Q3 Paper Outlook--Predictable Patterns
BY CAROLYN R. BAK
The second quarter of 1998 succeeded in delivering the type of paper pricing atmosphere that thrills commercial printers and publishers, but causes journalists covering the market to squirm.
“It’s been very quiet,” reports Bruce Janis, president of MSPGA: Management Science for the Publishing and Graphic Arts. “This past quarter was really the first quarter in over a year that we haven’t had some kind of increase.”
Brian Kullman, vice president, material procurement, R.R. Donnelley & Sons, attributes the lack of pricing activity this quarter to seasonal slowness. “Consumption is at a seasonal low point in the second quarter, then begins to rack up in July,” he states.
While the paper market has stagnated this quarter, prices did go up significantly last quarter. Early on in January, the typical No. 4 and 5 sheets increased in the ballpark of 6 percent.
“There were increases in the beginning of the year on coated groundwood; coated free sheet tried and wasn’t able to make it stick,” Kullman relates. “Coated groundwood has moved up in an intermittent pattern.”
The beginning of the year, however, did not set the pace for paper pricing. By the second quarter, activity had became relatively dormant. MSPGA research found very little variation in paper pricing this quarter.
“There weren’t any real surprises,” summarizes Janis.
Varying Industry Opinions
Hold on, though. The surprises could come next month. According to Janis, indications point to a price increase on typical No. 4 and 5 sheets, effective the first of July. Because of the industry’s strong revenue, such increases remain absorbable.
“Another 5-percent increase would be completely in line—that’s three dollars per hundredweight for a typical sheet,” Janis assesses.
However, not everyone in the industry is anticipating a jump in paper prices this summer. Some analysts are projecting that prices have currently hit a peak and are going to slide, due in part to the Nova Scotia startup of Stora North America’s supercalendered paper machine, reportedly the widest and fastest SC machine in the world.