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Paper Outlook--No Woe, Status Quo

June 1999
There are few signs that current, favorable conditions for paper pricing and availability will change anytime soon.


BY ERIK CAGLE


The current market prices for coated and uncoated groundwood and free sheet are progressing like a '74 Pinto spinning its wheels in the snow: going nowhere slowly and, if anything, digging itself into a deeper hole.

Don't expect "CNN" to break into its regular news coverage with a special market report on paper. Same low prices, different day. Same high availability, different quarter. And still no drastic changes in sight.

The price increases being implemented aren't taking hold, according to Karen Kelty, director of marketing for King of Prussia, PA-based XYAN, a leader in the on-demand printing market. XYAN primarily consumes uncoated stocks, but Kelty says the company will be moving toward using more coated grades.

Kelty doesn't envision a change in the domestic market during the foreseeable future and believes a concern over the consistent availability from foreign suppliers is the only reason keeping many printers from taking advantage of the superior prices.

"One interesting variable is the availability of high-quality paper from South America and Indonesia, which is priced below what is available locally," Kelty points out. "The opacity and whiteness of these foreign products is excellent. The big issue is long-term availability. You may be able to get it today, but what will be the situation in a few months? That's what is holding companies back from utilizing these sources."

Keep It Light
Coming from an on-demand, short-run printing perspective, Kelty discourages customers from becoming more aggressive in the quantities they order. XYAN's just-in-time practices, she notes, should discourage that.

"The pricing of paper shouldn't affect the quantities our customers are ordering if we are doing our job," Kelty stresses. "We try to show customers the disadvantages from an overall cost perspective of stockpiling and managing large inventories of documents. In addition, there are many issues involving waste obsolescence that companies overlook when they just consider the cost per page. We point out the advantages of printing just what's needed, when and where it's needed, then reprinting on-demand as required."

Mark Noe, purchasing manager for Broadview, IL-based Lehigh Cadillac Direct, agrees that, due to weakness in foreign economies, lower priced imports have become viable alternatives, even as domestics have seemingly bottomed out.

"It appears we have reached the lowest prices for the next 12 months," Noe remarks. "We may see some price recovery in the second half [of 1999], but in certain grades, they've reached their lowest prices in the last five years."

 

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