Paper Market Update
Each paper market segment has its own set of factors that influence pricing and availability. There are absolutes, such as supply and demand forces; however, major changes within each segment can now occur at a much faster pace and these changes can have immediate impact to supply and price. Years of mill consolidation, closures, and conversions to more profitable grades have led to fewer choices and the price elasticity of supply (mills reducing supply as prices decline) is greater. As a result, the predictability of future paper supply and price is difficult.
Paper markets remain tight during the busy printing season, especially newsprint. Mill operating rates for most grades remain strong. Despite repeated market price increases totaling as much as 20% or more over the past 18 months, the pace of mill conversions and closures is accelerating.
The ITC has removed the U.S. duties on Canadian imports of uncoated groundwood. Paper markets are in the midstof an upward price cycle. For the first time in many years, all paper markets are considerably tight and price increases are being implemented with relative ease in 2018. This is similar to the last big price rally of 2007-2008.