By: Bloomberg Business
Resolute Forest Products Inc., a Canadian pulp and paper producer, is on track for a record surge following a jump in newsprint prices.
The Montreal-based company is raising newsprint prices by $40 a ton in the U.S. and C$45 ($33) per ton in Canada, the first price increase in nearly six years, spokesman Seth Kursman said in an e-mailed statement. Prior to the increases, which were implemented in January and February, prices were the lowest since 2009 and had “pushed transaction prices down to levels that exaggerated actual market conditions,” he said.
Industry publications Pulp & Paper Week and Reel Time reported over the weekend that the price increases were successful and newsprint buyers are willing to pay more for the product, said Kevin Mason, managing director of Vancouver-based ERA Forest Products Research.
Resolute rose 31 percent to C$7.21 at 3 p.m. in Toronto, the most on record since the company began trading on Dec. 13, 2010, according to data compiled by Bloomberg. The company’s shares had dropped 47 percent this year through Friday amid low prices for lumber and newsprint.
“It’s been beaten up amazingly so it’s not taking a lot of volume to get things moving,” Mason said in a telephone interview. “Prices had gotten so low that people expected you’d probably be successful in getting these increases.”
The forest products industry has not been spared from the cyclical downturn in global commodities, Resolute’s Chief Executive Officer Richard Garneau said in a Feb. 4 statement. The company’s newspaper segment had an operating loss of $13 million in the fourth-quarter after average transaction prices fell $14 per metric ton. This was the fifth consecutive quarter where the average price has fallen by more than $10 per metric ton, according to a Feb. 4 company statement.