Do you ever think about the paper industry? The paper and forest-products businesses have seen a lot of change over the last ten years. They have dealt with a reduction in demand, the elimination of many papers and mill consolidations.
Along with consolidation comes closure of many production facilities. Numerous publications have warned that mills are losing money and need to see increased business to survive. With fewer mills in existence, they are facing a new issue of rising paper pulp costs, all adding up to rising paper prices. The price of wood pulp is forecasted to increase at an annualized rate of 5.1% through 2019 according to Strategic Sourceror. Surprisingly, the supply of usable, clean paper pulp has fallen while the demand for such has risen. There are several reasons for the reduction in inventory.
- First, a September Publishing Executive blog stated there is increased foreign demand competing with US buyers for paper pulp. In the past, China purchased recycled paper from the US to produce paper pulp. However, single-stream recycling has resulted in contaminating paper that is no longer usable as pulp.
- Additionally, another Strategic Sourceror blog reports Hurricanes Irma and Harvey resulted in the shutdown of 18 pulp and paper mills in the US. They also predict that long-term damage is still uncertain but if the past is an indication we can expect a 10-15% increase in paper pulp pricing.
At BFC, we have already seen paper price increases in 2018, with the expectation for more to come. We have received notice from each of our distributors that prices will climb and more brands are being eliminated.
So, what can you do to ease your pain? More than ever, it is an advantage to the print buyer to be engaged in a long-term working relationship with a print partner. While BFC is working continuously with our supply chain to find the best sources for our clients, the strong relationships with our customers that allow flexibility, the insight that provides for longer-term production planning, as well as flexibility to suggest more economical paper alternatives will pay dividends in these challenging times.
