Norske Skog dumps on cut-price newsprint

Cut-price paper hits the headlines again, as Norske Skog cries foul on cheap French and Korean newsprint drying up the local market. The low-balled imports are killing competition and threatening jobs, claims Norske Skog alleging dumping margins of 6.6% and 12.85% respectively

Barely a month after it binned its Chinese copy paper case the Anti-Dumping Commission is back on deck. Norske Skog lodged its application on March 24, pinning an 3.85% price point drop on the allegedly undervalued imports. The ADC reviewed the application and found reasonable grounds to kick off a full-scale investigation into the matter.

The application names UPM in France and Jeonju in South Korea as the culprits that have increased their penetration of the market despite an overall decline in demand for newsprint. Newsprint imports from France and Korea accounted for approximately five per cent of the Australian market in 2010/11 but this jumped by a dramatic 70 per cent to 13 per cent last year.

Norske Skog is the only Australian producer of newsprint from its Albury and Tasmania mills. It sells to all the major newspaper chains including News Limited, Fairfax and APN. The company claims that the unrealistically low prices charged by the overseas mill impacts its long-term contract negotiations as well as causing it to lose profit margins.

It claims that the dumped prices have been the prime reason for profits falling by 20 per cent following the renegotiation of key contracts.

In its application to Customs it states: Australian industry manufacturing newsprint has experienced material injury in 2013/14 as a direct consequence of responding to import prices of dumped and injurious imports from France and Korea. The dumping margins for imports from France in 2013 were approximately 6.6 per cent [and] from Korea at 12.85 per cent. Dumping margins in early 2014 are significantly higher for imports from both sources.

 Norske Skog claims that anti-dumping measures are necessary to minimize the impact of dumped prices in further contract re- negotiations. A failure to take action will likely result in an escalation of dumped imports. This will cause further price depression, price suppression and reductions in its profits.

It calculates the dumping margins for the French newsprint during 2013 at $40 per metric tonne (6.66 per cent of export prices); from Korea (based upon imports into W.A. and Queensland) at  $83 per metric tonne (12.85% of export prices).  However in early 2014, the weighted average dumping margins were calculated at 41.83 per cent for France and 32.07 per cent for Korea.

Norske Skog is asking for a quick determination as soon as the 60-day investigation is completed.

As the case heats up, Australian Forest Products Association (AFPA) has come out in support of Norkse Skog, as CEO Ross Hampton calls for further reforms to anti-dumping measures.

"The implications of this alleged dumping directly affects the livelihood of Australian families living in regional areas in Tasmania and the Albury/Wodonga area," he says.

"The AFPA is already on the public record having noted that improving import data transparency is critically important during the investigation of anti-dumping and subsidy cases. The Act, if fully implemented, will help preserve Australian jobs and manufacturing capability that are threatened by dumping activity."

According to Tim Woods, managing director of IndustryEdge, publisher of industry bible Pulp & Paper Edge, the newsprint market has been marred in recent years by the rise of cheap imports.

Compared with the recently dismissed Chinese copy paper dumping case, Woods says, "This case is equally significant and likely to be just as rancorous within the Australian industry."