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Report On Business U.S. publishers forecast higher newsprint prices after duties

B.C.-based Catalyst Paper Corp. is now paying a combined tariff rate is 28.25 per cent.

Catalyst Paper

Higher U.S. newsprint prices are on their way after fresh duties imposed against most Canadian producers, a new group fighting the tariffs warns.

Members of Stop Tariffs on Printers and Publishers (STOPP) are upset by last week's decision by the U.S. Department of Commerce to impose anti-dumping duties averaging 22.16 per cent against most Canadian producers of uncoated groundwood paper such as newsprint and book-grade paper.

The anti-dumping tariffs, which took effect on Monday, come on top of countervailing duties averaging 6.53 per cent levied in mid-January against most Canadian producers shipping into the United States.

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The preliminary duties totalling 28.69 per cent will hurt newspapers and book publishers already struggling to cope with recent increases in paper prices, STOPP said in a statement from Virginia.

Commercial printer Quad/Graphics is among the members of the new group, which includes U.S. newspapers and major Canadian newsprint producers.

The punitive tariffs "will result in driving up the costs of print and force an even faster migration to digital options at a time when our industry is already being severely disrupted," Quad/Graphics chairman Joel Quadracci said. "This will result in the loss of U.S. jobs. In the case of rural residents with no broadband access, they will end up underserved with no newspaper either."

Groundwood from Canada is subsidized and being dumped at less than fair value, according to complaints filed to the Commerce Department in August by U.S. producer North Pacific Paper Co., also known as Norpac. Norpac argues U.S. paper makers are being harmed by Canadian shipments of groundwood south of the border.

But Michael Makin, president of Printing Industries of America, said Monday that U.S. printers in the Midwest and Northeast in particular will "feel the havoc countervailing duties and anti-dumping tariffs will bring to the marketplace."

Even before the anti-dumping tariffs, newsprint prices jumped 10 per cent from US$575 a tonne in September to US$635 a tonne in February, according to RBC Dominion Securities Inc.

"Publishers are already feeling the negative consequences of a tighter newsprint market and higher prices because of these preliminary newsprint duties," said David Chavern, president of the News Media Alliance, which is a member of STOPP.

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Canadian newsprint producers now paying 28.69 per cent in combined duties include Alberta Newsprint Co., New Brunswick-based J.D. Irving Ltd. and Rayonier Advanced Materials Inc.'s Canadian unit. The combined tariff rate is 28.25 per cent for Richmond, B.C.-based Catalyst Paper Corp. and 32.09 per cent for Montreal-based Kruger Inc.

Scott Doherty, a spokesman for Unifor, Canada's largest private-sector union, said Canadian newsprint mills have been placed in a difficult position. "They're in a serious situation, especially Catalyst and Kruger," Mr. Doherty said in an interview. Unifor represents workers at Catalyst and Kruger.

The Commerce Department hit Montreal-based Resolute Forest Products Inc. with a countervailing rate of 4.42 per cent in January, but did not impose an anti-dumping tariff.

RBC analyst Paul Quinn pointed out that Connecticut-based White Birch Paper Co., which has three Quebec paper mills through its Canadian unit, won't have to pay duties on groundwood.

In contrast to Canadian softwood producers that have been able to pass on the cost of lumber duties to U.S. buyers, Mr. Quinn said he doesn't expect newsprint prices will rise to match the equivalent amount in groundwood tariffs.

He said in an e-mail that he expects newsprint prices in Canada could also increase, though not as sharply as in the United States, due to some supplies that will remain within Canada instead of being exported.

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