No Pulp Fiction: Strong Dollar May Mean Paper Savings for U.S. Publishers
If your organization is involved in print publishing -- you know, that ink on paper, Gutenberg thing -- now is an ideal time to reexamine your paper-purchasing practices. Here are three reasons that your substrate may be out of date:
- Prices for magazine paper in the United States are about 25% to 30% above those in Europe, a nearly unprecedented gap that is making the U.S. market extremely attractive for European manufacturers.
- North American mills are reportedly preparing to announce July 1 price increases on coated paper.
- The new postal rates that take effect May 31 include some significant price decreases that may make it easy to upgrade your publication's paper stock without busting your budget.
The average U.S. price for 40# coated #5 in March was $820 per ton, which was $187 more per ton ($9.35 more per hundredweight) than virtually identical paper in Europe, according to RISI's Paper Trader publication. Five years ago, the European price was $113 per ton above the U.S. price. Other grades of coated and supercalendered papers typically used by magazines have undergone similar reversals.
The strengthening dollar and some mill closures that tightened the U.S. market are the key reasons for the current pricing imbalance. But such a large spread can't last for long. Several European papermakers already have substantial exports to the U.S. They will happily dangle below-market prices in front of U.S. publishers to grab more of those juicy greenbacks. But don't write off the North American mills; they will not yield market share without a fight.
Turning a blind eye to the global paper market could put your publishing operation at a competitive disadvantage. Some U.S. publishers are likely to pay more for paper in the coming months, and some will pay much less.
Freight costs are not necessarily a deterrent for the European mills. Transatlantic shipping is far more efficient per mile than rail or truck, especially because of recent rail bottlenecks. It can actually be cheaper to ship paper to an East Coast printing plant from some European mills than from ones in the Midwestern U.S.