Paper Prices – will they stop rising?

by Rich B

Over the past months paper cost has gone in one direction – upward.  It has seemed that as the first day of January, April, July and September approached, so too did a letter from the paper merchants informing us that another rise of 5% to 8% would be required. Just have a look at Foex to see the upward trend in the graphs.

Last year I bought some paper for a client at £590 per tonne. Today, the same paper is £800 per tonne and the lead time has extended from 4 weeks to 12 weeks.Printing-paper-rolls

At a recent seminar, hosted by the Independent Print Industries Association, at Howard Smith Paper in Northampton, on paper costs there were many reasons given for the 2010 rises.  One off factors like the Chilean Earthquake that cause disruption to the world pulp supply, strikes by paper workers in Finland and the demands of countries in the Far East were cited. They also cited the need by paper mills to increase their margins and the need to increase the prices they get in the UK which are lower than in Euro countries. Many of the reasons are given a good airing in this PrintWeek article from July.

When compared to other times when this has happened, notably in the mid 90’s, the situation is somewhat different.  Back in 1995-6, mills were opening up capacity so the supply and demand was not in line. Prices fell because of over supply. Today, supply and demand is more in line as mills have closed and a lot of paper making capacity has been removed from the market place.

Your crystal ball is probably as reliable as ours, but the feeling at the seminar was that the price rises may soften and paper price will stabilise rather than continue to rise. We can wait and see, but certainly January 11 saw an increase in part mechanical grades so maybe this is the case.

Time will tell.

Future posts will look at how you can re-specify your print job to save paper costs.

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