State of Paper in the High-Speed Inkjet Market: When Will Prices Come Down?

Some paper mills are doing better than others when it comes to inkjet grades due to their aggressive position - whether from a price point,
a quality position or a geographic coverage standpoint.

It’s undeniable. The growth in the production inkjet application space is exponential and poised to explode. The first segments to convert to inkjet were the transactional and book publishing space. This transition made sense as the costs to convert to inkjet were quantifiable, print volumes were high, run lengths were reduced and low area coverage from toner or offset to inkjet made the return on capital equipment investment realistic.

Direct mail applications are now just taking hold. Ink coverage is typically higher than book and transactional printing, and the content has the potential to be highly personalized and more relevant. The commercial printing space is just beginning to adopt high-speed inkjet technology as the quality approaches offset output.

Production inkjet equipment vendors are poised for this growth by constantly enhancing their equipment with innovations to ink, inkjet head technologies, drying systems, data transfer, as well as expanding their product offerings to include sheetfed inkjet presses and the promise to print on conventional offset paper.

As the inkjet press performance and quality improve, in addition to the early paper suppliers, more traditional paper mills are pushed to expand their portfolios to include treated paper offerings for high-speed inkjet presses and applications.

Average engine utilization is increasing upwards of 250%, according to one press vendor. Year-over-year equipment placements are exceeding OEMs’ expectations. The volume of paper going through these inkjet presses will naturally increase due to increased capacity on-press, as well as from additional press placements.

Paper is an integral part of the decision-making process of press choice and affects the quality of output. Inkjet press manufacturers understand the importance of paper and most employ an individual whose responsibility it is to work with paper mills to test and qualify papers for applications and their customer needs. Many supply a list of tested and qualified papers to their customer base. Some OEMs go as far as rating the performance of papers in their ink and press environment. The OEM media experts serve as valuable liaisons between the OEM, paper mills, existing customers and prospects.

As this volume potential shows rapid segment growth, paper mills are rapidly developing inkjet treatment or coatings for high-speed inkjet presses. The transactional and publishing space is crowded with paper choices, as ink coverage is low and paper costs are a huge consideration. It is not unusual for a transactional printer to use an offset paper cost as an appreciable consideration.

It is only as the transactional or book printer adds color, or requires higher quality output, does the inkjet-treated sheet have relevance. As this space becomes increasingly competitive, the paper may be the differentiating factor.

With more presses being installed into new applications that require higher ink coverage and with quality approaching offset, now more than ever does paper unquestionably impact the finished product. Paper formulations and offerings are changing to adapt to press configurations, as well as to the needs of a customer’s application.

The trend the print community is watching is the ability of high-speed inkjet presses to print on untreated commodity coated offset sheets. Coated mills are contemplating whether or not to develop grades for high-speed inkjet presses if the trend is headed towards commodity coated paper. Paper mills that are now producing inkjet-treated coated papers are charging a premium that seems cost-prohibitive for asset owners to incorporate into their costing models.

At this stage, a select number of press manufacturers are developing presses for commodity coated papers. The cost implications of running an untreated coated paper typically require more expensive inks or a pre-treatment to the paper. Currently the installed base is small due to the limited number of untreated coated papers that perform well in this press environment.

It seems that the press and ink combination works best on higher-end coated offset paper, and not all untreated coated sheets perform to offset-quality expectations. There can be a compromise to speed of the engine when running coated offset papers.

The other consideration for this application is that not all commercial printers run 100% coated paper so, if they invest in this direction, the cost to run treated uncoated inkjet papers is redundant and more costly than necessary. Most press vendors offering inks and presses for the commodity offset papers still have an extensive “traditional” inkjet press offering.

Cost-effective treated coated paper solutions - whether gloss, matte or silk finishes - are still necessary for market expansion into commercial printing. Most commercial applications require coated papers, which still poses challenges for inkjet. Cost and availability, as well as ink type, impact choices for press and paper combinations.

The growth in the inkjet space is of importance to paper mills as offset volumes are declining and they are looking to new market opportunities to supplement capacity. All indications are that the growth segment is inkjet treated or coated papers, not only for the continuous-feed presses, but sheetfed inkjet systems as well. As more mills are introducing inkjet treatments of coatings to their papers, the question becomes: When will prices come down? The pressure for pricing to approach the offset price range is still a bit unrealistic at this stage of the product cycle. Some mills are doing better than others due to their aggressive position, whether from a price point or a quality position or a geographic coverage in the market.

Some paper pricing seen by OEMs and mills are so low that the prices seem unsustainable. Presumably this pricing strategy is being used to gain market share, as well as to fill capacity on paper-making machines. It is important to understand the research and development costs necessary to make treated inkjet paper formulations and bring them to market. Paper mills’ high operational costs, combined with current high paper pulp prices, are responsible for the higher prices being charged for inkjet paper.

Supply Chain Stability Is Key

The intention of the mills engaged in manufacturing and marketing treated inkjet papers is not to gouge customers or make huge profits. It’s to sustain a mill’s capacity, business and to be a fiscally and technically strong partner to OEMs and customers. A fiscally strong mill is critical to the consistent supply of high-quality paper. We’ve recently seen some mills with financial issues and that exposure has created a panic mode for asset owners to find papers and mills to potentially replace those quality sheets.

Most domestic mills are now making treated inkjet papers, as well as offshore mills that are making strong inroads in the U.S. market. The true test of the advancement of untreated coated papers is the achievement of color gamut and consistent quality. More mills are manufacturing better quality papers. Increased competition, along with increased volume in more segments, will help drive down pricing, at least on the treated uncoated side of the market.

The making of coated papers is more challenging. But strong cooperation between the mills and OEMs is advancing the progress in bringing commercially viable products to market. All mills face challenges of delivering price-competitive products in the right basis weight, shade, finish and width, in the right region of the country.

Logistics and freight costs are still of paramount importance. Logistics become more important as coated inkjet papers take a foothold into the commercial market, since the volumes are not close to the paper volumes of uncoated treated papers that transactional and book printers use. Subsequently, forecasting paper usage is almost impossible, as most commercial jobs are more immediate in nature.

Perspective is important in the growth cycle of high-speed inkjet. Press manufacturers are motivated to sell equipment and need paper to exhibit the virtues of their equipment capabilities. Paper mills need the OEMs to sell more presses in order to supply more paper. Asset owners of inkjet equipment need a trouble-free, economical press, paper and ink situation so they can be competitive.

Education is still key when discussing paper in inkjet applications. Because paper has such a great impact on the cost of a printed job, cooperation and understanding amongst equipment vendors, paper mills, and their channel and customers are imperative - and an ongoing, changing process.