Sheridan Magazine Services: News Releases

Paper Market Tighter, Prices Higher

February 2008 — The news from the paper mills isn't very good these days. Environmental pressures are greater, operating costs are higher, losses are steeper, and mergers and buy-outs have been coming thick and fast. As a result, the market's tight and getting tighter — and prices are going up accordingly.

Industry experts predict across-the-board increases of up to 21% by the end of 2008. And some papers may not be available at any price.

More than 700,000 tons of European paper were taken out of the U.S. market in 2007 as mills closed and the value of the dollar declined in comparison to the Euro. Mill closures and machine shut-downs also had a significant effect on the North American market, resulting in a reduction of more than 1 million tons of paper. More closures and machine shut-downs are expected in Europe and North America this year.

As more machines are taken out of play, mills tend to discontinue the grades and basis weights that they feel are less profitable. The situation is further exacerbated by the remaining mills' inability to stay far enough ahead of demand to maintain excess inventory in distribution centers.

Prices for recycled papers are trending higher still; International Paper announced earlier this month that as of March 10 it will be increasing the upcharge for recycled content on its Imaging Papers from $4/cwt to $5/cwt, due to the sharp rise in costs for post-consumer waste being driven by strong export demand and rising pulp prices. Other suppliers are expected to follow suit.

And papers certified by the Forest Stewardship Council (FSC) will be even harder to get. Not only is there a great deal of pent-up demand, but recent mergers have adversely affected the supply chain. Domtar, perhaps the biggest maker of FSC-certified paper, closed the mill where FSC paper was made as part of its merger with Weyerhaeuser, and hasn't yet been able to get an alternate mill certified. Stora Enso North America — another leading supplier of FSC paper — was just acquired by NewPage; mill closures announced to date will not affect its FSC sheets.

The good news is that both United Litho and Dartmouth Printing Company have strong, long-standing relationships with the biggest mills in our market. Those relationships are critical, ULI Purchasing Manager Melissa Fisher explains. "Because we're already good, long-term customers who buy large quantities on a regular basis, we'll be in a much better position to continue to get the paper we want in a tight market. But advance notice of any special needs is really important, and it's always a better bet for our customers to use the standard papers that we keep in stock. We might be lucky enough to get a special-order paper at first ... and maybe even for months. But when the market gets tighter and the mills have to scramble to keep their big customers supplied, small or occasional orders are the first to be sacrificed."

Get more information on paper trends.