Posts Tagged ‘Pulp & Paper Edge’

  • Aussie dollar turnaround casts doubt on Amcor mill closure – Pulp & Paper Edge report

    As local packaging giant, Amcor, enters the end game for its Petrie recycled coated cartonboard mill in Queensland, one of the factors that impacted the site’s profitability – the strength of the Australian dollar – is looking at a turnaround, casting doubt on the rationale behind the closure, Pulp & Paper Edge reports.

    In February, Amcor said it would cut around 160 jobs with the closure of its Petrie recycled paperboard mill in Queensland, following the facility’s struggle to cover it’s own operational costs amid falling earnings and international competition in the sector.

    In its half-yearly financial report, published on 18 February, the packaging giant said it would close the Queensland plant (pictured) by the end of December this year.

    According to the latest issue of Pulp & Paper Edge – published by Industry Edge – the irony of the closure, which was driven in part by the sustained high value of the Australian dollar, is the decline in the exchange rate since the closure announcement was made. By the time Petrie closes permanently at the end of the year, it is expected the Australian dollar will have further devalued. 

    IndustryEdge has long considered that at A$1.00 to US$0.80, or thereabouts, the Petrie Mill and Amcor’s supply of coated cartonboard from it would be a profitable business. Whether the Australian dollar will depreciate that far by the end of the year remains to be seen.

    After production ceases, the mill will continue to convert and finish its cartonboard stocks before they are delivered to fulfill final customer orders. The full closure of Petrie is not expected until the end of 2013, when final supplies are due to be delivered.

    Customers with whom IndustryEdge has contact, continue to sing the praises of Amcor’s team for the professionalism of their delivery and the quality of their products and service.

    Some customers have suggested they are already finding managing relationships and issues with new suppliers far more challenging, especially as the importers are viewed as having ‘less skin in the domestic game’ than Amcor had.

    As the chart (pictured above right) shows, Australia has a long history of coated cartonboard imports filling a domestic supply gap.

    While imports have played their part to date, it is domestic supply that has supported some of the largest and most brand dependent businesses in Australia. This seems to apply especially to those involved in food supply businesses where quality, hygiene and consumer safety considerations are interwoven with brand and identity.

    Buyer concern has turned to the relatively small size of the Australian market and the potential for importers of cartonboard to move in and out of the market as conditions change.

    The major supply nation continues to be New Zealand, with shipments coming from the Reynolds Group’s Whakatane Mill (formerly owned by Carter Holt Harvey). The USA and Korea both have solid supply positions, but in different sub-grades with an emphasis on different end-uses.

    These long term and consistent suppliers are considered stable and reliable. It is new entrants about whom most sleep is being lost and in respect of whom greatest assistance is being sought.

    This month sees Pulp & Paper Edge celebrate its 100th issue, and features an in-depth interview with IndustryEdge founder, Robert Eastman and former AusNewz publisher, Brian Stafford.

  • Catalogues claim continued volume growth – Pulp & Paper Edge report

    We’ve heard from the Australian Catalogues Association that catalogues continue to grow in popularity and volume in Australia despite soft markets in other printing industry sectors, now that sentiment is being backed by the numbers, with industry bible, Pulp & Paper Edge, highlighting the growing volumes of catalogue paper stock entering the country. 

    The latest issue of Pulp & Paper Edge, published by IndustryEdge, reveals that continued catalogue volume growth in the local market is driving volume growth in coated mechanical papers in the country.

    Coated mechanical papers are separated into two main grades, the light-weight coated (LWC) and the medium coated (MWC) papers. According to the publication, coated mechanical paper growth in Australian is occurring for both sub-grades albeit the growth is slow.

    Pulp & Paper Edge suggests that the driver for modest growth in LWC consumption is increased use by retailers of catalogues and brochures even as other uses have declined.

    The publication says:

    In a changing communications world, where digital and electronic media paper appear to be supplanting paper and print, news of the growth in consumption of coated mechanical grade papers is often met with surprise. Of course, it is not the paper itself which is driving the demand. Rather, it is the end use to which coated mechanical grade papers are put, which is the driver.

    According to Pulp & Paper Edge, the volume of catalogues in Australia has risen by almost one billion over the past five or so years. In 2006-07, Australians received 7.4 billion catalogues. By 2011-12, that number had grown to 8.22 billion catalogues – with an average annual rate of growth of 2 per cent.

    According to IndustryEdge’s analysis of the figures, the implication is that, in general, catalogues now contain considerably more paper (and more pages) than they did previously.

    With retailer and advertiser margins being squeezed ever tighter and other printed media facing declines, Pulp & Paper Edge suggests seeming immunity of catalogue volume against this squeeze is due to catalogues’ track record. In short, catalogues are proven to work.

    In 2012, research conducted by Roy Morgan and reported by the Australian Catalogue Association demonstrated in 17 of 28 separate categories of goods and services, catalogues ranked in the top three influencers of consumer purchasing decisions. In fact, in the case of groceries, it was found that catalogues influenced 52 per cent of purchasing decisions.

    However, the publication also points out that, while the total volumes of catalogues in Australia is still on the rise, the total recorded value of the catalogues sector is in decline. In 2006-07 the total value of the sector was AU$1.6 billion. The value declined by an average of two per cent per year to $1.45 billion in 2011-12.

    Clearly, the declining cost of each catalogue represents a value for money proposition for the end user, even as they are growing in weight, number of pages and paper use. The publication suggests this is one of the major drivers for increased consumption of catalogues.

