Why are my Paper Prices so Volatile?

Paper is at the heart of our business here at Paper Plus and we pride ourselves on offering best-in-class paper for every purpose, at the best possible rates. Whilst we strive to keep our pricing as consistently competitive as possible, we have seen significant increases from our suppliers in recent months which have inevitably led to price increases for our customers.

As a family run business, we like to be as transparent as we can. With this in mind, we have put together this post to give more information about where the price increases stem from. We hope that this information will provide a wider understanding of what is currently affecting the global paper market and how this might affect our business and supply to you, our customers.

Back to Basics – The History of Paper Making

Paper making is a process with roots spanning back 2000 years to ancient China. Traditionally silk or bamboo were used for printing pictures and words, however, with silk being expensive and bamboo weighty, a new solution was required. Records as far back as 105AD show the pulping of natural materials to create a lighter sheet for writing and drawing on.

Many other parts of the world followed suit shortly after this, with Arabic nations devising their own methods of production. The Europeans followed several years later, having decided that the animal skin parchment traditionally used was no longer cost effective.

From this point, the paper making industry saw endless innovation, using various raw ingredients and eventually settling on the use of shredded wood fibres to create paper. This is recognised in modern times as the most efficient way to create the paper we use every day.

The Paper Industry Today

Wood pulp is now used for the majority of paper goods including standard items like copier paper, glossy paper for magazines and brochures, tissue and cardboard packaging but also in more unusual items like electronic components, nappy filling, nail polish and even clothing.

Many paper mills also use recycled product to make their paper, converting used paper and packaging waste into new products.

The paper and pulp industry is currently one of the largest in the world, with an estimated 400 million tonnes of paper being used globally every year. Paper mills are now in operation in almost every continent, with the lion share of production happening in East Asia, North America and Northern Europe.

China’s Influence on the Market Place

Several of the stresses affecting the paper industry stem from China. Although now considered the second largest paper manufacturing country in the world, the country has struggled in the past to secure the raw materials needed to meet the production demand of consumers. In the late 90’s flooding caused by deforestation in the country meant that a completely new approach to raw material supply was required. To address this, modern Chinese mills rely on a combination of raw materials and recycled materials, many of which are imported from abroad. This included recycled paper and packaging from the UK.

In tandem with this, pressures have also been growing in China to address the impact of environmental misconduct across every industry in the country. The paper mills of China have been particular victims of new legislation brought in to regulate environmental impact, with many mills being closed down completely and others being suspended with no advice on what is required to bring them up to standard.

Countries around the world have been feeling the repercussions of a ban enforced by China in 2017, on the import of mixed recycled goods. Strict limitations were imposed on the types of paper and card being imported to the country for use in mills, meaning mountains of waste have built up in the ports of countries previously reliant on China for their recycling services. In addition, this has put considerable strain on the Chinese mills, forcing them to hike up their prices at a time where demand for paper is higher than ever because the surviving mills are having to import raw pulp to make up the difference, thus causing increase in demand

Paper vs Plastic

Recent shifts in the packaging industry are also playing a part in the increases we are seeing. A recent crisis point was reached regarding plastic waste, with worldwide media reporting damage to the environment caused by the disposal of non-degradable plastic items. In a recent report, the BBC stated that 6.3 billion tonnes of plastic waste has been generated to date. 9% of this was recycled, 12% incinerated and 79% was accumulated in landfills or the natural environment.

Global oceans have been a particular focus of the coverage with many distressing facts and images coming to light of the damage plastic is causing to marine wildlife and habitats. Consumers have become more aware of the impact their shopping choices make on a global scale and many are opting to go ‘plastic free’.

The result of this has been a shift by supermarkets and food manufacturers, away from single use plastic containers and towards sustainable, recyclable paper and cardboard packaging solutions. This has caused a spike in demand for paper and cardboard products, at a time when mills are already struggling to meet supply quotas.

How does this affect me?

It is little wonder that, with these mounting issues, paper prices are on the increase around the world. The increased demand for packaging continues to grow year on year, the global demand for cut size copier paper is actually in decline, whilst consistent supply of raw materials to make the products is becoming more and more difficult, particularly in China.

With the recent trends in supply and environmental pressures, mills are having to charge a higher rate for their products. The supply requirement is still prevalent but products are in shorter supply.

In the past year we have seen numerous increases to our paper supply prices at Paper Plus, many of which we have absorbed to avoid passing this on to our customers. Sadly we are now at a point where some of those increases will need to be passed on to our customers, in order to ensure we can still offer you the same quality paper, consistently when needed throughout the year.

References:
https://www.bbc.co.uk/news/science-environment-42652937