A Critical Issue for Publishers as well as Printers
It’s no secret that the paper market is volatile; in fact, it has become increasingly unstable. Wood pulp costs continue to jump and impact paper prices. Mills have closed due to exorbitant raw material costs, among other factors.
Pulp Demand Soars
Why? A somewhat universal backlash against the use of plastic for certain items has resulted in manufacturers looking for paper alternatives. New and heightened uses for paper include products within the hygiene, clothing, and energy industries. In addition, China, a very large global supplier of pulp, recently enacted an environmental initiative that closed 279 pulp and paper mills as well as capped pulp capacity. Further, China banned the use of waste paper for recycling. The result of these factors has seen pulp pricing blowing up – from $700-$750/tonne last year to almost $1,200/tonne today.
It is worth noting that new pulp mills are being built all over the world, but there will be a lag time as they get up and running.
Paper Mills are Closing
Why? Market pulp has been on a price run-up in North America over the last year and a half, and recovered paper costs are hitting record highs. But the cost of other raw materials such as chemicals and fillers has also spiked. Some mills have found that they simply can’t absorb the run-away input costs and turn any profit. Fewer mills mean fewer options, reduced supply, and higher prices.
The current state of affairs has paper buyers hearing daily that supply is either unavailable or scant, regardless of what their clients would be willing to pay. Another wrinkle in the pursuit of paper is an acknowledgement that some paper buyers today simply don’t possess a thorough knowledge of the paper industry, and thus are less savvy at navigating substitutions, negotiations, and procurements.
Another reality of this situation is the discontinuation or unavailability of certain brands. While the range of brands may diminish, requesting a certain paper grade without specifying a particular brand will increase the probability of securing paper that has the same brightness and opacity that the publisher expects. Put simply, publishers will be wise to request a particular grade of paper for their work, vs. a specific brand.
Sheridan Vice President of Operations Paul Loy provides the following perspective: “The current paper market seems unable to “turn the corner”. Just as we see slight signs of recovery, it turns down again and we are dealing with reduced printer allocations, extended delivery dates, and zero notice. Paper mills appear to be focusing on high profit stocks, and reducing the capacity of the more common stocks. Eventually it will stabilize but until it does, having the ability to specify grades versus specific brands is critical to us being able to meet our customers’ expectations.”
What else can Publishers do?
- Plan accurately.
- Project long-term.
- Communicate paper needs ASAP.
- Be flexible.