Paper Imports Rising, Newsprint Still Weak

Economic expansion is initially having a mixed impact on paper supply and prices. Office, offset, and periodical paper prices slipped slightly lower late last year, with lower prices continuing into early 2004. Both 20-lb. bond and 70-lb. coated publication stock started 2004 at about 10% below peak 2003 prices. However, prices for newsprint and marketing paper grades continued to rise slowly through the beginning of the year.

Printers can expect paper prices to rise progressively during 2004 and into 2005, although offset and bond price increases will not begin for several more months.

Some of 2003's paper price increases, especially for newsprint, were caused by the 15% depreciation of the U.S. vs. Canadian dollar from January through December 2003. No significant depreciation is expected in 2004, which explains why inflation will slow for some types of paper this year while paper consumption will rise.

Much of the price rise early in 2004 is a reversal of the price weakness seen in the second half of last year; this is an inventory adjustment cycle. Meanwhile, the small but steady price increase expected for all grades into 2006 reflects the impact of the maturing economic recovery on paper demand. The recent rise in paper company stock prices confirms that Wall Street anticipates higher prices.