Q3 Paper Outlook–Predictable Patterns
If strong production of supercalendered grades causes the paper to intrude sufficiently into the coated groundwood market, lower pricing could prevail for the latter half of 1998.
“I realize that possibility exists,” acknowledges Kullman, “but many mills seem to feel that they’re quite sold out for the second half [of the year], and could support an increase in coated groundwood.”
Supply and Demand
“There will be an attempt to increase price,” continues Kullman. “Will it be successful? That will hinge on how quickly the Stora machine will produce. Opinions are going in different directions.”
With Stora and other mills running their machines at full capacity, will paper supply outweigh demand? Janis doesn’t think so. Printers haven’t overstocked, and they need the paper that mills are manufacturing. That’s the type of scenario that supports price increases.
“There haven’t been any major changes in supply for quite a while,” Janis says, “and there’s nothing on the horizon to imply any changes in that direction.
“The inventory situation has not changed all that much from the printer’s standpoint,” he adds.
“In terms of what I have visibility over,” Kullman observes, “printer/publisher levels in R.R. Donnelley are at very manageable levels. There is no significant buildup in the Donnelley system.
“With inventories at modest levels heading into the busiest season of the year, and mills running at full capacity, that to me says groundwood paper prices will go up,” concludes Kullman.