Rising wood pulp prices, falling demand and import competition have hurt profit.
New York, NY (PRWEB) January 16, 2014
The Paper Mills industry has suffered from a structural decline in paper usage. Electronic communication technology and digital media have become more prevalent among businesses and consumers. Additionally, demand sharply declined during the recession, which further cut into industry revenue. Since then, the industry has continued to decline, albeit at a more moderate rate, as demand for paper products slightly recovered. Overall, IBISWorld anticipates industry revenue to fall at an average annual rate of 8.5% to $8.1 billion in the five years to 2013. Revenue is expected to decline only 4.5% in 2013, as economic growth picks up and exports slightly rebound.
Industry revenue declined over the past five years due to the contraction of the downstream newspaper and magazine publishing industries. Indeed, the domestic publishing sector has declined at an average annual rate of 3.1% over the period. The rapidly contracting US publishing sector has also hurt industry revenue. The United States is the industry's primary export destination, accounting for 77.6% of total exports. According to IBISWorld Industry Analyst David Yang, “Given that exports account for 77.7% of revenue for Canadian Paper Mills, falling exports to the United States caused total exports to fall at an average annual rate of 10.6% to an estimated $6.3 billion in the five years to 2013.”
Industry profitability also declined over the past five years, due to rising wood pulp prices, falling demand and import competition. In response, paper mills steadily consolidated and downsized operations. The number of enterprises is anticipated to fall in the five years to 2018. Employment is also expected to strongly decline, as industry operators increasingly automate the paper production process.
The Paper Mills industry is anticipated to further decline from 2013 to 2018, albeit at a slower rate than the previous five years. Paper consumption will likely continue to decline as electronic communications and online services become more prevalent. “Nevertheless, strengthening business confidence and corporate profit will bolster corporate demand for printing paper, notebook paper and other business-use paper products,” says Yang. Therefore, IBISWorld forecasts that industry revenue will gradually decline in the five years to 2018.
For more information, visit IBISWorld’s Paper Mills in Canada industry report page.
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IBISWorld industry Report Key Topics
The Paper Mills in Canada industry manufactures paper from pulp; mill operators may manufacture their own pulp or purchase it. Industry products include paper rolls and reams, including printing, writing, newsprint, packaging and household paper. These products are typically sold to downstream manufacturers for further processing, or to printers, newspaper and magazine publishers.
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