Unlike the falling softwood kraft pulp prices documented in our last issue, newsprint prices have exhibited a strong upward trend during most of this year. Here, courtesy of FOEX (http://www.foex.fi/), are up-to-date 2008 U.S. list price data for 30 lb newsprint:

The upward trend is counterintuitive – newspapers across the country have been shrinking in both readership and page count, decreasing the demand for the paper they’re printed on. The rising price trend can be attributed to a combination of several factors. Until recently, weakness of U.S. currency relative to the Canadian dollar appeared to provide a partial explanation for the rising price trend – most U.S. newspapers get their newsprint from Canadian producers – but the U.S. dollar has strengthened in recent weeks. Another driver, and one that may be more important than exchange rates, is sharp capacity reductions by producers in anticipation of the declining demand. It is likely that the price will level off in the not-too-distant future, given the stronger U.S. dollar and the likelihood that capacity reductions will soon have gone as far as they can go without further reducing demand.