North American printing and writing paper markets continue to see weak demand and high inventories

While some paper suppliers begin to see signs of improvement, the markets remain under pressure with uncertainty on when things will get better

Demand for printing and writing paper was weak again in May in North America, as customers continue to work through excess inventories, but suppliers start to see some signs of improvement, industry contacts reported to Fastmarkets’ PPI Pulp & Paper Week in the last two weeks.

Contacts described May’s market supply and demand condition as “bad,” “messy,” “weak,” “soft,” but “a bit better than April.”

North American printing and writing paper shipments declined 30.8% in April compared with April 2022 shipments, according to statistics from the Pulp and Paper Products Council (PPPC). Year-to-date shipments are 22.1% lower than January-April 2022.

Demand for printing and writing paper also dropped 26.3% in April compared with the same month last year, and it is 19.3% lower through April 2023 compared with January-April 2022.

People in the market are still destocking on paper, but imports have come down recently. I believe the market … feels pretty good.

An uncoated freesheet (UFS) paper producer

“We have seen more activity in the last three weeks. It has improved in terms of order intake,” another UFS supplier said.

UFS demand declined 18.2% in April year-over-year, with domestic shipments down 19.3% and imports down 8.1% compared with April 2022.

A paper distributor noted that his company’s publishing segment, “which is really geared more toward advertising and promotion, is seeing a softer demand than our traditional printer business.”

“Print demand is soft. Companies are right now holding back on marketing campaigns,” a printer added. “But August should be hot.”

A report published by WhatTheyThink! based on US Dept of Commerce data showed that US commercial printing shipments in March came in at $7.18 billion, up from February’s $6.46 billion and in line with annual seasonality.

According to the PPPC statistics, North American coated freesheet (CFS) paper demand was 31.9% lower in April 2023 vs April 2022, with domestic shipments 48.3% lower year-over-year, and imports up by 12.9%.

“May is still bad. April was really bad. There are a few opportunities in the market, but in general it is bad,” a CFS paper producer stated.

Inventory bubble

North American printing and writing paper mill inventory remained at a high level in April, or about 30% higher than a year ago, according to the PPPC report.

In days of supply, the average inventory figure for North American printing and writing paper producers doubled from 21 days in April 2022 to 41 days of supply in April 2023, which is almost the same level as April 2020, when the Covid-19 pandemic started and print demand declined, according to Fastmarkets data.

“Order books are much healthier, and our mill inventories have dropped by seven days. It seems as, though, the inventory at the printers have finally reduced to near normal levels and buyers are back buying after five long months,” a contact with a supercalendered (SC) paper producer said.

We may be at the bottom of this (inventory) cycle, but not sure when things will start to improve. Might not be until late summer or early fall.

An UFS supplier

“It could prove to be a bumpy ride for the next several months,” a UFS supplier noted.

A contact with a printer reported that he still has a lot of paper on the floor, and “high-price offshore paper we bought in December is arriving now.” The contact expects this “high-price inventory to be depleted by August, and from September on, our level will be normalized.”

Unannounced downtime

Industry contacts also reported that a lot of “unannounced downtime” continued to occur at North American printing and writing paper mills in May.

One source cited that a large UFS mill held a three-week annual outage in May and might “shut the mill down for the entire month of June, due to a lack of orders.”

Another contact with an UFS paper mill noted that his company will take a scheduled annual maintenance outage in the third quarter, and it can be longer than planned, depending on the demand situation. “It will be seven days, but it can be extended,” he noted.

The North American printing and writing paper industry operating rate dropped to 75% in April from 76% in March and from 94% in April 2022, according to PPPC figures.

Pricing under pressure

On the paper side, P&PW’s contacts reported this month that prices are under pressure, even though “lower pricing is not going to generate demand, especially because of the inventory bubble.”

Prices for printing and writing paper grades are still higher than their May 2022 levels, according to P&PW’s survey.

This article was first published in PPI Pulp & Paper Week, the industry’s most trusted pulp and paper market news and prices for North America. Speak to our team to find out more about our news and market analysis services.

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