The declining North American UFS market – causes and future trends

By John Maine, Vice President, World Graphic Papers, RISI

The North American uncoated freesheet market used to be a high growth market. It consistently outpaced the growth in the economy by 1-2% per year as business copiers, home printers, faxes and a myriad of other end-uses expanded rapidly, fueled by technological development and plummeting prices for business machines.
This trend ended abruptly in 1999. Almost overnight, the uncoated freesheet market morphed from a profitable high-growth business, to one that has been plagued by declining demand and lackluster profitability. It took the industry years to recognize the change in trend, and chronic oversupply dampened profitability in the market.
What Caused the Market to Decline?
There were two broad factors that led to the decline in the market:
1. The loss of print markets to electronics
2. The loss of market share to alternative grades of paper
When discussing the decline in the uncoated freesheet market, most people refer to the primary cause as the shift to electronic technology.
This was indeed the primary driver behind the declines in demand for tablet, envelope, stationery, carbonless paper, technical papers and form bond.
However, a very important and often overlooked fact is that a third of the market share loss since 1999 was caused by a shift to alternative grades of paper. The introduction and successful growth of uncoated mechanical offset substitutes in particular has displaced about 840,000 tons of uncoated freesheet demand in North America since 1999. Furthermore, the rapid growth of cheap, mostly Asian, coated sheets has also displaced about 250,000 tons of uncoated freesheet sheets, mostly in the “cover, text and bristol” category.