SC Gains on LWC for FSI
-- graphic arts online, 1/1/2001
SC (supercalendered) papers improved their market position in 2000 in a number of ways. Production in the U.S. outperformed all others except newsprint, increasing almost 2%. In Canada, SC production rose 5%, while European imports were up over 15%. Overall, the market for SC in 2000 was balanced. Traditional retail segment weakness has been partially offset by the catalog, Sunday magazine, trade magazine, and FSI (freestanding inserts) segments.
A big change in the demand for SC paper came from the newspaper-delivered coupon industry in the form of FSI, ordered by the likes of printing industry giants such as Quad/Graphics and Valassis. In 1999, FSI consumers did not use a single ton of SC paper. The SC Council has estimated that FSI's SC consumption in 2000 will be somewhere between 80,000 and 100,000 short tons.
New demand from the FSI industry was only half of the story, the other being SC application. The offset printing markets seem to have cracked, as plants charged that there was a loss of productivity when printing SC compared to LWC (lightweight coated) papers.
Dramatic productivity increases
Every week last year, thousands of tons of SC offset paper were being printed on high-speed offset presses, and as such, dramatic productivity increases were experienced. As offset printers learn to run SC as well as they run LWC paper, the LWC offset market will open to SC producers as the rotogravure market did before it.
LWC buyers like the big publication houses (especially newsweeklies) are the new prime targets. There also exists a decided cost advantage of between $5 and $20 per cwt, depending on weight and brightness. Additionally, the quality gap has been nearly completely closed.
Looking ahead
The focus for the paper industry in general in 2001 is to quickly adopt transactional e-business strategies and systems that drive costs out of the supply chain, while drawing closer to customers. The focus of the SC industry is to continue to improve SC offset mechanical performance; in the rotogravure process, it is to continue to improve optical properties.
In 2001, the FSI industry will be pushing the SC industry to double SC application tons for FSI coupons. The SC Council believes that by year-end 2001, 150,000 to 180,000 short tons will find their way into this segment.
Further migration from LWC offset to SC offset in the trade magazine (newsweeklies) sector will pick up steam in 2001. Further, developmental work has commenced on conversion of several catalogs printed rotogravure from LWC to SC, among them the top apparel and home products retailers.
The SC Council forecast calls for SC demand and supply to remain in balance in 2001. There is new capacity at the lower end of the quality scale (Alliance, Abitibi, Great Northern). The retail segment will continue to increase its purchases of lower-value-added "SC type" grades at the expense of higher-value-added SC grades.
However, new demand for high-value-added SC from the FSI sector, catalogs, magazines, and Sunday magazines will exceed demand lost on the lower end of the quality spectrum.
