Newsprint Makers Rescind 7% Price Hike, Sources Say

Most major North American newsprint producers have rescinded a 7% price increase that had been scheduled for April, industry sources said Friday.

Executives at Abitibi-Price Inc. in Toronto, Stone-Consolidated Corp. and Avenor Inc. in Montreal, and MacMillan Bloedel Ltd. in Vancouver, Canada, confirmed that those companies have notified customers they are postponing indefinitely plans to raise the price of newsprint.

Newspaper industry sources say several other big newsprint producers have also notified customers that they have called off the April price increase.

The failure of the April price increase reflects the buildup of inventories by publishers last year. With prices rising sharply, paper users built up inventories to protect against future price increases.

Producers continue to argue that the industry is in an “inventory correction” that should run its course in coming months.

Abitibi-Price, in announcing a second-quarter production cutback earlier Friday, said that “with no new newsprint capacity being built in North America and demand expected to rise, we fully expect newsprint markets will improve later this year. International growth is expected to remain strong in 1996.”

But a growing number of industry analysts believe newsprint prices will slide as the year goes on, partly because of the availability of new capacity outside North America, particularly in Asia.