Paper Mills Have the Power….To Finally Increase Prices
The advent of the Internet has revolutionized many industries in the past 20 years, and maybe none more so than the paper industry. As the Internet and digital publications have grown, consumers began to gravitate away from newspapers and magazines.
This exodus away from print media caused the demand for P&W (printing and writing) grade paper to decline significantly. In turn, many paper mills began repurposing their mills away from P&W grade paper towards a more profitable segment: PSA paper.
In the short term, this led to increased profits for paper mills. However, as the industry struggled to eliminate non-profitable assets and repurpose them, both the PSA and P&W market prices declined, and margins began to suffer.
Twenty years of these market conditions have not been kind to paper mills. Those mills that were prospering have decommissioned functioning assets that weren’t returning a fair ROI. Several mills that were not doing well financially have shut their doors for good. And almost all mills in this portion of the paper industry have had to accept painfully small margins.
However, ALL of that is poised to change. For the first time in 20 years, mills that survived the P&W decline now have the power to reshape their industry.
The boom of the specialty market, combined with a reduction of capacity due to the decline of the P&W market capacity, has brought the marketplace back into balance. Add in recent shifts in raw material prices and paper mills finally have the power that they needed to increase prices through 2019.