Paper Forecast — Consolidation Cuts Through

Kullman believes the market will remain true to supply and demand levels, and perhaps the somewhat smaller pool of paper companies will show a little more pricing discipline. The slow rate of capacity expansion is a more important issue.

"Larger forest products companies may be more willing to take downtime rather than cut price to secure orders, but it is easier to say that than do it in the face of unsold capacity," he says. "The paper industry is still relatively unconcentrated compared to markets for other commodities—oil, steel and chemicals—and it faces global competition."