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September 2006 - As many of you are well aware, so far this year we have seen three significant price increases in the paper industry. But while you are aware of these changes, you may not be as familiar with the indicators that are the catalysts for these changes.
In this feature, we will outline for you the indicators for price increases as well as give you a brief look at what current paper conditions are and whether we may be headed for our fourth increase of the year. |
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Generally there are five indicators to look out for prior to a price increase. While they may not always signify a change in price, they often times are the best indicators for an industry wide increase.
- Production Rates at Domestic Mills
- Amount of Imports
- Differential between Roll Pricing & Cut-Sheet
- Pulp Pricing
- Mill and Distributor Inventory Levels
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With the criterion now laid out for us, you now may be wondering what are the current conditions in the marketplace today?
Recently, Weyerhaeuser, one of the world’s largest timberland owners, announced a roll price increase. Additionally, Boise, the fourth-largest manufacturer of uncoated free sheet in North America, has announced a cut sheet increase. Further the mill run rates right now are remaining high at about +92%. All indicators of a price increase.
On the other hand, distribution inventories are remaining moderate. This factor would seem to be a clear contradiction to the price increase trend noted above. |
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While Boise has already announced a fourth price increase, it is still under scrutiny as to when an increase may occur industry wide.
But, if you go strictly on the indicators outlined above, the evidence would clearly point towards another 4th quarter increase. Please be sure to continue to check paperrap.com for the latest in price increases and additional indicators to keep you and your business ahead of the curve. |
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