An Insider's View of the Paper Market
High-quality grades with very low basis weights, which could not be produced before, are another example of developments attracting the attention of the industry, as cost-conscious publishers look to offset the impact of increasing postal rates.
All in all, PPPC believes the outlook for magazines and catalogs is still fairly robust. Catalog publishers have learned to use the Internet in a smart way, and magazines remain a highly effective advertising medium.
As a result, demand for coated grades will rise, but high-quality imports will continue to present a challenge to North American producers.
A Tight Market To Continue
In 2004, demand for coated paper grades was more in balance with supply than in any of the previous three years, which helped support stronger pricing. This clearly reflects improvements in the advertising markets and in the economy in general.
In 2005, PPPC expects growth in consumer spending will not be as strong as in 2004 and that this will moderate growth in demand for coated papers, especially through slower ad spending, particularly in the second half of the year. However, capacity growth will be very limited in the coated mechanical sector in 2005 and only slightly stronger in the coated woodfree sector. The net effect will be a relatively tight market again in 2005.
Paul Leclair has a Master of Science degree in economics, and has been working for the Pulp and Paper Products Council (www.PPPC.org) for five years, analyzing communication-paper markets. He can be reached at: PLeclair@pppc.org.