PAPER PRICING: Pulp Nonfiction
"Everything interacts with everything else on the supply side and the demand side," Miller says. "Even on the demand side, people will switch from coated to uncoated depending on the price. Not so much with books, but if you are doing commercial printing, on a job without a lot of color you might [switch to] uncoated paper [to save money]. If prices get too far out of line, people switch from one for the other."
For their part, mills can switch from making coated to uncoated paper. "Coated mills just turn off the coater. When they are really desperate for orders, they do that," Miller says. "This puts pressure on the uncoated side."
Mills (and printers) announce price increases, which are sometimes implemented and sometimes not, Miller points out in a recent Printing Impressions blog. Sometimes price increases go into effect but are quickly rescinded due to competitive pressures, usually from rival mills offering lower prices. Imports are down of late, but so is domestic mill profitability, which could lead to price hikes or capacity cuts. According to Miller, prices in the long term will almost surely move up, because unprofitable mills cannot lose money forever and will have to close, reducing supply.
"The dynamics fluctuate," Miller says. "The demand is falling across the board, and supply is adjusting, and sometimes it is adjusting more quickly than others. So when supply side adjusts more quickly the prices can firm up. When the supply side is not adjusting and you have a greater excess of supply over demand, then the prices will be under greater pressure." BB
James Sturdivant is Book Business' Senior Editor and the Managing Editor of Publishing Executive, where he writes the Pub Talk blog (pubexec.com/channel/pub-talk). Email him at email@example.com.