Paper Outlook for Q2 — Prices Holding Through Spring

"If I had to guess right now, the next increase won't be until July 1," Allen says.

Edward Murphy, vice president of commercial services for Hollywood, FL-based St Ives, also reports that the increased prices are holding—but he hopes for a small slip in groundwood pricing.

"I see the potential for a little slide on the groundwood market on into the second quarter as backlogs are reducing," he reports. "I'm hoping for a moderate slide prior to the fall catalog season."

He's not as confident concerning free-sheet pricing. "I think free sheet will stay where it is," he says. "The upcoming annual report season is short-lived—it won't be enough to sustain any further increases."

Janis isn't banking on any changes this quarter. There aren't enough factors to warrant more price hikes. However, the mills are in a strong enough position to maintain prices established last quarter.

"There isn't any softness out there—it's a strong paper market and a strong publishing market," summarizes Janis.

And a strong economy, for the moment—which is why the gradual increases have not been a noticeable cause for any concern. "As long as revenues can keep up with the increases on the cost side, you're not going to see a panic, and revenue has kept pace," explains Janis.

According to Janis, January's increase brings the calendar annual increase to 12 percent over and above the prior 12-month period.

Additionally, Janis observes that there is no great clamor for a move to short-run, cutoff presses—a sure sign that people are concerned with saving on paper costs.

Why the lack of worry? Possibly because printers may be focused on other pertinent issues, such as an overwhelming lack of available labor and rising labor costs.

Since the hikes have been incremental, they may appear non-threatening. However, it is advisable to keep a sharp eye on price increases—no matter how small.