Paper prices set for 10% increase
Thursday, December 1, 2016
Paper prices will increase by up to 10% over the next few weeks.
Most of the major papermakers have sent letters, seen by PrintWeek, out to paper merchants over the past few weeks to confirm that prices are about to go up by between 5% and – more commonly – 10%.
Fedrigoni UK has made the first move, pushing prices of the majority of its product portfolio up by between 5% and 8% on all deliveries from last Monday (21 November).
Smurfit Kappa is increasing prices of its white lined chipboard (WLC) qualities from its Baden and Hoya mills by £60 per tonne for deliveries from today (1 December).
On 15 December, The Navigator Company will increase prices for its uncoated woodfree products. It is expecting to add a minimum 6% increase per grade. The rest of the price increases will happen between 1 and 3 January 2017.
Arjowiggins Graphic will raise coated and uncoated, recycled and woodfree paper prices by 10% – for both sheets and reels – on 1 January while on the same day UPM intends to push prices up by 10% on all of its coated and uncoated fine papers, reels, graphic sheets and publication grades.
Asia Pulp & Paper’s Calington sales arm will increase prices on all woodfree coated grades from Gold East Paper Company and Gold Huasheng Company by 10%, impacting orders placed in January 2017 for February shipment.
Stora Enso will increase prices on all deliveries of its coated and uncoated woodfree paper grades – both sheets and reels and inclusive of cut size papers – by 10% from 2 January.
From the same date, Arctic Paper will advance pricing across all of its grades, sheets and reels by 10%, Lecta will increase its prices on all deliveries by 10% and International Paper will raise prices on all grades and brands of its uncoated woodfree products by a minimum of 5%.
Finally, from 3 January, Burgo UK will increase prices of all Burgo Group products by 10% and Suzano Pulp & Paper will push prices up on all orders of its uncoated woodfree paper products by 5%.
The reasons given by most mills for the price increases in the letters seen by PrintWeek are largely related in some way to the UK's current economic situation.
Smurfit Kappa said its increases are due to “a sharp rise in the cost of our raw material including recovered paper, combined with the continuing development in the GBP-euro exchange rate”.
Stora Enso attributed its price rises to “continued turbulence in the UK economic landscape and the need to secure sustainable supply lines”, while Lecta said operating margins from its UK business in woodfree coated and uncoated products have reached “unsustainable levels”.
Fedrigoni UK said: “Since the end of June the fluctuation in the major currencies has continued and the current exchange rate between the pound and the euro has reached a new low. Unfortunately, this drives the need for an increase to reach a sustainable ongoing price position for our products.”
International Paper blamed “continued unacceptably low returns” while Arctic Paper said it is “left with little alternative but to review our selling prices across all grades [due to] the continued margin erosion on our business over recent months”.
Paper merchants contacted by PrintWeek are currently deciding what to do with regards to their own pricing.
Antalis UK sales director Bruce Munro, said: “Antalis has received a number of price increase notifications from many manufacturers indicating their intent to increase prices. Dependent on the product, the increase is generally of a range between 6% and 10%, but we have also seen higher than this.
“We are now entering into serious negotiation with the mills with the aim of mitigating any increases and we would anticipate that we will be informing the market of our intentions within the next ten days.
“Clearly, the date and level of implementation will be dependent on the outcome of our negotiations but, as always, we will give the market 30 days’ notice of our intentions.”
Elliott Baxter (EBB) sales and marketing director Chris Sandwell said EBB has also received notifications from most of its major suppliers of their intentions to increase prices.
“EBB understands the impact of such increases on UK print and is working hard with customers and suppliers to ensure sustainable supply lines. Based on current information EBB would see a price increase on grades affected inevitable sometime in January 2017”.
Middleton Paper commercial director Ian Pentland said: “We've had letters from pretty much all of the suppliers though there hasn't been a merchant letter out there as yet. We're waiting to see how the market goes, but obviously we will have to increase prices in line with what the suppliers put through.
“Since the Brexit decision we definitely did see it coming, it's probably been a bit slower than we thought actually. I think [the paper suppliers] have been quite supportive in general. Based on the exchange rate I would say you can understand why they've got to do it.”
He added: “I wouldn't think printers have got the margin to just absorb it so I would say that they would have to put the prices up to save sliding backwards but whether the end customer can take the increase or whether that puts more pressure on print is another story.
"I think these increases will stick, it's very different than previous increases because Brexit is the biggest impact that we've had, down to the exchange rate more than anything.
"Because we do the conversion service, we're hoping that puts us in a good position of being able to negate a big part of the increase based on bespoke sizes from our cutter reels.”
At the time of writing £1 is worth €1.18, up a little from €1.11 on 13 October but still significantly behind the €1.31 recorded on 23 June, the day before the Brexit result was announced.