Paper Commodity Volatile at Best

Paper prices have increased recently, but that is nothing new to industry insiders who have learned to ride the ups and downs of this often overlooked commodity.

Many believed that with the growing use of computers and e-mails in the everyday lives of common workers, paper consumption would naturally decrease.

They were wrong.

According to the American Paper and Forest Association in the last 20 years the combined usage of today’s top ten paper-using nations has increased from 92 million to 208 million tons, an increase of 126 percent.

Newsprint output grew by 45 percent from 2003 to 2004 and consumption was up 3.1 million tons, growing by 30 percent, according to tdctrade.com

However, many commercial printers have felt the sting of e-newsletters and in-house printing by companies with high-quality equipment. Now many people prefer to head down to a big box retail store, buy “fine” paper and print from their home or the office.

Judging by the amount of paper that still clutters up the desks of everyone from secretaries to CEOs in offices across America, paper is here to stay, but recently it’s been costing more.

“The paper industry has been plagued by over-capacity for a long time,” said Steve Johnson, president of Copresco in Carol Stream. “A lot of mills have closed.”

Dozens of paper mills have closed across the U.S. over the past three years. This does not bode well for supply.

“When the market tightens up prices are raised,” said Johnson. “Paper mills haven’t been making a lot of money.”

Thus prices have increased over the past few years, but it is nothing that is new to the industry, or even an inconvenience to many.

“In a volatile economy it never has a chance to make an impact,” said Johnson. “A company does not have the opportunity to pass on the cost. It will even out before you have time to factor it in.”

Al Snyder, president of GlenHill Graphics in Glendale Heights, has been buying paper for the past 40 years and does not see this current market as anything out of the ordinary.

“There has been a sporadic increase for the past few months, but it hasn’t been anything substantial,” said Snyder. “At the most I’ve paid 3 percent more recently than I did a year ago.”

Many printers will shop around until they can negotiate a price that costs them nothing extra, or at the most, a slight increase, said Snyder.

Generally, if a printer does pay more for paper, the cost is passed onto the customer. However, there are times when the printer itself swallows that cost.

“It does hurt our bottom line,” said Nancy McAdams, owner of McAdams Multigraphics in Oak Brook. “I can’t keep charging more for the same job that I did six months ago. It is too competitive out there.”

Bill Starks, president of P&P Press in Peoria, echoes those sentiments.

“You can’t always pass the increase along,” said Starks. “There are clients you are reluctant to go in and raise the price on.”

However, at the end of the day, recent increases aren’t making most printers or customers turn their heads.

“In relationship to the entire job, what cost $1,000 now is $1,050,” said Copresco’s Johnson. “People can take that in stride.”

Johnson is quick to point out however, that because of new technology many people may find it more beneficial to enter other mediums and steer away from printing in favor of CDs.

“The price of CDs is going down,” he said. “If you add 10 more pages to a book, that adds up, while with a CD it doesn’t cost more. It becomes harder to establish value.”

A lot of printing has made its way overseas as well, especially to China, which accounts for a large portion of the book printing industry.

“A lot of paper is going over to China to be coated,” said Johnson. “A lot of people think that if you send the pulp over there to coat it, why not just print it over there?”

Ironically, while overseas competition may be adversely affecting commercial printers’ business here, Johnson claims that international paper could be the answer to rising paper costs domestically.

Now, more than ever, the U.S. is shipping in pulp and paper from other countries to be printed here.

“Brazil, Germany and Portugal will help to neutralize costs,” said Johnson. “This is something that we are not used to, but eventually their imports will keep prices from skyrocketing.”

As prices may decline for printers and consumers alike, loss of business due to e-newsletters and at home printers will continue and commercial printers are a bit worried as to where that business has gone.

“Now they go through more paper on LaSalle Street (downtown) with home and office printers,” said Johnson. “That has never played into the market before.”