Paper company Domtar told its customers last month it will no longer provide forest industry research group RISI with information on Domtar’s selling prices. Nor will it recognize RISI’s published data as a “guide or reference tool in evaluating market pricing levels for any paper grade.” Domtar is one of the top producers of uncoated freesheet paper in North America.
In an April letter to customers, Richard L. Thomas, Domtar’s senior vice president of sales and marketing, said that during the past few years the paper company has “observed an increasing number of customers and other stakeholders seeking transparent, objective, and readily available indices with which to gauge broad market pricing for various grades of paper.”
“We fully understand the interest in securing information of this nature, and we also appreciate the challenges inherent in determining whether published data is truly representative of the marketplace,” the letter says. “In fact, despite what would seem to be enhanced transparency brought about by the growth in instant electronic communications, we often find that third-party published metrics are today more anecdotal and poorly correlated with Domtar’s customer transaction pricing levels than in the past.”
As a result of company and customer concerns, Domtar will continue its practice of reporting changes in Domtar’s average selling prices for selected paper grades “as a part of our quarterly earnings release material. This will be the only external communication we provide regarding paper pricing.”
John Maine, vice president of RISI, says his company issued an official response to the Domtar letter. “RISI is respected as an independent, third-party reporter of market prices for a full range of forest products. Our independence is critical to reporting the most accurate prices in both rising and falling markets.”
RISI prices for each grade/product aim to reflect the average price of all of that grade/product sold via all channels, and include input from both the selling and the buying side of the market.
“Individual market participants — suppliers, distributors or buyers — may find that our reported prices differ from the prices they see, but this is simply because our prices attempt to reflect the market average,” the statement said. “We welcome all feedback and encourage additional participation.”