Sustained price growth or decline is unlikely due to conflicting trends in decreasing demand and supply; increased foreign competition due to the rising strength of the dollar will mitigate the effects of consolidation within the market.
Los Angeles, CA (PRWEB) March 31, 2014
Newsprint and offset papers have a buyer power score of 3.9 out of 5. This score signifies a high amount of negotiating power and reflects slow price growth, a wide variety of substitutes, a low level of product specialization and very low switching costs. However, some factors work against buyers. “A medium level of market share concentration, high price volatility, a medium level of supply chain risk and a very high degree of vendor financial risk all diminish buyer power,” says IBISWorld procurement analyst Michelle Hovanetz.
Newsprint and offset papers are commodities in decline. Paper is highly standardized, with little variation in products among suppliers. Buyers will typically source from multiple suppliers on a rolling basis to fulfill their requirements. The standardized nature of the product makes moving from supplier to supplier simple because there is little perceptible difference between papers. In addition to low switching costs, there are also a wide variety of substitutes for the paper itself. “The most notable substitutes are forms of electronic communication, which offer the same functions as traditional print newspapers, magazines, coupons and promotions, typically at a lower cost to buyers,” adds Hovanetz.
Due to rising internet use, rapidly declining demand for newsprint and offset paper has caused considerable consolidation within the market. Top suppliers in the market include International Paper Company, UPM-Kymmene Corporation, Staples Inc. and Mondi Group. Falling demand has played a large role in rising rates of supplier bankruptcies and higher levels of vendor financial risk, which negatively affect buyer power. To mitigate vendor financial risk, many buyers source from multiple suppliers. Supply chain risks also exist in sourcing the major inputs for paper manufacturing. Wood pulp prices experience extremely high volatility, and chemical manufacturing adds additional supply chain risk. While average annual price growth has been slow, benefiting buyers, year-on-year fluctuations have been very high. This factor negatively impacts buyers, as it makes it much more difficult to accurately anticipate price changes and complicates financial planning. For more information, visit IBISWorld’s Newsprint & Offset Papers procurement category market research report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld.
Like IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189.
IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of newsprint and offset paper. Newsprint and offset paper are uncoated groundwood paper products manufactured in paper mills and used in offset printing processes. Offset printing is a printing technique that involves transferring an inked image from a plate to a rubber blanket, then onto a printing surface. Newsprint and offset papers are used to produce newspapers, magazines, telephone books, bibles, dictionaries, brochures and other products economically and in large volumes. Suppliers of newsprint and offset paper include manufacturers, distributors and retailers. This report excludes office, writing and coated papers.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.