Impact on Canadian merchants and printers
In most sectors, printers buy their paper from merchants. For uncoated woodfree and coated woodfree grades, merchants in Canada are often buying from mills in the U.S. such as Verso, New Page and IP. Domtar sells to Canadian merchants in Canadian dollars, but typically the American mills sell to Canadian merchants in U.S. dollars. This means that when the value of the Canadian dollar fell by 23% in 30 days, Canadian printers got a 23% price increase unless the merchants absorbed the loss. In many cases, that is exactly what happened: a merchant who bought paper on September 29 in U.S. dollars with 30 day terms, and sold it to a printer on that date in Canadian dollars, would have paid 23% more for that paper when he wrote the check 30 days later.
Jack Miller is senior consultant, North America, for Pira International, a leading supplier of strategic, marketing and technical consulting in paper, print and packaging. jack.miller@pira-international.com