Like most other industries, the paper industry is global. With many options available for sourcing their paper, printers take a variety of factors into consideration when deciding which supplier to go with. For our Q3 Paper Market Update, we’re taking a look at the state of paper manufacturing around the world.
As printers continue to shift their attention to international mills, there are a few things that are driving this move. Below are some factors that have contributed to a heavier reliance on foreign paper this year than last year.
A strong U.S. dollar forces printers to go global.
The health of the dollar and other currencies can greatly impact where paper is sourced, as can other economic factors, like tariffs. As long as the quality of the paper is up to printers’ standards and meets USPS regulations, a lower price is an attractive option for most companies.
With a strong U.S. dollar, offshore imports were up 55% in the first half of 2019, with the most notable gains from Brazil, Thailand, Indonesia and Colombia. These offshore mills are decreasing their prices to stay competitive, and the continued increase in monthly orders from these locations reflects that they are succeeding.
A commitment to the future.
Unlike the paper mill industry in this country, we’re seeing other areas of the world investing in production technology. Asian countries have been especially keen on adopting innovation, which is helping support the growing demand for their products.
Asia has become a hotbed of supplying paper to U.S. printers, especially with a healthy Chinese economy and their mills’ commitment to new and better machines. And South Korean mills have seen their collective capacity double, thanks to the implementation of world-class equipment.
The trajectory of the U.S. paper mill industry seems to be heading in the opposite direction. The current trend of American mills shutting down machines has helped stabilize domestic prices, but has also seen the number of paper-producing machines in this country shrink to under 20. That’s half of the number of machines operating in the U.S. as recently as 20 years ago.
They’ve got the goods.
A big factor in why U.S. printers look oversees for paper is simple – foreign mills can keep up with demand. There simply isn’t enough coated paper being produced domestically to support the needs of American marketers. That’s why 50% of free sheet paper is being sourced from foreign mills.
Ironically, the U.S. is still providing foreign mills the materials they need to produce a lot of the paper we’re buying back. In fact, one out of every four American trees used for pulp is shipped to China for processing.
While the demand for both coated and uncoated free sheets has dwindled over the past year, U.S. mills will continue to be a factor when printers look for suppliers. For example, foreign mills don’t produce the 9pt and 7pt paper weights, which are currently required by the USPS for direct mail campaigns.
The U.S. and international paper industries will always react to many factors, such as the health of global economies and resource availability, which is why SPC continues to keep its finger on the pulse of what’s going on. That way we can ensure that our customers are getting the best possible price.
Key Takeaways for SPC Clients
SPC has you covered
While the paper industry can be sensitive to many factors, we do our best to protect you from the volatility. In addition to our standard quarterly price protection, we use our purchasing power by buying in bulk in order to receive discounted rates from suppliers.
Doing our part for the planet
Over the years, print media has gotten a bad rap for its impact on the environment. In actuality, there is a lot of misinformation out there, which we encourage you to learn more about. Regardless of these myths, we take our responsibility to the environment very seriously, which is why we designate all of our paper waste for recycling. Roughly 35% of the paper that runs through our machines during a print run ends up as scrap, which is separated into white and colored paper and then provided back to companies that specialize in recycling.
The Final Word
“As a leader in the print industry, we believe in taking care of the planet as well as we take care of our clients. That’s why we put thought into every decision we make, from where we source our paper, to how we process each project, to how we responsibly discard our unused materials.”
– Ryan LeFebvre
Mills in the News
West Linn Paper Mill Reopens as Willamette Falls Paper Company
Willamette Falls Paper Company recently jumped back into producing paper for the first time in a couple of years. The mill, which was bought and renamed by Columbia Ventures Corp., is the only coated free sheet producer on the West Coast, and also produces C1S and uncoated grades, with a capacity of 260,000 tons.
ND Paper Mill to Expand in WI
The environmentally friendly producer of high-quality paper and pulp has announced plans to expand its operation in central Wisconsin. Plans include conversion of the B25 paper machine from white papers to containerboard products, construction of a two-line greenfield recycled pulp facility and the construction of a water treatment and fiber recovery plant.
Domtar Cuts Capacity at Two Mills
The Domtar Corporation recently announced that a reduction of approximately 204,000 short tons of uncoated free sheet paper per year will take place by the end of 2019. The Ashdown, AK machine closure is effective immediately and the Port Huron, MI machine is expected to be closed in November. Both mill locations will continue to produce a wide variety of products, but the combined workforce will take a hit of about 100 employees.
SPC prides itself on providing you with an experience that leaves you confident in the success of every project we work on together. Part of the confidence comes from staying on top of what’s going on in the paper industry, and using that expertise to make educated decisions about where to source our products.
Our goal is to provide you with the best quality paper at the best price, so we’re positively impacting your bottom line while making an impression with your customers. We only succeed when you do too.