    To access the full report, click here.

  • Newsprint prices set to increase as demand slows – Pulp & Paper Edge report

    Global newsprint prices look set to increase as international demand for the medium declines, according to a report in the latest issue of industry bible, Pulp & Paper Edge. 

    The report, published this month by one of the leading providers of market analysis on the pulp and paper industry in Australasia, IndustryEdge, says that the decline of global appetite and demand for newsprint diminishes looks set to improve newsprint prices around the world.

    According to the report, the latest figures from the United States indicates that for March 2013 – compared with the same period in 2012 – demand for newsprint was down by 12.1 per cent, with newspaper driven demand down by 11.7 per cent and from commercial printers, down by 14.8 per cent.

    However, the falling demand could lead to greater value in the medium, with the world’s largest manufacturer of newsprint, Norske Skog, reporting that it expects newsprint price increases in the second half of 2013.

    This is based on significant capacity reductions of over 1 million tonnes which, for Norske Skog, could arrest some of its slide in profitability, most of which is attributed to lower prices.

    In the March quarter, Norske Skog reported operating earnings of NOK (Norwegian Krone) 174 million (AU$30 million), down by 54.8 per cent from the corresponding period in 2012.

    In Australia, total import volumes have remained relatively stable over the past year, averaging 23 ktpq (kilo-tonnes per quarter). However, imports declined rapidly from a high of 45.7 kt in the June quarter 2010, to just 20 kt in the December quarter 2011.

    The most recent quarter, March 2013, recorded almost the lowest quarterly imports on record.

    The report says prices are impacted by many factors, but near universal supply to demand imbalances are key amongst them.

    Discounts are offered when producers have too much supply and must reach out to a new or opportunistic market, without the advantages of proximity, relationship and service.

    According to the report this seems to be occurring regularly with imported newsprint in Australia. It is a situation that can only improve if capacity reductions are sufficiently deep to bring global supply and demand into closer alignment.

    To access the full report, click here.

  • Strong dollar impacts Aussie cut sheet – Pulp & Paper Edge

    The volume of imported cut ream paper reached a nine-month peak in May this year, impacting Australian paper production following this year’s strong performance of the Australian dollar against the US greenback, according to the latest issue of industry bible, Pulp & Paper Edge.

    While the strong Australian dollar has been accompanied by imported paper price increases and local paper price increases, the effect of the storng Aussie currency against the US dollar in May led to import levels as high as those seen since the GFC.

    This month’s issue of Pulp & Paper Edge, the industry’s foremost authority on paper market trends, indicates that, while both imports and exports of cut ream paper – office copier and printer paper – import rates have ballooned, outstripping the export figures.

    The report says:

    Imports of cut reams – office paper for printers and copiers – reached their highest level for nine months in May, almost breaking through 12,000 tonnes for the month. Other than the imports for August and September of 2011 when some serious anomalies and external factors were at play…May witnessed one of the highest levels of imports since the onset of the GFC.

    In recent times, the trend in the exchange value of the Australian dollar has coincided with a comparable trend change in imports, albeit with greater sensitivity applying to the imports,

    Many of the imports, probably those volumes that are above the long-term average of around 8.5 ktpm, are particularly price sensitive and only viable against the domestic production where the Australian dollar is securely at or above parity with the US dollar.”

    The report suggests that, while imports and exports have risen as a result of the Australian dollar relative to the US dollar, it is expected that cut-ream imports will be down for July, but rise again by August.

    The full report is available here.

  • Cut reams still coming in the back door – Pulp & Paper Edge

    The practice of importing cut-price volume office paper under the ‘no country declared’ (NCD) provisions to mask paper imports arriving from regions with questionable pulp harvesting practices – notably Indonesia – is not only continuing, but rising, according to the latest issue of industry bible, Pulp & Paper Edge.

    The previous decision by some of Australia’s largest office paper sellers to import cut-ream volumes under the NCD provisions immediately after announcing they would cease using Indonesian paper amid the local market’s environmental concerns coincided with a national spike in NCD imports, suggesting the Indonesian imports were continuing under a new guise.

    This month’s issue of Pulp & Paper Edge, the industry’s foremost authority on paper trends, indicates that the volume of NCD continues to rise, and suggests that the continuing usage of the NCD provisions of the Census & Statistics Act 1905, negatively impacts the Australian paper market, particularly domestic producers.

    The IndustryEdge Pulp & Paper Edge report states:

    As IndustryEdge has repeatedly commented, the continuation of imports under NCD arrangements is a deliberate attempt by one or more importers to hide Indonesian imports behind a veil of secrecy. Regardless of the reason for this secrecy, ultimately no good comes of it. The importer is always exposed and the trade prices can always be determined, though it takes longer than if transparency is applied.

    The report suggests that the use of NCD provisions could be due to the possibility that the importer is embarrassed about the source of their imports, or their competitively low prices points may be less than the cost of manufacture and they are attempting to hide what could be questionable pricing tactics.

    With NCD prices typically being lower than the prices of the bulk Chinese imports that have taken over from the bulk imports from Indonesia, it is conceivable that the current NCD imports could be direct from Indonesia.

    According to Pulp & Paper Edge, both the previous low priced Indonesian volumes hidden inside NCD and the current budget Chinese volumes are believed to have been imported for and by major branded organisations.

    The concurrence of declining prices and increasing NCD for imported cut reams and the subsequent Chinese volumes are explored in depth in an IndustryEdge Special Report, which is available from www.industryedge.com.au/publications.php