The news on the “paper and pulp price pressures” continue to build toward substantial increases for 2010. We continue to see sharp increases in input costs for most mills, not only with pulp, but energy ( and this could be significant with some pending legislation ) wood, chemicals and transportation costs all trending up. Add to this that the “black liquor credits” all expired in 2010, which is the equivalent of a $ 100 per ton cost increase! IP, Franklin, Domtar and Plymouth together have announced permanent shutdowns of over 700 tons of uncoated freesheet capacity in North America alone in 2010! Additional imports may offset some of this capacity, but with the current issues with “mother nature” including weather and earthquakes as well as union strikes, will slow their importation. Pulp costs have risen 31% in the last year already….and that is eqivilent to $ 230 per ton in cost increases. Add to this possible pressure to close non-integrated paper mills in Europe and North American due to the rising costs of pulp, and we could be in for a long run of price increases, especially if demand stays strong or increases. Prepare for those increases now… it is no longer a matter of “if or when”….but “when, how much and how often”!
Paper prices have been slowly but constantly edging upward over the past months and now they appear poised to possibly make some dramatic increases unlike any we have seen in recent years. There are several factors that are creating this climate of upward pressure on paper prices. Even with the recent recession paper consumption has remained strong. This coupled with various production plant closures prompted by various reasons, some financial and others due to enviromental regulations, capacity has been reduced. Now pulp shortages are now occuring and the month of March has seen an incredible number of events already that impact paper prices and it is only the 20 th! Another 11 days like the first 20 and paper prices may escallate at a record pace! With credit to the PAF’s recent breaking news on this very subject…..here are just a few of the real March “Paper” Madness …. Finnish Ports are on strike forcing their mills to shut down due to over stocked storage facilities. Since the U.S. receives over 600,000 tons annually of coated papers from them in the US ( Finnish Mills UPM ) you can quickly see the impact here. Pulp prices reached $ 900.00 per ton last week… the largest 7 day increase in 6 years! Pulp in Europe should break the $ 1,000 per ton mark this spring…and that is higher than the last peak seen in 1995! Add to that the earthquake taking out the Chilean production you have 12% of the WORLDS pulp mills shut down! And of course we have had one of the worst winters on record in the U.S. and with that very wet winter the US Mills are not able to harvest the pulp needed for production! St Marys Paper, New Page Corp and others have announced plans to curtail or place moratoriums on some paper grade orders. All of these situations world wide have created the “perfect paper storm” ! No need to panic…we will have paper…but we WILL be paying more! Euby