Declining demand for industry services will put major pressure on industry operators.
New York, NY (PRWEB) February 15, 2014
The Paper Mills industry has experienced little improvement in the past five years due to growing competition from foreign paper manufacturers and lingering levels of low demand for industry products following the recession. The United States is no longer the world's largest producer of paper, having been overtaken by Chinese manufacturers in 2009. IBISWorld estimates that revenue for the Paper Mills industry has slowly increased at an average annual rate in the five years to 2014. Revenue has experienced mild improvement over the past five years, although the effects of the recession continue to limit spending among downstream industries. Industry operators have emerged from the recession with concerns surrounding the increasing popularity of online communication, which will continue to reduce demand for paper products going forward. In 2014, revenue is expected to increase in anticipation of slightly higher wholesale paper prices and increasing corporate profit.
Industry profit has fluctuated slightly over the past five years. The industry's profit margin has recovered from its recessionary low in 2007, when manufacturing demand from downstream markets came to a sudden halt amid the climate of vastly reduced investment spending. Over the five years to 2014, the price of paper grew at an average annual rate and corporate profit, a key indicator of downstream demand for industry paper products, recovered at an impressive average annual pace over the period. These improvements in the market for industry products have allowed paper manufacturers to weather the recessionary storm over the past five years without any major declines in total revenue. However, the industry has emerged from the period significantly leaner due to bankruptcies, restructuring efforts and mergers. The number of paper mill enterprises has fallen at an average rate over the five-year period.
Market share concentration within the Paper Mills industry is low and decreasing, with the top four companies estimated to hold a small proportion of the market. The Paper Mills industry, according to IBISWorld Industry Analyst Nick Petrillo, “will face continued challenges over the next five years”. Downstream demand for paper products will recover from recessionary lows, “but the increasing presence of digital office communication platforms will pose a major threat to industry revenue going forward,” says Petrillo. IBISWorld estimates industry revenue to decline at an average annual rate over the five years to 2019, with total industry revenue falling by the end of the period.