EMGE World Newsprint Markets (WNM)

Providing a critical review of the demand-supply outlook, EMGE World Newsprint Markets (WNM) report is based on comprehensive historical information, up-to-date market knowledge. It examines a valuable range of issues that are changing the structure of global markets for newsprint. Individual country data are provided and forecasts are grouped by region as Western Europe (EU-14, Norway and Switzerland); Other Europe (Eastern Europe, Russia, Greece, Iceland, Cyprus, etc); Total Europe (Western + Other Europe); North America (USA & Canada); Latin America; Japan; China, Hong Kong; Other Asia (All Asia); Total Asia (Japan + China, Hong Kong + Other Asia); and Africa, Middle East (All Africa & Middle East including Turkey & Israel).

The latest report provides detailed analysis and forecast of the demand-supply balance, including a projection of expected, unspecified closures by region. It also assesses the outlook for the global newsprint industry operating ratios, international trade and self-sufficiency.

Global analysis & forecast

The latest EMGE World Newsprint Markets (WNM) report examines the key market issues, covering information including demand, trade, output, capacity, investments and leading suppliers. The focus is on the demand-supply outlook. The partner report EMGE’s Publication Paper Price Forecasts covers a forecast and analysis of paper prices, for newsprint, SC and LWC. Furthermore, the sister forecast report EMGE’s World Graphic Papers was also published recently, covering demand, supply, trade and capacity for the printing and writing grades – i.e. Coated Woodfree, Uncoated Woodfree, Coated Mechanical and Uncoated Mechanical (including Improved Newsprint).

Demand in doldrums as price weakness persists

In the last WNM report in Spring 2019, EMGE explained that demand was collapsing partly due to the price bubble bursting in late-2018. As the chart (Global Newsprint Demand Cycle) shows, demand has since continued to fall steeply, at around 12 to 14 percent in recent months. Prices are continuing to weaken worldwide, having fallen most steeply in emerging markets, but are also declining in the USA and Europe, where further price falls are widely expected in the first half of 2020.

As the current pricing downcycle moves towards bottoming out, EMGE would expect new moves to close significant capacity. Until that happens, there is no reason for any significant or prolonged improvement in demand.

Capacity cutbacks expected, but slow progress so far

Since the last World Newsprint Markets report (Spring 2019), there have been two new major capacity reductions announced for the end of this year, with 210,000 tpa coming out at Resolute’s Augusta mill in the USA and 270,000 tpa coming out at Norske Skog’s Albury mill in Australia.

There could also be a further cutback in the first half of next year, depending on what happens at UPM’s Chapelle Darblay mill in France, although there is some uncertainty about this. The company is planning to sell the mill, but if that fails, the company will close it, meaning a 180,000-tpa reduction in capacity. However, there is obviously no certainty about what a buyer might do with the mill. Theoretically, it could continue producing newsprint, although it is highly unlikely.

Indian scenario

In India, meanwhile, most of the smaller machines that were re-started while prices were rising in 2018 have now either closed again or switched to making other paper grades. What all of these plusses and minuses add up to is falling Operating Ratios for the mills that are still running.

Oversupply getting worse

The combination of capacity restarts in 2018 and modest closures since have combined with the double-digit collapse in demand to produce quite heavy oversupply at the global level as the chart (Global Newsprint Supply Balance) shows. This is fuelling the current global price weakness.

Price downturn in progress everywhere

The heavy oversupply worldwide has driven prices downward, with emerging markets suffering most. The Asian price shown in the chart (Newsprint Prices (Germany, USA & Asia)) shows a dramatic fall since late 2018, but similar declines have also been seen in Latin America and Africa. In the more mature markets of North America and Western Europe, prices have fallen less steeply, but a further decline is expected in Western Europe in H1 2020, and it has been predicting more falls in the USA, too.

EMGE expects this to contribute to continued weak demand until prices bottom out and/or producers reduce capacity far enough to worry buyers.

(EMGE & Co is one of the leading consultants to the world paper industry, which specialises in industry focused market research, forecasts and analysis.)