No doubt you will have noticed a sharp rise in the cost of copier paper recently.
There is no glossing over the story, it is a fact, paper prices are on the rise, and will continue to climb.
If you'd like to know more, here's some information on the paper market; where it is at, why it is heading that way and what the outlook is.
Why are prices increasing?
Before the paper is even shipped the cost of Pulp has increased by nearly 50% in the past 12 months. With pulp making up 48% of the production cost - that is significant.
Energy prices we all know are on the rise. For a mill producing cut sheet paper it has gone up by 400%.
The below is an example of costs for producing £1k worth of paper today compared to 24 months ago.
The impact of the above on a carton of paper is even more poignant. To make the example easy, if you assume a carton of paper cost £20.00 two years ago, that cost would now be £33.10 - An increase of 65%.
What about the demand for paper?
In short, it is in decline. Massive decline.
That must mean that there is plenty of paper to go around.
Surely that excess will help to bring prices down?
Nope. Paper manufacturers have been facing some tough decisions for their business. Over the past two years they have faced:
- A dramatic reduction in demand
- Significant cost input inflation
- Global shipping route disruption
- Container shortages & huge transport cost increase
So, what have they done?
- Some have repurposed their machinery to other more profitable products such as packaging.
- Some have stopped production and closed completely.
- Others have focused on more lucrative income streams: pulp, timber or real state
As a result, there is actually a 5%, 732,500 tonnes, supply/demand deficit.
Things are not looking good then?
You don't need Aristotle, Archimedes or Diophantus to calculate that the answer to the below equation (oh yes, we haven't mentioned the strikes at the mills yet) is a period of extreme price inflation and very tight supply. Paper merchants are reporting that they have their paper orders in place, if they didn't, they would be waiting until November for the next availability.
So what are we doing?
Our team are keeping a close eye on paper prices and we will only be implementing price increases when absolutely necessary. If the paper, or any paper product you buy, is subject to an increase your account manager will notify you and offer alternatives if anything is available.