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"Changes in Catalog, Magazine Paper Hits Publishers' Bottom Lines"
"SAN FRANCISCO -- The market for SC printing papers, used primarily for catalogs, magazines, and inserts, is on the verge of shifting to producers' favor with higher prices likely to follow, according to Verle Sutton, editor of Forestweb's The Reel Time Report. Sutton attributes reduced supplier capacity, fewer European imports, and stronger domestic demand as the forces underlying the market seachange.SC paper is a premium groundwood paper used primarily for magazines, catalogs, and other printed materials. The largest users of SC papers are retail companies, with catalogers the second biggest followed by magazine publishers. In North America, Stora Enso North America, Madison International Sales Co., St. Mary's Sales Co., and Abitibi-Consolidated are major producers of SC-A Papers.Removal of tonnage by Abitibi-Consolidated Inc. and Katahdin Paper and a drop-off in European imports have reduced North American capacity for SC-A and B papers, Sutton notes. According to the Pulp and Paper Products Council, North American demand for SC-A papers increased by 12.8% in the first two months of 2004. These tighter market conditions are expected to lead to price increases.The recent announcement by International Paper Co., Bowater Inc., and Stora Enso North America that they were increasing coated free-sheet and coated mechanical prices on June 1 by US $60/ton is an indicator that producers believe market conditions are ripe for a price increase, Sutton adds. SC-A prices are already on the way up, with the April increase of $40/ton expected to be implemented fully by July 1, and the market can expect a second increase in the third or fourth quarter.Demand for SC papers has grown rapidly, as improvements in quality, brightness, opacity, and gloss, coupled with lighter basis weight availability, have encouraged publishers to examine the cost advantages of using SC papers in place of other lightweight coated papers, Sutton says.Forestweb Inc. is a provider of complete outsourced business intelligence solutions for the forest products industry. The Reel Time Report is a monthly newsletter offering analysis and forecasts for printing paper markets. Visit Forestweb Inc.: www.forestweb.comVisit The Reel Time Report: www.reeltimereport.com"