Demand is exceeding the supply of Paper Products especially in the fine printing and label paper market. We are now seeing some catch up along with strict allocations and long lead times. Planning and Paying All of your BILLS is the key to success! The Paper Mills are not able to keep up with demand in the uncoated and coated free sheet market. We are seeing companies like ND Paper get out of the lightweight coated groundwood paper for publications and catalogs which will drive customers to digital media and hurt the large printing companies like Quad Graphics in Wisconsin! We will see a minus 5 – 6% CAGR over the next 5 years in publication printing and catalogs will recover at 2.5% CAGR. However, we will see a very good growth in digital publications expected at 10% CAGR.
We have seen major price increases from 30 to 70% in some cases in the printing paper markets. We will also see modest price increases in the paperboard and corrugated markets. However, the pulp prices continue to increase which is a BIG part of the paper costs. Harwood pulp prices in China are up 40%. Europe is in the same position and the Urkraine conflict will continue to put pressure on the European suppliers of paper products. We will see limited supply exported to the USA.
We have witnessed rising inflation due to fuel increases, logistics and employee compensation. We expect it to flatten and possibly see a decline in fuel prices in the USA. Europe will continue to see fuel and shortages of fuel due to their dependence on Russia.
Strategic partnerships between Paper Companies and Paper Merchants are invaluable and critical for one to survive. We are witnessing the Printing Companies that were buying seconds or price sensitive have NO ALLOTMENTS available to them. The Paper Merchants and Paper Mills are in control and we see this continuing through December 2023.
We are seeing FOB Dock from a number of Paper Manufacturers and the printers will be picking up the costs. We expect the Paper Mills focus to deliver close to home. We expect that the East and West Coast will be forced to purchase paper overseas due to limited supply of paper from domestic suppliers.
Lead Times: Look ahead 90 days forecast for what you are going to need. It is recommend too get standard sizes and basis weights. Special Orders and Special Papers are a thing of the past! In addition, move to a HOUSE STANDARD SHEET arrangement.
All Printing Companies are facing series issues finding employees and prepare for the challenge. In many cases, the Printing Industry is upgrading equipment for automation at all levels.
Supply Chain issues: Keep close track of inventory, track cancelled or rescheduled orders.
We recognize the importance of cash flow management due to larger inventory. We suggest that you pick up a SECOND BANK or increase your line of credit. Your Bank relationship is critical to survival.
We recognize that the market for printing paper has changed. However, the commercial printing market has rebounded to pre-covid levels with the expected growth of 2.2 to 3.0 CAGR for the balance of 2022. In the first quarter of 2022, the growth was unexpected for the paper companies producing the needed paper product and they anticipated a decline in the demand. The label market for C1S and pressure sensitive papers is strong with a CAGR of 3.3 to 5% growth rate. Interesting the label market has had increases for the past 29 years. The Direct Mail Printing companies have seen continued growth especially with the integration of variable data and personalized direct mail. We anticipate a 2-3.2 CAGR through 2025.
Domestic Fuel Costs: We anticipate seeing a pullback on the cost of fuel due to the increase in supplies and the worry of a recession. However, the consumer still is willing to pay the high fuel costs regarding of the price so businesses are passing on the costs even if their costs are reduced!
The Mid-Term Elections: We will see a historic RECORD amount being spent on the ELECTIONS which will put a BIG DEMAND on the Printing Industry.
Overseas Paper Supply will very slowly come back and Europe will take care of their customers. China is still recovering from their lockdown and will serve their local market first. We have seen containers go from $2,500 to $25,000. We anticipate that the prices will end up around $6,000 with long lead times for product.
The War in Ukraine will continue to have a major impact on Europe and the USA. China will continue to support Russia buying cheap oil and forest products. The TIME IS RIGHT to re-invest in the Paper Industry!
TRENDS AND FACTS IN THE COMMERICAL PRINTING INDUSTRY
We have over 25,000 US companies specialize in commercial printing. The Great Lakes States produce over 42% of printing products in the USA.
Commercial Printing generates nearly $900 billion in annual revenue!
Digital printing is growing at an average of 10%. We see major companies like Hewlett Packard continue to invest in the printing industry!
72% of corporations utilize direct mail campaigns supporting digital media. Direct mail open rate is 10 times e-mail, linkedin, etc. and has proven very effect due to new technologies with variable data.
The latest report (See the Industry Report in GBIG NEWS) is the return of profitability of the commercial printing market and we are starting to reinvestment in new automated equipment.