As Paper Supply Falls, Prices Rise

by Jim Milliot -- Publishers Weekly, 3/27/2006

After absorbing steady losses over the last several years, the tide has turned for paper manufacturers, a shift that could spell higher prices for publishers as well as supply issues. Paper prices rose an average of about 5% in January, and another 5% increase is set for April. Paper prices have risen in the past, only to be rolled back under pressure from customers. The January increase, however, has stuck, and there is every indication that the April rise will also hold.

While paper demand has risen slightly, the most important reason for the ability of paper companies to increase prices has to do with a sharp drop in supply. Citing rising energy costs, several mills have been shut over the last six to nine months, removing an estimated two million tons a month from the market. The decline could cause manufacturers to begin rationing paper later in the year.

The general feeling among printers at last week's printing meeting, Book Tech, was that small and medium-sized publishers would feel the impact of higher prices or a paper squeeze before the larger houses, many of which have long-term contracts and/or buy paper themselves. Several printers expressed concern that if paper and production costs in general became too high, smaller publishers will decide not to publish marginal books.

The owner of one major indie said she has already shifted the way her company acquires books, factoring in manufacturing costs before she makes an offer. If the higher costs make it impractical to do a reprint—and weaken the book's viability as a backlist title—the house is likely to pass on the book, she added. Another indie also touched on the reprint question, noting that if costs are too high, he would be more inclined to move a slow-selling book into print-on-demand rather than do a traditional second run.