Over the course of the last year, Fisher has provided analysis and discussed the decline of the printing and writing papers segment, which has accelerated under the stress of the pandemic and the transition to remote work and schooling. But now that more than 825 million doses of the COVID-19 vaccination have been distributed globally, a return to in-person work and schooling seems imminent. The question the industry is asking now is: What’s going to happen to the printing and writing segment as we begin to return to “normal?”
There’s no clear answer to this question at present, and speculation. While it’s expected that the demand for printing and writing papers will experience a slight increase as more at least some percentage of the population returns to in-person school/work, it is not expected to make an overwhelming impact on the segment for a couple of reasons:
- It was an already declining sector – While the pandemic did accelerate the decline of the printing and writing sector, this was an inevitable outcome as we can tell from Figure 1. As the new digital age took over in the mid-1990s, demand for printing and writing papers and newsprint began to decline rapidly as access to information gathering became easier and knowledge sharing became more efficient with new technological advances — which aren’t showing signs of slowing. While there may be an initial increase in demand as more paper is needed to accommodate in-person schooling and work, it’s not going to skyrocket like we’ve seen with other sectors such as specialty papers and corrugated cardboard.
P&W Capacity in North America
Source: FisherSolve™ Next 2021 Fisher International, Inc.
Figure 1 – P&W Capacity in North America
- After COVID-19, there will be new sanitation concerns – The coronavirus has created some lasting effects that will continue to impact social habits, including a conscious concern for sanitation. Based on new, remote habits developed during the pandemic, we have become accustomed to managing sanitation concerns in confined, private spaces. People have thus become hyperaware of just how unsanitary some of our public activities can be, instilling a new fear of public spaces within many. As such, demand for a number of physical consumables - including books, magazine, printed documents, etc. will not return to pre-COVID levels.
Adapting for the Future
As a response to the reality the printing and writing sector is facing, line conversions (where feasible) will open new opportunities for traditional P&W producers looking to expand beyond the sector. As illustrated in Figure 2, US containerboard capacity has seen a spike in demand since the onset of the pandemic, suggesting that there is plenty of current and future demand in this segment.
Source: FisherSolve™ Next 2021 Fisher International, Inc.
Figure 2 – US Containerboard Capacity
While the pandemic didn’t necessarily create a permanent negative impact on printing and writing paper grades, it has accelerated an already declining sector. Should pandemic-related restrictions ease enough to allow a significant reopening, there will at least be a short-term bump in demand as businesses and schools resume previous patterns. That said, producers expecting a wholesale return to pre-2019 activity will be disappointed.
Production costs, asset health, logistics and profitability concerns will define “next steps” for manufacturers who commit to the changing dynamics of this segment. Producers will require a full-spectrum view for maximizing strategic decision making and understanding all the factors predictive of longer-term asset performance. Fisher has the available tools and resources to help manufacturers in the printing and writing segment audit their current assets and positions, and chart a smarter way forward in this dynamic market.
