Andy Preece, general manager at Spicers, details several factors that have impacted on paper pricing. He says, “With a combination of dramatically rising input costs (notably pulp and oil); considerable decreases in capacity (European coated woodfree sheet now flat lining at around 96% utilization, with Asia breaking through 90%); and a rapid surge in emerging market demand (specifically middle east, India and intra ASEAN trade flows) the historical soft supply demand equation has been reversed.”
He comments that in response to this, the mills, after several years of results ranging from poor to critical, are repeatedly driving paper increases. He says, “It has not been unusual to see multiple increases of US$50-80 for several months in succession for a single brand. The ensuing pressure on local imported costs has again become such that it is simply impossible to absorb.”
The present situation is likely to continue. Preece says, “Indeed it can be further commented that we are experiencing a paper environment globally that has not been seen since the mid nineties.”
