Paper Prices Continue Climb

Jun 22, 2006 12:24 AM  By

Prepare to spend more on your catalog paper: Wisconsin Rapids, WI-based Stora Enso North America has announced a $2 per hundredweight (cwt) increase on its Productolith, LumiArt, and Orion coated freesheets and all private-label web offset papers. This comes just a few weeks after International Paper and Fraser Papers, both based in Stamford, CT, announced a $2.50/cwt, or $50 per ton, price increase on coated groundwood #5 products beginning July 1. What’s more, International Paper, which has said its second-quarter 5% increase on coated groundwood #4 would remain in effect, also announced a $2/cwt ($40/ton) increase on all coated freesheet.

Industry watchers warn that more paper price hikes are likely. Rick Dethloff, director of purchasing for Menomonee Falls, WI-based printer Arandell Corp., expects to see other mills announce price increases for the third quarter as well. And David Goldschmidt, vice president of marketing, catalog division for Newport, CA-based paper brokerage Strategic Paper Group, says he won’t be surprised to see additional paper price hikes later in the year, “especially with the rising fuel and energy costs, and the busy season approaching.” And though some mills have dropped their fuel and energy surcharges, if gas and energy prices continue to rise, he adds, “we could certainly see the mills make a bigger push for this again or announce another increase.”

Compounding the problem is a reduced supply. John Maine, vice president of the Bedford, MA-based forest industry research group RISI, says that paper markets are “generally going to be quite tight in the third quarter due to seasonally strong demand, capacity closures in Canada, and capacity closures in Europe.” He says that facilities with 800,000 tons of coated mechanical capacity and 250,000 tons of coated freesheet capacity are scheduled for closure in Europe, primarily during the third quarter.

Look for more on the paper price outlook in the July issue of MULTICHANNEL MERCHANT magazine.