Paper Market Outlook — Stocks Are on the Rise
Excess capacity sometimes overwhelms the impact of exchange rates, Leclair says, as it has in Europe for the past couple of years. "Over the short term, manufacturers have an interest in running their machines and shipping wherever they can," he observes.
Stable or declining capacity is pretty much a North American phenomenon, the economist asserts. "It's certainly not the case in Europe or places like China and Brazil. Overseas, capacity is growing at a very rapid pace," Leclair says. "As a general rule, paper is consumed where it is produced, however."
While he sees at least the potential for a surprise, such as the exchange rate developing into a financial issue, Leclair expects it to be a relatively stable year for the paper market overall.
Don Jones, director of purchasing at Malloy Inc., offers a similar assessment from the printer's perspective. He regularly updates the company's book publisher clientele on trends in the paper market through its "Malloy Quarterly" newsletter. The shop primarily buys coated offset grades in rolls and sheets for its sheetfed and web press arsenal.
Jones says he noticed a significant change in that market around the start of the new year. "The white offset market is very different than it was a couple months ago when grades were tightly allocated and prices were going north. It seems to be the most volatile category now," he observes.
Although not tied to the recent tightness in the market, Jones points out that there has been some decline in demand for white offset papers as buyers shift to a high-bright groundwood grade. He estimates this change in buying pattern has siphoned away about 10 percent of the demand for white offset stock. "That market force is here to stay."
Regardless of the current conditions in the paper market, Malloy's advice to customers remains consistent, adds Joe Upton, vice president of sales and marketing. "To ensure paper is available for your work, try to preschedule jobs as far in advance as possible," he summarizes.