Stick a fork in it: The bull market for paper is officially done.
Confirming what many market participants were already seeing, RISI released a report today declaring that prices have peaked for virtually all grades of publication paper, from newsprint to coated freesheet. RISI has a reputation for accurately reporting current prices but being a bit bullish when it comes to forecasting. So when the respected information provider for the forest products industry says prices have peaked, you can bet on it.
The firm's monthly Paper Trader report took a dramatically bearish turn, showing that market prices almost across the board were lower in October than the company had recently projected. Prices for some grades declined in October, while others hit their peak prices, the report stated.
The exception is uncoated groundwood grades, but even there RISI has turned less bullish on the super-tight supercalendered paper market. It projects that the price of the benchmark 35# SCA will peak early next year and then hold steady, rather than the previous month's forecasts of rising prices into the year 2010.
Respecting RISI's copyright, Dead Tree Edition will not reveal RISI's current or projected benchmark prices; Paper Trader is available only by paid subscription. But we will report that we are seeing and hearing about more aggressive prices for coated groundwood and that in the tighter coated-freesheet market mills are reportedly offering price caps to lock up business for next year.
Much of the contract pricing in the supercalendered market is set for six months or even a year at a time, so there had been much expectation that prices would move up dramatically in January to match this year's ratcheting up of coated prices. But the strong dollar, lower costs for energy and freight, and the deteriorating economy have put the lid on those increases -- and are wreaking havoc for coated groundwood.
Mr. Paper Executive, do you hear those phones ringing at your favorite paper brokers' office? It's not the end users who are calling; they're too busy adjusting their bloated inventories in response to declining ad pages and reductions in catalog circulation. It's the European mills, who have noticed that the dollar has risen nearly 20 percent versus the euro in barely three months while prices were rising, suddenly making the U.S. an attractive market.
Woe to the paper executives who thought "market discipline" had something to do with whips and chains rather than just holding the line on prices. You are likely to find RISI's forecast of a gentle downturn to be overly bullish.
Paper buyers, still smarting from your arrogance when markets were tight, are now watching waves of layoffs and shutdowns roll through their industries. They won't hesitate to push prices as low as possible to keep more titles, and their own jobs, from going under. And they'll find plenty of suppliers willing to price aggressively to keep their machines running, despite your brave talk of ROI targets and shutting more mills.
Friday, October 31, 2008
Wednesday, October 29, 2008
Forest Development, Add-a-name, Intelligent Mail
A few items on other sites worth noting:
- "Private forest owners can make more money selling their land for subdivisions than harvesting it for timber," begins a recent item in the Corvalis, Oregon Gazette-Times.
- Add-a-name and drop-a-name are tricks that cataloguers use to reduce their postal costs, as an item in Multichannel Merchant explains this week. I know of one magazine publisher that tested add-a-name a few years ago and wonder whether others have tried it recently now that the incentives are better. Quick explanation: If you have five Periodicals pieces going to the same postal carrier route, adding a sixth piece will make them eligible for a carrier-route bundle, saving more than 50 cents in postage on the five pieces. That sixth piece might have a negative incremental cost.
- Intelisent's Postal Affairs Blog has a brief item explaining the difference between the "basic option" and "full-service option" for the Intelligent Mail Barcode. Isn't "intelligent mail" an oxymoron?
- If you agree that there's more to environmentally friendly paper than recycled content, go to Folio:'s recent piece about sustainable paper and place a comment saying that people should read "I'm an environmental idiot!". Be sure to copy the piece's URL (http://deadtreeedition.blogspot.com/2008/10/im-environmental-idiot.html) into the comment because Dead Tree Edition is still hard to find via search engines. If what you want is in-depth coverage of sustainability issues regarding paper from a buyer's perspective, go to the Sustainability section of PaperSpecs blog.
Why are monthly magazines so “unwieldy”?
Nat Ives at Advertising Age has a great piece this week discussing monthly magazines being slow to market from an advertiser's perspective. He notes that, in times of uncertainty, marketers want to wait until the last second to make a commitment.
“Unfortunately for monthlies, which often need about two months to get an ad into an issue, the "last second" is often actually well past their deadlines,” he writes.
Don’t be surprised if your publisher starts asking questions (again?) about why your ad-close deadlines are so far in advance of an issue’s actual production and why it takes nearly a month for copies to hit the newsstands.
Here’s the sad part: The Magazine Publishers of America formed an “immediacy committee” five years ago to focus on the issue, but the group has disbanded, Ives writes.
“Unfortunately for monthlies, which often need about two months to get an ad into an issue, the "last second" is often actually well past their deadlines,” he writes.
Don’t be surprised if your publisher starts asking questions (again?) about why your ad-close deadlines are so far in advance of an issue’s actual production and why it takes nearly a month for copies to hit the newsstands.
Here’s the sad part: The Magazine Publishers of America formed an “immediacy committee” five years ago to focus on the issue, but the group has disbanded, Ives writes.
Tuesday, October 28, 2008
I'm an environmental idiot!
I used to think that using post-consumer recycled content to make paper was good, that cutting trees to make paper was bad, and that online editions were greener than “dead-tree” editions. Silly me.
It's taken me years to realize that using post-consumer waste (PCW) in North America to make magazine-quality paper not only does not “save trees”, it’s often actually bad for the environment. The problem is “up-cycling”, the use of low-quality recycled material (such as post-consumer newsprint) to make higher-quality products, such as coated and supercalendered papers.
