The Catablog
Posts Tagged ‘paper prices’
Fraser Papers Files for Bankruptcy Protection
Fraser Papers, which operates two paper mills and two pulp mills, produces mostly uncoated publishing grades, although they do manufacture some coated groundwood products. Annually, they produce 410,000 tons of paper and 615,000 tons of pulp. The company claims that, at least initially, their operating plans remain unchanged, and that they will continue to manufacture specialty paper products for existing clients. How long that continues to be the case depends on how much cash they can generate to continue operations and how many orders they continue to receive.
This is the second North American mill to file for protection this year, click here to see the first. A continuing trend? Doubtful. But, if Fraser fails to generate enough cash to keep paper operations going, it will force many of their clients to seek paper elsewhere, and that could tighten the market up.
The Changing Paper World, Spring 09 Edition
In looking back at what I was predicting to happen in the first part of 2009, I have found that I was right about decreased demand, decreased pricing and increased downtime and capacity reductions. But I was not envisioning these types of numbers:
Decreased Demand
Through a variety of different end-user actions, such as reductions in page counts, changes in trim sizes, pared-down mailing lists and cancelled print projects, consumption of coated paper in North America has fallen over 25% since the third quarter of 2008. So far in 2009, shipments of paper have fallen by over 20% on a monthly basis as compared to shipments in 2008. This trend is expected to continue until at least the second half of 2009.
Because of these actions, the paper mills have attempted to match this drop in demand with supply. The easiest way to do this for them is to simply shut down their machines.
Paper Prices
After a year and a half of almost constant, quarterly price increases, paper prices are retreating and retreating quickly. No more is this evident than in the coated groundwood stocks. Coated freesheet prices have fallen to levels last seen in June and July of 2008, and they continue to fall. Coated groundwood prices, however, continue to fall and they are a moving target on a daily basis. Part of the reason for this is the greater number of groundwood manufacturers than freesheet producers.
2009 Paper Prognostications
Recently, I was asked a series of questions about the paper market and where it is heading in the near and long term. I thought I would share some of my answers with you.
Q: What do you see as far as paper prices for the first quarter?
A: I see paper prices as a whole going back down to the levels we saw during the 2nd quarter last year. That would mean a drop of about $40-$60 ton overall. Coated groundwood will drop faster and perhaps farther than coated freesheet will. But how much depends on where supply and demand are.
Q: How would you describe the current conditions in the market as they relate to paper prices, supply and demand?
A: Right now, demand has dropped MUCH faster than the coated mills can cut their production and inventory levels. This has led to shorter than normal lead times, excess inventories, and reduced prices across the board. Since most, if not all mills are still not turning a profit (despite such dramatic price increases over the last six quarters), I believe they will try and hold the line on price. In order to do this, they will attempt to reduce capacity to a point more in line with demand. This could be very tricky, as demand continues to decrease at a rapid pace with no apparent bottom in sight.
Get Connected
Call Jim Treis: 800-558-8724
View Map | Get Directions- Request Information
- ArandellN82 W13118 Leon Road
Menomonee Falls WI 53051
- Products & Services
-
Customer Service
Our Customer Service team is here to partner with you as an extension of your production team.» Customer Service -
Direct Marketing
Reaching the right customers and prospects is crucial to the success of your marketing campaign. Arandell Marketing Solutions will ensure your list is on target.» Direct Marketing -
Premedia
Our dedicated team of Premedia experts is here to make sure your product is accurately represented in your printed catalog.» Premedia -
Mailing Services
We'll guide you through the variety of mailing and co-mailing services and keep you apprised of the ever-changing postal regulations.» Mailing Services -
Paper Management
Just because paper consumes a significant portion of your print budget does not mean it should consume your time. Leave it to us!» Paper Management -
Pressroom
Our state-of-the-art Pressroom is known for its impeccable color reproduction and outstanding print quality. » Printing & Pressroom -
Finishing
Your printed catalog is not complete without our bindery's finishing touches. » Finishing
-
Customer Service
- About Us
- Our Green Commitment
- The Catablog
- News & Events
