Market factors and systematic reduction of global newsprint manufacturing capacity are creating the first newsprint shortage in years, and mill owners are reaping the benefits.

Multiple factors are being blamed - including a shortage of truckers and the bankruptcy of forestry companies - but the core reason is the closure of mills and paper machines throughout the world.

Meanwhile newspaper publishers in the US have their own problems, with the introduction of tariffs on imported Canadian newsprint following a dispute over dumping increasing prices and driving smaller editions.

With almost a million tonnes of newsprint capacity closed during 2017, demand is "suddenly higher than capacity," Ian Hamilton, who is southeast Asia sales director for UPM Papers, told last week's Publish Asia conference.

"High prices are here to stay," he says, and one more machine closure could create a "quite dramatic" effect.

Hamilton says he fears there will be a further machine closure, and with most smaller mills and machines already shut down, "it will be a relatively big one, and the effect will be quite dramatic."

Helsinki-headquartered UPM has just had its most successful year yet, and profits didn't all come from print. Hamilton says only half of the group's revenue came from paper, with other products including pulp, plywood and bio-diesel accounting for the rest.

And he hints that publishers have only themselves to blame for the current shortage, which will balance out in time, "but I don't know when".

The higher prices sought by mill owners have been filtering through the industry, with European newsletter EUWID reporting that price increases at the start of the year "came fairly close to the demands of the paper producers". While most grades are affected, newsprint and SC paper prices achieved "considerable mark-ups" with increases of ten to 12 per cent mentioned.

In Australia, where Norwegian owner Norske Skog converted a newsprint machine to LWC production in 2014, prices to Asian customers were increased by five to ten per cent last year. Major Australian newspaper publishers - who ironically, used to own the largest mill - have long-term agreements, but will see the prices flow-through at the same time as battling reduced circulations and advertising revenue.

Hamilton says one reason for the shortage is that China has become a net importer of newsprint, and "will pay to get what they want". He says Korean mills have "almost trebled" sales, with further capacity coming from another Scandinavian producer, Stora Enso, and from Canadian mills.

In the US, publishers already hit by anti-dumping duties levied against imported Canadian newsprint, are now facing higher prices from domestic mills and the prospect of their existing orders not being filled.

Problems there began when Norpac - owned for the past two years by a New York private equity fund which focuses on undervalued businesses, and operating a single mill in Washington state - petitioned for trade sanctions, claiming that Canadian newsprint was being unfairly subsidised. The US government responded with preliminary tariffs of up to 9.93 per cent and then an additional 22.16 per cent on all but two companies, ahead of a final determination due in August and the report of a US International Trade Commission investigation in September.

Paul Boyle, a senior vice president at News Media Alliance - which represents 2000 US and Canadian newspapers - says the situation is "almost like a perfect storm with what's going on in China and all the capacity taken off the market, and now with these tariffs.

"It's just whacking the whole newspaper industry."

Peter Coleman

Pictured: A concerned WAN-Ifra deputy director Manfred Werfel listens as UPM's Ian Hamilton speaks