Paper is the main ingredient of any printing operation and the fluctuation in its price will affect the business and bottom line of any printers and their customers. The pandemic has caused dramatic shifts in operating patterns within the paper industry, which have resulted in fluctuations in pulp and paper supply and demand, and recurring price increases.
Many paper manufacturers have already announced price increase. Sappi Europe announces a price increase for all its packaging and specialty paper grades by 7 – 11% valid for deliveries from 1 April 2021.
Sharply rising input costs, particularly relevant to pulp and energy in combination with very high freight rates due to global logistic constraints make price increases unavoidable.
Sonoco announced it will raise the price for all paperboard tubes and cores by a minimum of 6 percent, effective with shipments in the United States and Canada, on or after March 1, 2021.
“This price increase is necessary due to continued increases in costs for uncoated recycled paperboard (URB), our primary raw material. URB demand remains very strong, and the supply in the marketplace is extremely tight,” said Mike Thompson, Director of Sales and Marketing for Sonoco’s North America Tubes and Cores Division.
Sonoco is the largest producer of paper-based tubes and cores in North America, which are used to serve the paper, textile, plastic film, and tape and specialty industries.
Mitsubishi HiTec Paper announced it will increase coated inkjet papers price by 5% from 1 May 2021 and German paper mill Feldmuehle has already increased prices for its wet strength label papers by 8%.
Other paper manufacturers such as Verso, Domtar, International Paper, and ND Paper either already increased their prices or will implement the price change during next few months.
Blame it on pulp
In its recent report on global paper, packaging and forest products outlook, Moody expects that paper Industry’s global EBITDA to increase 8%-10% during 2021. The reasons behind price hike are higher pulp, fiber, chemical, energy and transportation costs.
By region, Moody’s says that the consolidated operating earnings from rated producers in North America and Europe is anticipated to increase 5%-7% in both regions, as that of rated producers in Latin America is expected to surge by 25%-30% over the outlook period. Latin America’s significant pulp and paper rebound is driven mainly by a spike in bleached eucalyptus (BEK) pulp prices.
Demand is expected to remain strong in 2021 as consumers continue to buy online, with shipping items individually to consumer homes, rather than in bulk to retail outlets, requiring more protective packaging. Additionally, demand will continue to be fueled by paper packaging alternatives to single use plastic packaging. Nevertheless, Moody’s says demand for tissue products will normalize in 2021 after spiking last year due to panic buying at the outset of the pandemic.
