Tight Paper Markets Highlight the Importance of Plan-Ahead Scheduling for a Smooth 2021 (piworld.com)

If 2020 was anything but business as usual in the world of direct mail, 2021 is most certainly cut from the same cloth. From lockdowns in the beginning of the year to – what appears to be – a sharp economic rebound, the COVID-19 economic roller coaster is ever-present in the acquisitional direct mail markets. At the time of this post, we have seen paper supplies become constricted and schedules move out, all while marketers appear to be clamoring to reach their consumers (flush with cash and new-found freedoms) in reliable and effective ways. Direct mail contractors that understand today’s paper market, forge and maintain strong alliances with their vendors, and understand the importance of a schedule will be far better equipped to fair the tumultuous seas of 2021.

Paper markets have become increasingly tight in 2021. An across-the-board mill increase at the end of March signified that demand justified some attention. A typical heathy mill operating rate may be 94-95%, which ensures that the mill’s expenses will be met and will be profitable, but still retain some flexibility for its customers. Poor operating rates tend to be in the high 80s to low 90s, signifying an excessive supply that suppresses paper prices and, in some cases, causes mill closures and “right-sizing”.

For a decade, mills have been shuttering doors one-by-one to try to control the supply-demand equation. Today, however, mill operating rates are well above 95%, have put all its customers on allocation (which prevents hoarding and is typically a function of historic usage), and have little to no flexibility in scheduling. It’s widely expected that mills will have another increase this summer (some are announcing at the release of this memo) and that schedules will stay tight through the end of the year. The takeaway for direct mail manufacturers and brokers is to align with printers and envelope converters that have good mill relationships and involve these partners in the early stages of planning to secure stock for your upcoming projects.
much more at source: https://www.piworld.com/post/capacity-restraints-highlight-the-importance-of-scheduling-for-a-smooth-2021/

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