Paper pricing in the printing industry has always been a bit of a roller coaster ride, with hefty increases due to supply shortages in 2018. But according to D. Eadward Tree in Publishing Executive, don’t hold your breath waiting for a reduction.
“Prices for publication papers have stabilized since late last year, and the usual post-peak glut and price slashing don’t seem to be on the horizon. In fact, more paper shortages could develop in a matter of months,” Tree explains.
“Welcome to the new normal for magazine and book papers,” Tree continues. “Structural changes in the industry and the market have empowered paper companies to put the brakes on the paper-pricing thrill ride.”
We saw the paper price storm of 2018 coming from a long way off, and we actively worked to shield our customers from the worst of the paper shortages. And yes, we are seeing prices stabilize now, which makes us all breathe a little easier. But, like Tree, we don’t expect a reduction in paper costs.
“In the past, such shrinking demand would have led to overcapacity and cutthroat pricing. But two developments have permanently altered that pattern,” Tree notes.
“The e-commerce boom is creating more demand for cardboard and other packaging papers. Rather than continuing to run unprofitably or being idled altogether, several machines that used to make paper for magazines or books have been overhauled to produce boxes for the likes of Amazon,” he explains.
“Because of consolidation and shutdowns, most segments of the North American publication-papers business are dominated by only two or three manufacturers. For both coated freesheet (used for glossy magazines and brochures) and uncoated freesheet (copy and book paper), two companies have more than 90% of the continent’s capacity.”
The bottom line? Work with your sales representative to ensure proper paper allocation. The sooner we know your commitment on paper, the sooner we can work with the mills to get you what you want, when you want it, to keep your job on schedule. This ultimately is the key to weathering the paper market.