“Up-cycling of fibers wastes an additional 400 pounds of fiber per ton to make high-quality recycled paper,” states the Association of American Publishers Handbook on Book Paper and the Environment, which does a nice job explaining up-cycling and down-cycling. PCW usually has to be deinked and bleached to make higher-quality papers. There is no such fiber loss when the PCW instead goes into products like cardboard. So insisting that North American mills include PCW in the paper we buy merely bids up the price of that fiber and diverts it from more ecologically appropriate uses. For that reason, at least one publisher has asked its North American paper suppliers not to put post-consumer waste into its paper.
The situation is different in some European countries, where waste streams for office paper (mostly uncoated freesheet) and magazine/catalog paper are kept separate from lower-grade products like newsprint. To get such high-quality recycled fiber in North America generally means using pre-consumer fiber, such as printer waste and unsold newsstand copies.
An argument often made for recycled fiber is that it has a lower carbon footprint than virgin fiber. That is a gross over-generalization that often is simply not true. Pulp and paper mills relying on virgin fiber tend to get their energy from biomass (such as bark) and hydroelectricity. Making pulp from PCW may require less energy, but that energy typically comes from natural gas and coal-fired electricity.
As an environmentalist, it pains me that so much of the guidance the environmental movement has offered regarding paper purchasing, however well intentioned, has been misleading. Take the idea that cutting trees is bad.
Deforestation is definitely harmful to the environment, but there is little correlation in North America between forestry and deforestation. Agriculture and urban development are much larger despoilers of forests.
“To address climate change, we must use more wood, not less,” says Dr. Patrick Moore, a founder of Greenpeace and more recently of Greenspirit. “Using wood sends a signal to the marketplace to grow more trees and to produce more wood. That means we can then use less concrete, steel and plastic -- heavy carbon emitters through their production. Trees are the only abundant, biodegradable and renewable global resource.”
And how about the idea that it’s greener to publish a digital or Web edition than to put ink on paper? There is nothing green about all the electricity it takes to power Web servers and keep them cool. You can buy carbon-neutral paper, but I haven’t heard of any carbon-neutral PCs.
Global climate change is the key environmental issue of our generation, so our green efforts should focus on minimizing emissions of carbon dioxide and other greenhouse gases. For me, when I buy paper, that means selecting mills that use earth-friendly fiber (whether from sustainable forestry or from appropriate recycled content) and emit few greenhouse gases, then having the paper transported in the most energy-efficient manner (e.g. rail instead of truck).
Disagree? Then speak up. I am willing to publish other viewpoints as long as they are well-reasoned and well written; you can email them to dead.tree.edition@gmail.com. Or just click the “Comment” button at the end of this post to share your immediate, unedited response. If we’re going to preserve the Earth as we know it, we need to have more intelligent discussions and debates and fewer knee-jerk reactions and oversimplifications.
It's taken me years to realize that using post-consumer waste (PCW) in North America to make magazine-quality paper not only does not “save trees”, it’s often actually bad for the environment. The problem is “up-cycling”, the use of low-quality recycled material (such as post-consumer newsprint) to make higher-quality products, such as coated and supercalendered papers.
“Up-cycling of fibers wastes an additional 400 pounds of fiber per ton to make high-quality recycled paper,” states the Association of American Publishers Handbook on Book Paper and the Environment, which does a nice job explaining up-cycling and down-cycling. PCW usually has to be deinked and bleached to make higher-quality papers. There is no such fiber loss when the PCW instead goes into products like cardboard. So insisting that North American mills include PCW in the paper we buy merely bids up the price of that fiber and diverts it from more ecologically appropriate uses. For that reason, at least one publisher has asked its North American paper suppliers not to put post-consumer waste into its paper.
The situation is different in some European countries, where waste streams for office paper (mostly uncoated freesheet) and magazine/catalog paper are kept separate from lower-grade products like newsprint. To get such high-quality recycled fiber in North America generally means using pre-consumer fiber, such as printer waste and unsold newsstand copies.
An argument often made for recycled fiber is that it has a lower carbon footprint than virgin fiber. That is a gross over-generalization that often is simply not true. Pulp and paper mills relying on virgin fiber tend to get their energy from biomass (such as bark) and hydroelectricity. Making pulp from PCW may require less energy, but that energy typically comes from natural gas and coal-fired electricity.
As an environmentalist, it pains me that so much of the guidance the environmental movement has offered regarding paper purchasing, however well intentioned, has been misleading. Take the idea that cutting trees is bad.
Deforestation is definitely harmful to the environment, but there is little correlation in North America between forestry and deforestation. Agriculture and urban development are much larger despoilers of forests.
“To address climate change, we must use more wood, not less,” says Dr. Patrick Moore, a founder of Greenpeace and more recently of Greenspirit. “Using wood sends a signal to the marketplace to grow more trees and to produce more wood. That means we can then use less concrete, steel and plastic -- heavy carbon emitters through their production. Trees are the only abundant, biodegradable and renewable global resource.”
And how about the idea that it’s greener to publish a digital or Web edition than to put ink on paper? There is nothing green about all the electricity it takes to power Web servers and keep them cool. You can buy carbon-neutral paper, but I haven’t heard of any carbon-neutral PCs.
Global climate change is the key environmental issue of our generation, so our green efforts should focus on minimizing emissions of carbon dioxide and other greenhouse gases. For me, when I buy paper, that means selecting mills that use earth-friendly fiber (whether from sustainable forestry or from appropriate recycled content) and emit few greenhouse gases, then having the paper transported in the most energy-efficient manner (e.g. rail instead of truck).
Disagree? Then speak up. I am willing to publish other viewpoints as long as they are well-reasoned and well written; you can email them to dead.tree.edition@gmail.com. Or just click the “Comment” button at the end of this post to share your immediate, unedited response. If we’re going to preserve the Earth as we know it, we need to have more intelligent discussions and debates and fewer knee-jerk reactions and oversimplifications.
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