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July 20, 2020 | by Paul Fillmore

A VIEW FROM THE TOP – THIRD QUARTER OUTLOOK ON PAPER AND TRENDS

As Quantum enters August, we continue to navigate the choppy waters of the pandemic.  Looking forward, we begin to prepare for the busy direct mail season that will soon be upon us.  Being in direct mail, paper is a crucial part of what we produce.  After postage it is the largest contributor to cost, and at the same time, the largest contributor to value.  With that in mind, we bring you our Third Quarter Outlook on Paper and Paper Trends.

Inventories

Quantum anticipates inventory will continue to be available even with many mills reducing capacity and idling machines.  American Forest and Paper Association reports 18,000 short tons of increase (36 million pounds) month-over-month at the end of May 2020, and 18,000 short tons overall from May 2019.1

Quantum’s Analysis:  With inventory available, we are currently not concerned with the mills idling equipment.  This should keep prices stable.  Our mill and merchant partners will be more inclined to be competitive with these inventory levels, especially on spot buys.  Now is a great time to start thinking about campaigns and A/B testing ahead of what could be a record retail season.

The Election

With the impending election, you can be assured that USPS 7 PT and 9 PT stocks will be in high demand come August and September.  Outlooks for direct mail tell us it is going to busier this cycle than in previous ones.2

Quantum’s Analysis:  If you are in the realm of political mail, fantastic!  It will be a boon for you as well as for our industry.  If you are thinking about direct mail campaigns during this busy time of year, talk to us or your service partners regarding plans you have now.  At Quantum, we nurture close relationships with our merchants and mills.  Going beyond just a partnership, we have made them part of the Quantum service arm for our clients.  They are ready to assist us and assist you.

Sustainability

COVID continues to challenge us all, in every area of living.  One of the areas of focus here at Quantum is sustainability: across our operations, in our products and services, in our partnerships, and as members of society and the planet.  Research done by Smurfit Kappa, a leading global paper and packaging provider, tells us 61% of consumers expect the brands they buy from to have clear sustainability practices.3

Meanwhile, business leaders surveyed expect sustainability practices to remain high on their priority list for businesses post COVID.

Quantum’s Analysis:  We value a sustainable-centered approach at Quantum.  We do what is right for the customer, what is right for the business, and we make decisions because it is the right thing to do. We expect the growth of the sustainability trend to continue, with demand from present and future clients for clear, comprehensive, and transparent sustainable practices.  We plan to answer that call, beginning with paper and expanding plant-wide.

Quantum’s Outlook for Third Quarter 2020 is Positive.  We anticipate inventory will continue to be available even with many mills reducing capacity and idling machines.  Looking forward we see sustainability trending upward.  One significant challenge we see going into Q4 may be pent up demand from the retail sector, as well as the impending election.  Keep your eyes on the Quantum website in the coming months as we plan to unveil a brand-new sustainability dashboard.

Thanks for reading Quantum’s Third Quarter Outlook.  If you would like to speak with us directly, visit our website and send us a note.

1:               https://afandpa.org/media/news/2020/06/17/american-forest-paper-association-releases-may-2020-packaging-papers-monthly-report

2:               https://www.campaignsandelections.com/campaign-insider/top-mail-trends-to-look-for-in-2020

3:               https://www.smurfitkappa.com/newsroom/2020/new-research-reveals-conscious-consumerism-will-keep-sustainability-a-top-priority-for-businesses

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