A “perfect storm” of global events has resulted in long lead times for some paper grades – with mills resorting to allocation for the first time in over a decade – and printers and paper buyers have been warned to plan ahead for the rest of the year.
The combination of factors affecting the supply of graphical papers includes increasing demand for pulp for other markets, such as tissue and hygiene products, which has pushed prices up to almost $1,200 (£883) a tonne. A year ago, it was $700-$750.
As well as pulp prices, other rising input costs for papermakers include chemicals and fillers. In recent years, paper manufacturers have shut down paper machines in the face of declining demand, or converted lines to make other higher-value products, such as cartonboard. In addition, there has been a surge in demand from China, where many small paper mills have been closed down due to tighter environmental regulations. This has resulted in at least one European papermaker switching some of its tonnage that would have been sold in Europe to the Chinese market.
Some European paper is also currently being exported to North America due to fluctuations in capacity there, including extended downtime at Sappi’s Somerset Mill because of a conversion project.
Publishers have also switched to lighter paper weights in order to save costs, which has resulted in a further knock-on squeeze, with web offset, gravure and newsprint papers in particularly short supply.
Further, paper price rises over the summer are in the pipeline, with Sappi announcing a price increase of 6-8% on LWC and MWC grades from 1st July.