Paper Forecast — Calm Seas Ahead

While Paparozzi believes printers will see continued paper price stabilization, Noe predicts a different paper scenario. "In the next six months, pricing will likely trend up slightly or hold steady as supply is kept in balance with demand." Noe also believes that further consolidation among paper companies and emerging online paper buying initiatives will have more of an impact on paper prices over the next year.

"Consolidation is allowing suppliers to better control excess capacity, which in turn allows for more stable pricing in the short term. In the long term, this capacity control will likely put an upward pressure on prices," he notes. But it's not just consolidation that will make its mark on the paper market in the coming months, according to Noe. The movement toward more online paper purchasing is going to greatly impact prices in the next year or two.

"These companies are not making a large impact now, but they are providing a great deal of information. As the online companies achieve greater scale in terms of transactions cleared, they should make a significant impact on the market," he says.

Karen Kelty, of King of Prussia, PA-based XYAN.com, also foresees a time when online paper buying will have a strong impact on paper prices. She agrees with Noe's philosophy that increased access to information will mean lower prices. "When you look at the e-commerce model, you see that the consumer has access to a lot of information. And when you have that kind of access, it gets highly competitive," Kelty explains. She also believes that more online purchasing of paper will require the paper industry to become much more streamlined and will help wring the current inefficiencies out of the market.

Smooth Sailing
While Paparozzi concedes that paper industry consolidation and e-commerce will impact paper prices, he still contends that the major issue for printers is the slowing economy. "All the other things that are affecting our industry will continue to have an impact but, on top of that, we have to start monitoring the economy very, very closely," he cautions.