Paper prices on the up
If things weren’t bad enough with inflation rising and a shrinking market, it now seems certain the printing industry will be hit by above inflation rises in paper.
Coupled with that the concerns over what sort of Brexit the Government will deliver have unsettled markets with the pound falling again this week against the dollar. And it’s the thorny issue of a hard or soft Brexit together with the conundrum of the Irish border that has prompted many to believe the Prime Minister has no option but to go for an election this autumn. The Metro reports this month: “Conservative MPs are reportedly preparing themselves for a snap general election over fears Theresa May will not be able to break the Brexit deadlock. Some are said to have spoken to their local party associations asking to be readopted as parliamentary candidates in preparation for an election later this year.”
Bloomberg are also reporting the rumours which have had an effect already on the markets as it will lead to more uncertainty although the uncertainties created by political problems in Italy are also having a negative effect. Despite denials from Downing Street if Theresa May does gamble and go for an election in September she could finally lance the boil in the Conservative Party. If she managed to win then her plans for a customs partnership would have been endorsed by the public and she could finally side line Johnson, Gove and Fox. It is a result the markets and industry would most like as finally there would be certainty over how Brexit will look like: essentially not much different from membership of the EU. Trade could continue seamlessly with no extra costs. There is the small matter of winning an election of course, but opinion polls suggest the Conservatives are slightly ahead of Labour. The opposition has so far not made much headway since the last election with some commentators suggesting Corbyn-mania has reached its peak. If as expected the Tories can win more Scottish seats plus pick up one or two elsewhere then it is game on.
Meanwhile problems mount for the printing industry as reported in Paper Market Update. It says in its May bulletin: “There have been more price increase announcements since last month’s market update. Most markets are still tight, with newsprint grades leading the way. We now see unprecedented fragmenting of newsprint, machine finish high-bright, and directory grade prices due to the recently implemented tariffs on Canadian supply of these grades. This results from US mills announcing market driven price increases, while Canadian producers are seeking larger increases due to the US import duties being collected.”
In Europe the news is similar. In Finland Metsa Fibre says their pulp prices will rise due to a shortage as demand rises while in the UK the independent trade press publisher EUWID reports: “In the view of limited supply and order backlogs, manufacturers of uncoated fine paper were able to charge more for deliveries in April. Uncoated fine paper manufacturers are determined to go hike prices further as long as pulp costs also continue to rise. The price increase achieved this month was not sufficient to cover the higher pulp prices paper makers had to pay so far – and pulp prices were expected to continue their upward trend, market experts pointed out.”
And with plastic falling out of favour in some sectors due to its pollution, paper is making a comeback for anything from drinking straws to shopping bags. It may be good news for the environment but bad news for printers as prices as a whole are affected – and not in a good way. Neil Osment of NOA-PRISM the organisation that works alongside the paper industry says business has been hit by a perfect storm of price increases. He says: “It is fuelled by the growth of ecommerce, even more formats of shelf ready packaging, and the public’s backlash against plastic – and a shortage of supply. UK buyers have had three price rises in corrugated over the last 12 months and it looks like a fourth increase is likely during this first quarter of 2018. This trend may continue until UK prices are in line with those in Europe and until Europe’s prices are in line with those of other global markets.”
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