Weak Demand Will Mean Higher Paper Prices

Decreasing demand for publication papers in the U.S. is apparently having a counterintuitive result: higher prices. Or, at the least, higher minimum price levels during down markets. There’s a logical explanation, and it doesn’t involve repealing the law of supply and demand.

With so many paper companies in or on the verge of bankruptcy, significant capital investments in existing machines are rare. The most efficient machines today are likely to remain the most efficient for years to come.

That means the industry’s efficiency gains are too meager to counter the impact of rising input costs.