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Q4 Paper Outlook--Caution in a Moderate Market

September 1998

"More recently, quantities of paper have been at our beck and call," she explains.

"With projected rates of increased production through 1998 to be 2 percent for coateds and uncoateds (according to most paper predictors), I feel comfortable that, at least for the foreseeable future, I will not lack paper on which to print for the price I want to pay.

"Knowing that paper is readily available—in most cases, at stable, non-fluctuating prices—enables print buyers to drag their feet in actually placing larger orders until absolutely necessary," Dohman states.

There was a time, though, when that statement would have been absolutely false—circa 1980.

Colortone's Dohman remembers this period well. "Back in the late 1980s we were forced to convey to customers that we could only hold prices based on uncontrollable increases in paper costs, especially on sheetfed offset and coated grades," she states.

At Cedar Graphics, of Ronkonkoma, NY, Vice President Michael Clark reports that the standard purchasing procedure at his firm is to batch orders, entitling Cedar to volume discounts.

Many Large Clients
"Our criteria for purchasing paper naturally includes quality, price and availability," he says. "We have many large clients that require the same stock repeatedly, so we purchase very large volumes of these stocks and have them available at all times."

Terry Degler, paper buyer for Acorn Press and a 36-year veteran with the Lancaster, PA-based printer, knows all about pulp fact and fiction. As Degler tells it, a glut—and a subsequent return to more normal market conditions—soon followed a spike in coated prices about a year ago.

"Notable sheets do tend to yo-yo around a bit, but overall, coated has been holding fairly steady for the past five or six years," Degler says. "Any spot price increases are more the result of manufacturers seeking additional profit than any large-scale market forces."

Degler says much has remained the same in the paper purchasing business in recent years. One significant change has been in the ability of paper suppliers to respond virtually on-demand to an order.

"The days of large inventories are virtually over," Degler says. "Today, we pick up the phone and order four cartons of two skids, and 90 percent of the time we can get it the next day—suppliers are becoming increasingly competitive in the area of service."

And in the absence of significant price differences, it will most likely be service that defines the paper industry in coming years.


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