Brian Kullman, vice president of paper services for R.R. Donnelley & Sons, became aware that the market was softening last summer, which is unusual, given it's a time when demand is generally headed toward a seasonal peak.
"It's not due to a lack of demand or unusual publisher inventory levels. The issue is imports," Kullman says. "The Asian recession and resulting decrease in demand for paper has been exported to America, particularly groundwood paper. Figures from late last summer show the European industry is running close to capacity—its rate of manufacturing is a comfortable operating rate. As further statistical evidence, paper has been redeployed in North America."
Kullman notes that price levels in the United States last summer made America an attractive choice for European mills. As for Asia, he feels paper consumption should return to normal levels there once the recession concludes.
There could be a paper thawing once spring arrives, but until then, "it'll be a tough winter for paper makers and a good winter for buyers," Kullman says. He sees more coated freesheet capacity washing up on U.S. shores.
In terms of growth for the paper market, he predicts slow growth in America with little to no growth in Asia. Both the former Soviet Union and Latin America are also floundering.
"I don't believe anyone's forecasting a collapse in the market like we saw in 1996," Kullman remarks.
Not everyone sees the excess of foreign supply in glowing terms. According to Janis, it's a matter of quality.
"Who wants to buy Russian paper through a North Korean bank?" he asks. "Just because paper is available doesn't mean it's good paper. The question is: Do you want it once you have it? If there's foreign availability from European mills, it's a lot different than paper from Malaysian mills."