Magazine article Folio: the Magazine for Magazine Management

Paper Industry Begins to Stabilize: Paper Suppliers and Publishers Have Lived with Wild Swings in Prices over the Past Few Years, but Things Are Beginning to Stabilize

Magazine article Folio: the Magazine for Magazine Management

Paper Industry Begins to Stabilize: Paper Suppliers and Publishers Have Lived with Wild Swings in Prices over the Past Few Years, but Things Are Beginning to Stabilize

Article excerpt

It's no secret that the paper industry has suffered through volatility as digital mediums wrest readers from print. The aggregate effects of publishers slashing pages and mills shutting down swung prices wildly over the past several years on yet another front of the battle between digital and print.

The market may be stabilizing though as paper mills adjust and page counts slow their decline.

For Terry Choate, president of Making Magazines, static pricing has been a function of the paper mill industry's ability to manage their own supply.

"The paper mills have done a better job downsizing recently," he says. "[They're at] the point where their capacity is pretty much in line with demand."

The other side of the pricing equation--demand for paper has stayed relatively flat or declined slightly as of late, Choate says.

Ad pages, a generally reliable indicator of overall page counts, declined 8.3 percent for the industry as a whole in 2012, according to PIB. The numbers stabilized through the fourth quarter however, ending with a 7.3-percent reduction year-over-year.

The gradual stabilization of the paper mill industry, page counts, and therefore pricing, played out in last year's fall increases. The 2012 catalog season saw a roughly $3/CWT bump across the board--a standard hike Choate says--but those prices have yet to come back down.

"It stuck," he says. "Prices haven't decreased since that [fall] increase. And that has to do with that consolidation of paper mills and bringing capacity in line with demand."

Marie Myers, senior vice president of manufacturing at UBM, agrees. She's seen the same prices holding in the market, as well.

"They haven't really shifted one way or the other," she says. "They're holding." The future is a little less certain though.

New players in paper manufacturing--especially those in emerging markets like China and India--could have a significant impact. It's too soon to tell what role they'll play, but right now it's clear they're investing. Even traditional indicators like import levels have been largely negated by federal trade regulations, so things are murky at the moment. As a result, Choate is leaning heavily on page counts to determine where paper pricing will go.

"I don't think the paper industry is going to be much different than it's been the past couple years," he says.

WAYS TO SAVE

Price stabilization is welcome news for suppliers who have suffered through swings recently, but it keeps overhead locked in for publishers. …

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