OSLO (Reuters) - Norwegian papermaker Norske Skog (NSG.OL: Quote, Profile, Research, Stock Buzz) expects European newsprint prices to increase in 2009 by more than rising costs, giving some margin improvement, the company's chief executive said on Wednesday.
The company sees a tighter balance in the European newsprint market due partly to capacity closures, but also aided by price increases in North America and steep price rises in Asia, Chief Executive Christian Rynning-Toennesen said.
"We believe in price increases in European newsprint next year," Rynning-Toennesen told the Reuters Paper Summit, calling it "highly likely."
He declined to say by how much he expected prices to rise but said: "There's an unusually strong combination of price increases in the other major markets in the world plus a tightening of the market balance in Europe."
Costs are rising, though there has been some easing off in the rise in energy prices and recovered paper prices have flattened out, he said. "I still expect cost pressure throughout the rest of this year," he said.
"In European newsprint, it is likely that we will see price increases bigger than cost increases so that there is some margin improvement," Rynning-Toennesen said.
Magazine paper prices are up and can go further, he said.
"We have been able to implement from 5 to 7 percent price increases from the second quarter into the third quarter in our new contracts, and we still think there is room to increase prices of magazine paper further from where they are now," he said.
(Reporting by Terje Solsvik, Camilla Knudsen, Sakari Suoninen and John Acher; Editing by David Cowell)
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