Paper Prices Show a Rise Again
This year saw a third-time price hike in paper and paper products.
This is a disturbing and daunting statement for not only the end users but for the suppliers and retailers as well.
What Elliott Baxter had to say
Feltham-based merchant Elliott Baxter (EBB) confirmed that an increase of 6 to 9% is expected from 4 December 2017, on coated sheets, reels, and specialist paper. This action was imminent because their suppliers had notified EBB that to maintain and sustain an uninterrupted supply to the UK, increase in prices were mandatory.
David Jones’ opinion
Further confirmations on the said issue came from David Jones, marketing director at the Premier Paper group, whose statement highlighted the pressures of the cost that had to be met by suppliers.
Jones further elaborated that the ever-increasing cost of the raw material used in the paper industry along with the fluctuations in the financial markets especially those of the dollar and the euro has increased not only the running cost of these mills but has also increased the pressure for a sustainable return.
Moreover, fluctuations in the major currencies and the current exchange rate between the pound and euro, reaching a new low, has further increased the pressure on this industry and has driven the need to raise the products’ prices to sustain their supply.
James Jarvis’ opinion
James Jarvis, Antalis channel director for print, confirmed an increase of 6 to 10% in prices for uncoated papers and envelopes. The bulk of the price hike falls on the temporary shutdown of the Stora Enso’s Veitsiluoto mill in Finland, which was catering to an abundant supply of assorted paper in Europe. This incident was the result of drying cylinders being severely damaged on the paper machine resulting in massive equipment and electrical damage.
Although no one was reported to be injured in this incident, the extent of damage resulted in the cancellation, reduction, and postponement of orders in the different paper product grades. This scenario further added a burden on the cost-effectiveness of this industry.
Furthermore, Jarvis stated that as this mill will not be functional until the end of the year, this will create a significant vacuum in paper supply especially with Christmas approaching and demand for coated paper rising.
“It’s not quite as straightforward as a standard price rise,” said Jarvis.
Jarvis further explained that price hike in the paper industry is not a simple mathematical equation of addition. Problems arise as there are a lot of different products that are employed at various levels in the industry by suppliers.
Price variations of these products are not synchronised with each other thus complicating the process. So instead of a simple straight increase in price annually, here the increase depends on the different cost variations of the various products, combined to get to a final input cost.
A further shortage, as seen in uncoated paper, puts more burden on the suppliers to meet the customers’ demands.
Lecta and Navigator Company, two major paper makers, have also announced an increase in the price of various paper products with Lecta especially increasing the rates for thermal and carbonless paper.
An 8 to 10% increase will be effective from 2 January 2018 for the aforementioned products signifying the rising costs of this industry’s infrastructure and customer demands. How this will end up having an impact on the UK is unclear as no statement regarding the UK market had been issued by then.
The Portugal-headquartered, The Navigator Company, has shown an increase of 4% to 7% in October, on uncoated wood-free paper. It further announced a 6 to 8% increase in the same for the UK from 1 January 2018. This further reinforces the fact that highlights the rising pressure of sustaining an effective cost system in this industry with the ever-increasing demand.
Zanders, a German company, is increasing its rates on all its products by 5 to 8% from 1 January 2018 in consequence to the rise in the prices of the raw material.
The start of this year saw an increase in prices on all paper products with uncoated paper showing a further increase of 5 to 7% in May.
James Jarvis has stressed the fact that an improved and effective dialogue should be conducted with the printers regarding the consistent price hike in paper products. This dialogue should ensure that the end product is delivered to the end user efficiently at a cost which does not affect the profitability of the printers.
Conclusively, rising costs of raw products, irrespective of causative factors, are a challenge for the suppliers’ profitability and sustenance in this industry.