Live from GCIC: Get ready for paper price hikes

Naples, FL—Within a year, the record low paper prices that catalogers have recently enjoyed will but a memory. In a session at the Graphic Catalog and Insert Conference (GCIC), John Maine of paper and economic forecasting firm RISI said that the paper industry, which for the best two years has suffered from declining demand, is starting to recover.

“In 2003 the paper market will begin tightening,” Maine said, referring to a decline in excess inventory. “We’re going to really see it tighten and more of a close balance between capacity and demand in 2004″—and therefore a likely spike in prices then as well.

During 2002, Maine said, catalog circulation was down 2% from the previous year. Total paper demand—including from magazines, book publishers, and stationers—was up 1% from the previous year. On the surface that may not seem so bad, but Maine noted that historically paper demand has increased 5%-6% a year.

But Maine noted that the factors that contributed to 2001’s record decline in paper demand—the dramatic decline in magazine and newspaper advertising, inventory tightening, the worldwide recession—are starting to turn around. “We’re starting to see recovery in magazine ad pages,” he said. “The catalog industry is slower to recover, but at least circulation has stopped declining. Newspaper lineage and insert participation are recovering well.”

Maine said that freesheet paper will be the first to rebound, due to managed capacity. Indeed, freesheet prices already rose slightly during the summer and another price hike, scheduled to take effect in January, was announced this week.

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