PAPER OUTLOOK DISMAL GOING INTO 2022

Supply chain disruptions, transportation network challenges and various reasons for downtime at mills added stress to the already limited paper market. Coated freesheet inventories were low to begin with and haven’t been able to keep up with further shortages caused by plants going offline.

From Quad/Graphics, December 3, 2021:

Supply chain disruptions, transportation network challenges and various reasons for downtime at mills added stress to the already limited paper market. Coated freesheet inventories were low to begin with and haven’t been able to keep up with further shortages caused by plants going offline.

Coated groundwood on the west coast will be impacted by disruptions at Paper Excellence (Catalyst). Demand in the U.S. on top of issues with international shipping have caused printing & writing paper and newsprint exports to decline significantly.

The notable items below will affect supply and prices in the coming months.

Extremely low newsprint inventories on top of trucking shortages have led to a widely backed $25 per metric ton (45gsm) price increase across the board.

Norpac, White Birch and Resolute will all increase prices for high brightness uncoated groundwood by $50/ton on December 15.

Prices for uncoated SC grades and uncoated freesheet grades have also increased since November, as mills continue to fight cost inflation and paper shortages.

Coated paper prices have increased since November. We wait to see if prices remain at this level into next year, though industry analysts are predicting further price increases in 2022.

From Quad/Graphics, August 11, 2021:

Paper markets in North America remain in short supply with low inventories and rising prices. As a result of the COVID-19 economic impact in 2020, multiple paper producers eliminated significant graphic paper production capacity…upwards to 40% in some paper grades. Some mills transitioned paper machines to packaging grades, while others shuttered altogether.

This year, there has been a significant bounce back in print and paper demand to the point where the paper mills are sold out through at least the fall. Consequently, mills are operating at 100% in some cases, and as a result, the mills have no room for error for the balance of this year. Lead times and LDCs for orders have increased.

To add to a difficult situation, shipping costs have skyrocketed across the country and there is a shortage of trucks and drivers. Imports have been inhibited by container shortages and higher costs to ship internationally. Anticipate that most grades of paper will remain in short supply through the end of this year and potentially continuing in the first half of 2022 for some grades.

As producers seek to maximize machine efficiencies, expect reduced brand and basis weight offerings, including elimination of entire product lines and basis weights.