Q3 PAPER OUTLOOK — Paper Thin Market

Europe-based Foex Indexes Ltd., an independent publisher of pulp and paper price indexes, says “small rays of hope can be detected in the U.S., with consumption and production numbers up from early 2002.” The market research company claims several price increase attempts have had partial success, and it also sees the end of the war in Iraq providing some relief in the U.S. advertising sector.

All things considered, “unsettled” might be the best way to describe the outlook for the paper market.

Stopping the Presses

A lack of solid information and price stability led Perry Judd’s Inc. to suspend publication of its “The Paper Mill” quarterly customer newsletter, reports Bill Orndorff, vice president of materials management for the Waterloo, WI-based printing organization. The company hasn’t issued a new edition since the fall of 2002.

“It’s a matter of having information of good value to disseminate in the newsletter,” Orndorff says. Given the sometimes crazy things going on with pricing, he doesn’t see any point in making statements about the outlook in a quarterly publication. “We’re dealing with market realities as they happen and now disseminating information to customers through other, more immediate, means,” the printing exec says.

Perry Judd’s customer base and capabilities dictate that he focus on web paper grades. In that segment, Orndorff says a recently announced bid to raise prices by $3 a ton resulted in about 30 percent of the paper companies actually instituting the full increase and being able to hold it. Others backed down and instead tried to institute a $1 or $2 price increase, he notes.

“The day after the price increases were announced, you could still source spot work just as aggressively as you could three weeks before it was announced,” the materials manager reveals.

Orndorff is hesitant to make any predictions about the outlook for paper, other than to say that he believes prices will remain stable throughout the summer and it will continue to mostly be a buyer’s market. That’s assuming buyers behave sensibly.

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