In our first quarterly newsletter, we shared updates regarding tariffs the US government put on Canadian Newsprint mills and how the cost of Newsprint would continue to increase, while supply would also be harder to find. In this newsletter, we wanted to update you on the latest news and what to expect in the coming months.
Before the tariffs went into effect, the Newsprint market was steadily declining around 9.1% per month. However, once the tariffs went into effect, it nearly doubled to 17.3% in the first month, 14.3% the following month and then to its highest month drop of 2018 at 17.7%. This has caused less secondary and trim options in the market which has forced converters to buy premium (or prime) Newsprint, therefore pushing mill operating rates to 101% .
That being said, supply is still limited. Some mills are shutting down altogether, while others have transitioned to running other grades as those markets grow.
On a positive note, temporary relief is on the way as the White Birch Bear Island mill was recently purchased by Cascades and will start running Newsprint for the next 27 months while Cascades begins to transition that mill from running newsprint to running Kraft papers (see last quarter’s industry insight).
In addition, the US tariffs were repealed in late August which will allow the Canadian mills to come back to the US market.
Some important points to understand about this update:
How the Canadian mills re-enter the market will be a tricky endeavor. One of the tariffs they were hit with was a anti-dumping duty. They will need to strategically monitor how much, at what cost and to whom their Newsprint tons will be given to.
The sole petitioner of the tariffs has appealed the overturning of the tariffs and if the Canadian mills enter the market in the same way as before, it could trigger the tariffs back into place.
Our goal is to be transparent with our customers and we promise to continue to work closely with our vendors to stay ahead of these changes.