 50% y/y to US$107 per tonne in May. On a positive note, imports from overseas in April were down 3,000 tonnes y/y (all North American imports occur in the U.S.) as lower pricing levels curbed imports.

Excerpt from Salman Partners Paper & Forest Products Weekly Industry Digest. For more information, visit www.salmanpartners.com

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