Business Management - Industry Trends

BY MARK SMITH Technology Editor The end had to come sooner or later. Everyone knew the buyer's market for printing stocks simply couldn't last forever. Eventually, the adjustments made in papermaking capacity by suppliers and increasing demand fueled by the economic recovery had to bring price increases that stick. Paper companies have announced or already implemented price hikes for most grades, and another round of increases may be in the offing before the end of the year. There's little reason to hope for a repeat of 2003, when increases were floated, but never fully implemented or were subsequently rolled back. Perhaps the clearest

BY MARK SMITH Technology Editor Paper costs can account for as much as 60 percent or more of a typical commercial printing job. For that reason, the fortunes of both industries are inextricably linked. But it is not a one-to-one relationship. Paper pricing and availability can swing in cycles that don't mirror printing business activity, either in timing or degree. Printers are insulated from the impact of rising paper prices, at least to some extent, because the material is more or less a pass-through cost. In recent years, both industry segments have been enduring a dramatic drop in pricing power. Paper companies have

BY MARK SMITH Moving in fits and starts is about the best that can be said for the paper industry's attempts to rebound from its recent market woes. Across most grades, prices have been seen to be on the rise, but also continuing to decline. In both cases, the change has been relatively minor. The quarterly financial reports from major manufacturers again tell the story. Common themes include a continuation of competitive market conditions and rising costs. "This has been a particularly difficult quarter for the company," reports Sappi CEO Jonathan Leslie. "Our third quarter results were achieved against a background of lower pulp

BY MARK SMITH On paper, the interplay of supply and demand looks like a straightforward model for the forces that shape a market. When it comes to predicting the outlook for paper, though, lately it seems as if one might be better off reading tea leaves. Paper makers have gone to great lengths in a collective attempt to rationalize the supply. Unfortunately, the demand side of the equation hasn't performed in the way that was hoped. The industry also has been buffeted by developments beyond any company's control. Quarterly financial reports from major manufacturers have included a mixed bag of earning declines, losses

BY MARK SMITH Uncertainty and Iraq. In the first quarter of 2003, that's basically all that was needed to be said about the short-term outlook for the U.S. economy and all of its industry segments. In many cases, though, this extraordinary (in economic terms) concern masked underlying weakness in demand. That was true for paper and printing, alike. The new year had been expected to mark a rebound in the paper market. Chiefly because of the aggressive moves made by manufacturers to bring capacity more in line with demand. The problem is, the demand side of the equation hasn't shown clear signs of

BY MARK SMITH Predictions of the paperless office may have lost their edge, but not the threat of a paperless printing plant. One only has to go as far back as 1995 to find the last time some printers were faced with shutting down their presses for a lack of paper to run through them. The buyer's market of recent times saw printers, and their clients, being doubly blessed with a ready supply of paper at historically low prices. Everyone knew it was just a matter of time before the market swing came, though. In the case of paper, the more apropos saying would

BY MARK SMITH For better or worse, the fortunes of printers and paper producers are inextricably linked. If one sees this as an adversarial relationship, then the paper producers clearly are in a defensive position. Printing papers have been on a downward trend for some time and now are at or near historically low prices. Even the mega-deal consolidations among the major producers have yet to have any obvious impact on the level of competition in the marketplace. Lower paper prices are not necessarily good news for the printing industry, so say even those responsible for buying large quantities of it. "We

BY CAROLINE MILLER The price of paper continues to remain at an all-time low thanks in part to industry consolidation, a stagnant economy and weak demand. However, in the long term, market watchers are predicting that prices will begin to increase as the economy continues its slow climb out of the recession. The National Association of Printing Leadership's (NAPL's) March survey of printers found that just 9.8 percent of those responding to the survey reported that paper prices were rising. "That is just half of the 18.4 percent who reported that paper prices were rising last November," reveals NAPL Chief Economist Andrew Paparozzi. "In

BY CAROLINE MILLER It's a good news/bad news situation. The good news: Printing paper prices are very favorable and popular grades are readily available. The bad news: When prices are low and paper is readily available it generally means that the demand for printing is soft, as well. And that is exactly what the trend in the paper market has been for the past year. In late October and early November, just 2.5 percent of those who responded to the National Association for Printing Leadership's (NAPL's) national monthly paper survey indicated that paper prices were rising in that period. "It's the lowest we've ever seen that

Paper prices and production drop as a slow U.S. economy continues to plague suppliers. BY CAROLINE MILLER A flagging U.S. economy, an increase in offshore paper and the never-ending merger and acquisition dance among paper producers is continuing to keep the price of paper low, reports NAPL Chief Economist Andrew Paparozzi. In his latest survey of printers, 72.5 percent of those polled responded that paper prices are stable. However, what is more interesting is the growing number of printers that are reporting falling paper prices. In June 2001, 18.5 percent indicated prices were falling. That number has increased progressively from last summer when