Copy paper is poised for a fall . . .

Prices of uncoated free-sheet grades sold to merchants, particularly cut-size copy paper, have dropped by as much as $40/ton over the last couple months because of an inventory bubble. Prices also have declined to the large office superstores for future deliveries. Upshot: Analysts expect retail slippage soon off the recent four-month average $830/ton spot market price.

Merchants say that major U.S. producers have been trying hard to hold the list price of standard truckload quantities of bellwether 50-lb offset at list price levels. But, reports on Paperloop.com indicate discounts are available on larger volumes, and that smaller mills have been offering discounts to fill holes in their order books. Some value-added grades such as opaque papers are being more widely discounted and have declined about $40/ton in price since last autumn. Uncoated free-sheet grades such as offset, lightweight opaque and trade book are also facing more competition in the market from super high-bright substitute grades. North American shipments of uncoated free-sheet declined 1.8% in December, according the Pulp and Paper Products Council and American Forest & Association. So, for all of 2004, North American shipments were up only 1.2% from 2003—and mills ended the year shipping at only 82% of capacity in December, down from an average of 90% for the year. Mill inventories ended the year at 42,000 metric tons.