Rising cost of paper: causes and effects

For engineers and manufacturers, the exploding cost of paper can be seen as a marginal topic. However, this should concern all of us, because paper is still pretty much everywhere. Print publishers and their customers are not immune to this development.

For engineers and manufacturers, rising paper costs can be seen as a marginal topic. However, this should concern all of us, because paper is still pretty much everywhere. Print publishers and their customers are not immune to this development.

One could try to hastily explain this with something like, “Well, it’s not just the fleas that are missing!” Or: “So the onset of inflation has also hit the paper market!” But there is more than meets the eye. First, in Central Europe and other industrialized countries, the production of pre-paper products like waste paper, pulp, etc. — and this is the scarce resource we are talking about here — does not cover the real needs. Thus, paper and paper precursors have already been imported on a large scale for a long time. This creates dependencies which, in times of difficult logistics, supply chains and production volumes, become inevitable problems leading to increased prices.

Paper costs: the current situation

For nearly a year, signs point to the threat of a cost explosion in the paper market. You can easily find articles online – such as “Pandemic drives up (German) paper prices” – detailing how many suppliers had to raise their prices by up to 20% already in March 2021. -be just the beginning.

The development of wholesale prices for waste paper during the first three months of 2021 (2015 = 100%). Source: Federal Statistical Office of Germany (Destatis) 2022.

After prices remained fairly stable for several years, the price of waste paper almost doubled from January to September 2021, and the price of pulp increased by around 50% during the same period, as l illustrated in the adjacent diagram (according to the German Federal Statistical Office). Since then, a few more months of further strong price increases have been observed. These prices are reflected, for example, in product packaging costs and increase by just under 20% for general printed paper products (only slightly dampened by a decline in demand of around -23% in this sector over the last 10 years).

Other inflators

In Germany, for example, most paper products are made from materials from wood-exporting countries such as Brazil (22.9% share), Sweden (18.3% share) and Finland ( 14.3%). The market is tight, not just because of the global coronavirus crisis. Already in 2020, more than 75% more paper (compared to the previous year) was exported to Asia. If there is a shortage of material at a single local point, the effects can quickly become a global problem. According to “Le Monde diplomatique (German)”, workers in the Finnish paper industry have been on strike since the beginning of the year. The strike was originally scheduled to last until February 19 this year and was temporarily extended for three weeks until March 12 in early February. Even if this closes only a small part of global production capacity, it is easy to imagine what effect this will have on prices. For the first quarter of the year, and without the consequences of this strike, European printing prices increased by 50 to 70% compared to the previous year.

Consequences

You don’t need to be a fortune teller to predict that paper prices will continue to rise later this year due to the Finnish strike. It also affects large sectors of industries that typically have little contact with paper processing but cannot continue to function without packaging materials, printed instructions, cellulose filters, etc. Therefore, paper prices will continue to drive current inflationary developments.

Obviously, print publishers are particularly affected by the prince’s increases. Physical products such as printed books, newspapers and magazines will continue to become more expensive, unlike online virtual sales channels. Most likely, the publisher will not be able to absorb these immense constant increases and will also have to adjust their prices to sell printed products.



Translation: Stephan Nolting

About Cedric Lloyd

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