Paper Prices Going Up or Down?
Regarding the shipment numbers, one must be very careful when examining statistics. North American printing and writing paper shipments were down 16% for the year 2009, but were up 3.5% in December 2009 from December 2008. This would appear to be a sign of strength—a solid rebound. While this is certainly positive, it is an increase from a very depressed level, a level depressed not only by weak consumption but also by inventory liquidation.
The inventory liquidation is over, and inventories are now low. This factor, more than the 3.5% shipment increase, suggests an environment favorable to paper price increases. For uncoated papers, prices are at reasonable levels, and increases are likely to be modest. Coated paper prices are more depressed, and if anti-dumping duties are imposed, the recovery in prices may well be more rapid.
How can you tell if a price increase will hold? It’s always a matter of supply and demand. Are you able to get as much paper as you need before the price goes up? If so, it is likely that supply is more than adequate and the increase will fail. If not, supply may really be tight, and the increase will hold—unless the tightness is artificial, driven by excessive pre-price increase buying.
Jack Miller is founder and Principal Consultant at Market-Intell LLC, offering Need to Know™ market intelligence in paper, print and packaging. Previously, he was senior consultant, North America, with Pira International.
Known as the Paper Guru, Jack is the former director of Market Intelligence with Domtar, where he also held positions as regional sales manager, territory sales manager and product manager. He has presented at On Demand, RISI’s Global Outlook, PRIMIR, SustainCom World and at various IntertechPira conferences. Jack has written for Printing Impressions, Canadian Printer, Paper 360, PaperTree Letter and Package Printing, along with publishing a monthly e-newsletter, MarketIntellibits.
He holds a Bachelor of Arts degree in Economics from The College of the Holy Cross and has done graduate studies in Statistics and Finance.