A good year for paper

It looks like paper prices will remain steady throughout 1998, despite rumblings this past spring of a July 1 and an Oct. 1 increase. But catalogers can probably count on a slight increase across all grades sometime in the first quarter of 1999.

Paper manufacturer Repap, which in May announced a 5% increase on coated groundwood planned for July, rescinded its decision in early June when it realized clients, including catalogers, wouldn’t accept the increase. A depressed pulp market, built-up inventory at the mills and printers, and the anticipation of a new supercalendered grade hitting the market this summer contributed to keeping prices in check.

At press time, coated groundwood prices hovered around $940-$1,000 per ton for 40-lb., #5 large-volume purchases, and more for smaller quantities. Lighter basis weights of #5 coated groundwood were selling at $1,070 per ton, according to the latest Pulp & Paper Week report.

Coated freesheet still remains a bargain for catalogers. In May, Pulp & Paper Week reported that the #3 sheet was down $20 per ton to around $920 per ton. And that shouldn’t change, according to industry sources, even as we head into the busy catalog season. Some observers cite an anticipated influx of Asian paper into the North American market as a reason. “Imports have a real impact on our paper buying,” says Neal Schuler, advertising production director at Bear Creek Corp., publisher of the Harry and David, Jackson & Perkins, and Northwest Express catalogs. “Right now, freesheet is flowing freely into the marketplace, keeping the market soft.” Bear Creek prints on #3 and #4 coated freesheet, which Schuler says is a better quality sheet than groundwood.

On the flip side, a $2 per ton July 1 increase for the SCA grades is expected to hold, but it’s still 10%-20% cheaper than #5 coated groundwood, the grade SCA+ directly competes with. “A lot of the #5 coated groundwood manufacturers are waiting to see what impact the SCA+ will have on the #5 market before raising prices,” says Vern Bush, print services manager at Quill Office Products.

The prices for coated groundwood and freesheet aren’t expected to rise in October, either. Most manufacturers raise their prices during July, when catalogers gear up for the fall/ holiday season.

Catalogers, however, can probably count on an increase early next year, according to sources, as the impact of SCA+, the state of the economy, and activity in the pulp market are evaluated.