Printers Winning on Paper

"Increased availability of foreign paper available to domestic markets has resulted in an extremely soft market," Hilliker says. "Without a significant rebound in world economies, the foreign paper supply will continue its growth."

Brian Kullman, paper supply chain strategist for R.R. Donnelley & Sons, notes that a buildup in mill inventory is also depressing prices. Strong import levels, particularly coated free sheet, have also played a significant role in affecting the domestic market.

As for uncoated free sheet, Kullman claims that particular market has been "on its back" for some time. "There is an attempt to get a price increase. That won't necessarily translate into price increases in other grades, and I don't know whether the market will accept that increase or not," he says, noting that prices are starting to get down toward the lows that were seen in 1996.

"They're not there yet, but they're a lot closer than they were even six months ago," he contends. "So based on recent history, the market is starting to approach the low point seen in '96, which was a terrible market from the paper makers' perspective. How much lower it will go, I'm not sure."

C. Stephenson Gillispie, chairman, president and CEO of Cadmus Communications in Richmond, VA, has been keeping a watchful eye on other aspects within the paper community that are affecting prices.

"We continue to witness significant consolidation in both the mill and merchant communities," he says. "Xpedx's purchase of Zellerbach in July of 1998 was notable in that, while very well managed, the merger effectively narrowed the field of national-level distributors to two players."

Gillispie concurs with his colleagues on the subject of pricing levels, which he expects will remain flat through the balance of the year. "It is questionable whether the recent attempts to increase offset mill prices will take hold and have any material impact," he says.