1st Quarter Paper Outlook
The winter months tend to signify the need for more—more clothing for facing frigid temperatures, more wood for the fire—and, this winter, if you happen to be a printer or publisher—a bit more money set aside for paper expenses.
As predicted, the fourth quarter of '97 saw an average increase of about 3 percent—and another increase is set to go into effect the first of January.
"This comes on top of a roughly 10-percent increase over the last nine months," notes Bruce Janis, president of MSPGA: Management Science for the Publishing and Graphic Arts (www. mspga. com).
"We should see a January increase of another 6 percent on a typical 40 lb. number five sheet—so we're looking at a two-or-three-dollars per $/cwt. increase," he says.
Janis points to a continued strong economy as the primary reason for the increase. "Advertising and pages were up nicely again this past quarter," he states.
Tristan Vogel, president of Metro Web, a financial printer in Hoboken, NJ, is also anticipating a first-quarter increase. "I've already been sent a minor increase from one of our mills," he relates. "The mills have been trying to lay the groundwork for the increase for the last several months—my feeling is that it will not be sustained.
"I think they'll get their increase, but due to competition, there will be backsliding."
Tightening, shortage or stockout problems seem unlikely for the present. Additionally, a stay in the implementation of a postal increase should keep postal rates at bay for at least the first half of 1998.
Fairly consistent paper pricing in recent months has given way to inconsistent pricing among printers—a factor that Janis warns should be of importance to print buyers (see MSPGA Internal Paper Analysis, above).
"What's interesting is that among the different printers, there is some fairly large disparity in what they're charging their clients—which reflects both markup and the printers' ability to buy paper," cites Janis.
"These disparities between printers are there," notes Janis, "so one really needs to be paying attention to it; it's not monolithic. If it hasn't been an important part of your overall budgeting process, make it one," advises Janis.
Because of the variances in pricing, opportunities may arise for print buyers to supply their own paper. "With variances, there are chinks in the armor—if you haven't looked at supplying your own paper, now's the time to do it," he says.
Feeling No Pressure
The anticipated increases don't seem to be alarming many printers, who are confident that a year similar to 1995 in any way is far from likely. In fact, a recent Printing Industries of America survey of web printers revealed that for the first time in recent years, paper prices no longer head the list of problems facing web printers. Although still a major concern, paper prices ranked third in the survey, behind a lack of skilled employees and over/under capacity troubles, respectively.
Only 15 percent of printers surveyed identified paper as the top concern—compared with 51.1 percent from the previous year.
Judging by the optimistic outlook of many printers, it would appear that a mild winter lies ahead—or is it just the calm before the storm?
"The economy cannot keep running at this pace. It's hard to believe that these steady rate increases are going to continue," notes Janis. "The January increase may not even hold across the quarter."
—Carolyn R. Bak