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Q2 PAPER FORECAST -- Paper Losses

April 2001
Printers debate the availability and prices of paper as the economy weakens.


BY CAROLINE MILLER


It could be said that as the economy goes, so goes the paper market. And, in recent months, that has certainly been the case. The slowing economy has resulted in what appears to be a stabilization in pricing and availability, reports NAPL Chief Economist Andrew Paparozzi.

"We saw paper prices continuing to aggregate along with the economy right through mid-year 2000. Prices really peaked sometime in the spring of 2000. Then, in the second half of the year, prices started to moderate significantly as the economy rapidly degenerated," he notes.

As the economy continued to weaken into the fourth quarter, Paparozzi began to notice—in his monthly survey of paper pricing and availability—that more and more printers were reporting that prices were stabilizing. "We had a huge majority report that prices were stable in the fourth quarter of 2000. That stabilization was in response to the slowing economy," he explains.

As a result of a weakening economy, many printers also began to see a slowing in business, according to Paparozzi. "In fact, for the first time in 14 months, we saw our panel's sales decline in December. As we've moved into the new year, NAPL panelists have continued to report stabilized paper prices and availability, he reveals.

In January, 88.2 percent of those surveyed reported that paper is as available as it was the prior three months. The panel also reported that paper prices were stable, with 67.8 percent reporting stable prices and 29 percent reporting that prices were rising.

Crunching Some Numbers
These number are in direct contradiction to what printers were reporting a year ago, states Paparozzi. "One year earlier, we saw 72.5 percent reporting that prices were rising and 26.5 percent reporting that prices were stable."

While NAPL's survey is made up of more than 100 printers across the United States, there are some printers who believe that prices and availability have not yet stabilized. Bill Orndorff, Perry Judd's vice president of materials management, characterizes the current paper market as being unsettled, especially when it comes to pricing. "Lower-end grades are experiencing increases, top-end grades have already decreased and middle-value grades are becoming a little more flexible." He also reports that paper availability has followed the pricing curve.

Orndorff isn't the only one taking issue with the belief that prices and availability have stabilized. Michael Dubowitch, president of Philadelphia-based Oak Lane Printing, claims that the availability of uncoated paper has become tighter and prices have continued to increase.

 

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