Prices for both coated freesheet and lightweight groundwood paper rose for the third time in less than a year in October, according to Daniel Glazerman, vice president of sales and marketing for Pickering, Ont.-based printer Ironstone Media. And Kim Latreille, group production director for St. Joseph Media, says she's planning for three more paper price increases next year.
Printers may not yet be passing on these cost increases—about $3 per hundred weight, or 4-5%, in each instance—but sources say the general trend for paper prices is up, meaning bottom lines on magazine budget statements will sooner or later be affected.
Supply and demand is the key factor in determining paper prices. With the rise of the Internet, declining magazine ad sales and readership, and falling catalogue and direct mail circulation, demand has been steadily dropping, says Nancy Clark, paper columnist for Graphic Monthly Canada, a trade magazine for the Canadian printing industry.
To combat this, paper producers are reducing capacity, frequently shutting down mills in order to drive up prices.
“In the years before, they’d let the mills run to capacity and if they had extra paper they’d warehouse it and start to sell it,” Glazerman says. “Those days are I think over. Mills have become more efficient. They’ve become better at forecasting [how much paper consumers will need].”
Increased consolidation in the paper industry has compounded this effect. In December 2007, NewPage, the dominant coated freesheat producer in North America, acquired the North American operations of Stora Enso and subsequently closed four mills. Last week, meanwhile, Finnish company M-Real sold its coated freesheet operations to South Africa-based Sappi Limited, Europe’s dominant paper player. That deal resulted in the closure of three European mills.
Rising fuel, fibre and chemical costs have also hurt the paper business. “Some companies will now add things like transportation fees on top of their prices,” Clark says.
Offsetting (and challenging) rising prices from North American and European mills are the Asian paper producers, who have become key players in the global and Canadian markets. While some publishers may be concerned about the environmental impacts of importing paper, it may be worthwhile to have a conversation with your printer about this prospect.