Demand for newsprint falls off a cliff
Demand for newsprint in Australia fell by nine percent in the first five months of the year while demand for magazine paper was stable, according to latest figures from global paper manufacturing giant Norske Skog.
Despite an improved global operating profit for the second quarter of NOK (Norwegian Krone) 335 million – the best operating earnings since the third quarter of 2012 – the company said its Australasian business posted a decrease in revenue compared to the previous quarter due to the stronger krone and lower sales volume.
The Norwegian-based company has two mills in Australia – at Boyer in Tasmania and Albury in NSW – and operates the Tasman mill at Kawerau in New Zealand.
Demand for newsprint in Australia decreased by around 9% in the first five months of the year compared to the same period last year, while demand for magazine paper was relatively stable. Operating revenue decreased due to a stronger Norwegian krone and somewhat lower sales volume. Sales prices remained stable. Gross operating earnings increased slightly quarter-over-quarter from NOK 75 million in the first quarter to NOK 78 million in the second quarter.
The Asian export market for newsprint, of increasing importance to Norske Skog due to a smaller domestic market in Australasia, is encouraging with price improvements. There continues to be strong demand from regional Indian newspapers.
The company said its looking at expanding its New Zealand Nature’s Flames wood pellets operation, which has reached an annual capacity of 40,000 tonnes.
Norske Skog considers to expand the production of pellets, given the considerable competitive export advantage. Pellets brings significant environmental benefits replacing fossil fuels in the large economies of South-East Asia.
The paper manufacturer said that after a comprehensive refinancing of the group, major cost reductions and significant progression on new growth projects, the Group is better equipped to meet the future than earlier.
“The improvement in the market balance, after significant capacity closures in Europe and North America in recent years, should maintain margins in the second half at the same level as in the first half,” said Sven Ombudstvedt, CEO of Norske Skog.