Selective Cuttings

Graphic paper 101

August 1, 2014

The term “graphic paper” consists of all grades of paper products that are used for graphical purposes, i.e. used for conveying printed information. There are five generally accepted grades: newsprint, and coated and uncoated groundwood and freesheet.  “Groundwood” refers to paper produced with more than 20% mechanical pulp (it is made from, literally, ground up wood) while “freesheet” consists of at least 80% chemical pulp fibers (the “sheets” are “wood free”). While each product has a range of uses, newsprint is primarily used for producing newspapers; uncoated freesheet (UFS) for copy paper; uncoated groundwood (UGW) in magazines, inserts, catalogues, directories and paperback books; coated freesheet (CFS) for brochures and high-quality magazines; and coated groundwood (CGW) in lower quality magazines. Generally speaking, there is an increase in quality: newsprint < UGW < CGW < UFS < CFS. Despite this difference, at the margin these papers can be substituted for each other in a variety of applications, particularly if short-term market changes result in growing price gaps. The market reflects these linkages, and prices for the five grades move in sync, with premiums for the higher quality grades.

Graphic paper prices (US$/tonne)

 This line chart shows the prices of various graphic paper grades over the 2005-2014 period. It shows that these prices are highly correlated and move in-synch.

Critically, each of these grades is primarily used for graphic purposes—to convey information. However, after more than a thousand years at the top of the communication technology podium, paper is being rapidly supplanted by electronic media, and all grades of graphic paper are suffering the result. While the pen may be mightier than the sword, it seems as though the keyboard is mightier still.

Over the next few weeks we will explore the nature of graphic paper and discuss how electronic media is changing this market.