Paper manufactured overseas is comparatively inexpensive and readily available, but what's its long-term potential for commercial printers here in the United States?
BY ERIK CAGLE
Like Beanie Babies and baseball cards, foreign paper has become too much of a good thing.
The respective markets all reached a saturation point, but when it comes to paper, you won't hear any printers complaining about the situation. Collectors may bemoan the dwindling value of Rainbow the Unicorn or a 1984 Fleer Update Kirby Puckett, but it's not likely the decline in price for Phoeno Star No. 2 is going to make a commercial printer throw a mug of coffee against the wall.
Foreign paper is inexpensive and readily available. It is also partly to blame for depressed paper prices in the United States.
"There's no question (foreign paper) was the cause of the weak market in the second half of the year," states Brian Kullman, paper supply chain strategist for R.R. Donnelley & Sons. "The print market was quite strong and printer/publisher inventories were reasonable."
The Asian economic woes and overcapacity may have played pivotal roles in the U.S. market. According to U.S. Census Bureau statistics quoted by Pulp & Paper Week, U.S. imports of coated and uncoated free sheet and groundwood were up 12 percent, while exports in the four categories were down an average of 6 percent.
There was a big increase in imports last year for both groundwood and free sheet papers, and it was a response by European and Asian manufacturers to the softness in Asia.
"If you look at relative price levels in Europe and North America, in their local markets, the price levels for groundwood papers are similar now, whereas they were 15 percent higher in North America last summer," Kullman points out. "Once the prices reach relative parity in the two markets, then the additional freight expense becomes more of a deterrent to shipping European paper here."