Newsprint tight as mills look to new markets – paint, at a stretch

Jan 24, 2022 at 05:54 pm by admin

With little or no choice of domestic supplier, newspapers are being told to sign up to newsprint contracts or suffer the consequences.

Logistics difficulties and energy cost hikes are adding to publishers’ problems as mills continue to tighten supply in a bid to create a sellers’ market.

In Australasia, two mills have closed in recent years, and supply is dependent upon the output of Norske Skog’s 80-year-old Boyer, Tasmania, mill, where newsprint capacity had already been cut when a newsprint machine was converted to lightweight mechanical in 2014.

The company’s Tasman mill in New Zealand’s north island closed last year, cutting 150,000 tonnes of capacity and 160 jobs. Its Albury, NSW, mill – opened in 1981 – stopped making newsprint two years earlier after the mill was sold to packaging producer Visy.

Both Australian mills owe their origin to newspaper publishers, in those days the Herald & Weekly Times – now part of News Corp Australia – and Sydney Morning Herald publisher John Fairfax. Both ceded control to Kiwi forest products manufacturer Fletcher Challenge, which sold them to Norske Skog.

In today’s Australian, media writer Sophie Elsworth said publishers were battling to obtain sufficient stock, both domestically and internationally. Some newsprint deliveries had been pushed out by “weeks and in some cases months”.

Publishers who made spot market purchases from overseas or previously purchased products when needed “have been nobbled by global shortages and shipping delays caused by the pandemic”. She quoted a Norske Skog spokesman that “there would continue to be significant challenges for publishers who ‘chose to purchase from offshore producers’.”

Significant increases in the cost of newsprint in Europe had been “largely caused by increasing gas and electricity prices”.

EBITDA figures for Norske Skog’s fourth quarter are due shortly, but promise well for the company, which pushed quarter profits from NOK17 million (A$2.6 million) to NOK 111 million (A$17.4 million) earlier last year. Chief executive Sven Ombudstvedt talked then of “unprecedented increases in raw material costs, in particular energy” but said the capacity closures had eliminated the imbalance in both newsprint and magazine paper markets.

Substantial price hikes in the European markets during the third quarter in response to “volatile energy and raw material costs” were expected to continue, requiring further price increases into 2022.

In Australia, the remaining major publishers have long-term supply contracts although Nine Entertainment – which bought Fairfax Media in 2018 – does not print its own newspapers, contracting production of its metros to News and selling its regional papers to Antony Catalano and Alex Waislitz in 2019.

Mills have continued to look for alternative markets for their products, Norske Skog operating the 90,000 tonnes-a-year Nature’s Flame wood pellets business on the former Tasman site, and developing a new fibre-based additive for paint and epoxy floor coverings at its Saugbrugs “industrial site” in Halden, Norway.

Between 100-150 tonnes of the Cebina “cellulose nano fibrils” is being made in a contract Norske Skog values at about NOK500,000 (A$78.4 million) a year. A gramme of the product – formed from a network of micro-length, nano-wide threads – could cover an entire tennis court, or be stretched eight times around the earth, it says.

At Saugbrugs – where Norske Skog still makes SC magazine paper – commercial development director Hugo Harstad reported that using existing infrastructure to expand capacity for Cebina would be “relatively capital light”.

What the future holds remains unclear: In Frankfurt in October for the European Printers Summit, the owner of Palm Paper Dr Wolfgang Palm told me he expected the next two-to-three years would see Europe served by only two companies, UPM and his own. Palm produces up to 400,000 tonnes of newsprint a year at a modern mill in King's Lynn, UK, opened in 2010.

Meanwhile, in Australia and New Zealand – where a number of new newspapers have appeared since News Corp closed print editions in May 2020 – publishers struggle with supply issues exacerbated by the traditional “tyranny of distance” and a single supplier.

Peter Coleman

Sections: Print business


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