Rhyme & Reason

paper price rises

Rhyme & Reason
paper price rises

Here are the many, many links explaining what has happened:

Dear Tim,

As a valued customer we thank you for your continued support through what has undoubtedly been a terrible period. We are sure that you are looking forward to putting Covid 19 behind you and are now planning the return of your business in the ‘post pandemic’ world.

The last 18 months have seen some major changes across global supply chains as well as many changes within the printing industry. Many paper mills throughout the world have either permanently ceased operating or have repurposed some of their paper machines from producing publication paper to other more lucrative products such as packaging paper, pulp, or cellulose fiber (see Attachment A).

Such a huge reduction in global capacity has resulted in the slashing of paper allocations for the Australian market as well as paper prices increasing at unprecedented levels. Many paper suppliers of newsprint, light and medium weight coated paper no longer accept orders from Australia – at any price (see Attachment B).

This year, every single paper mill has increased their paper prices incrementally to Spotpress by at least 25% with many mills increasing by over 35% (see Attachments C, D, F, G, H, I).

Shipping container delivery costs have increased between 400-500% on average, further exacerbating the paper costs. To make things worse, delivery times for paper orders have blown out from 2 months to 5-6 months.

Just this week, most major paper mills have just announced an additional “energy surcharge” of around 100 euro/ton to cover the spike in energy prices (see Attachment J & K).

Furthermore, paper mills have warned that there will be even further and significant price increases in the new year, and the situation is not expected to ease until the last quarter of 2022.

Despite the fact that paper prices this year have risen on average above 30%, Spotpress has held firm on its prices to its customer – absorbing these paper price increases to protect its valued clients in such difficult times. This is no longer possible as the costs continue to soar in an ultra-low margin industry.

Regrettably, we must inform you of the following changes:

  • For magazine, periodical, or newspaper publishers producing 4 or more titles per year, all existing pricing will be honoured until 1 December 2021. To ensure you are protected from further increases going forward, we suggest discussing a new, minimum 12-month contract.
  • A reminder that any existing quotes are valid for 30 days and need to be repriced upon expiry to take into account our current production costs.
  • Due to the volatility of logistics prices, your delivery charges will be quoted separately based on your latest order.

I genuinely appreciate your understanding of what are challenging times. If you would like to discuss any aspect of the above, please feel free to call your Spotpress Account Manager or me.

Besides the attached letters from suppliers to Spotpress, I have taken the liberty of providing some article links below to help you become aware of the current situation.

 

About paper manufacturing capacity consolidation:

https://www.euwid-paper.com/news/singlenews/Artikel/upm-to-close-720000-tpy-kaipola-mill-and-to-sell-shotton-mill.html

https://www.euwid-paper.com/news/singlenews/Artikel/burgo-to-convert-verzuolo-pm-9-to-recycled-containerboard-production.html

https://www.abc.net.au/news/2020-08-11/boyer-paper-mill-troubled-times-during-coronavirus-pandemic/12541810

https://www.print21.com.au/news/norske-skog-to-close-albury-visy-to-buy-mill-for-85m

https://www.bloomberg.com/news/articles/2020-10-19/nordic-paper-mill-closures-accelerate-as-covid-decimates-demand

https://www.rnz.co.nz/news/national/444376/kawerau-paper-mill-to-close-160-people-to-lose-jobs

https://www.helsinkitimes.fi/business/19080-stora-enso-shuts-down-pulp-and-paper-mill-in-kemi-finnish-lapland.html

https://www.printweek.com/news/article/paper-supply-crunch-buyers-urged-to-plan-well-ahead

https://biv.com/article/2021/04/mackenzie-pulp-mill-will-close-permanently

 

About global paper shortages:

https://marketrealist.com/p/why-is-there-a-paper-shortage/

 

About paper price increases:

https://www.printweek.com/news/article/sappi-graphic-grades-have-to-go-up-again

https://www.fastmarkets.com/article/4004766/european-magazine-paper-prices-increase-sharply

https://finelineprintinggroup.com/blog/pandemic-impacting-manufacturing-industry-paper-prices-increasing/

https://www.sappi.com/sappi-europe-to-increase-prices-by-no-less-than-10-for-all-graphics-paper-grades

 

About the global shipping crisis:

https://www.print21.com.au/industry/spiralling-shipping-costs-pushing-paper-prices-higher

https://nypost.com/2021/09/12/paper-supply-is-thinning-due-to-delta-variant/

https://artexnaman.com/ocean-freight-rates-continue-skyrocket-2021/

https://www.afr.com/companies/transport/unprecedented-times-for-ocean-freight-as-fees-soar-20210806-p58glf

https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/whats-going-on-with-shipping-rates

https://citywire.co.uk/funds-insider/news/soaring-shipping-costs-fuel-inflation-and-shortages/a1546396

https://insidesmallbusiness.com.au/latest-news/will-soaring-shipping-costs-make-australian-manufacturing-more-attractive

https://www.abc.net.au/news/2021-06-10/prices-consumers-shipping-ports-trade/100203086

 

About the energy crisis:

https://www.reuters.com/business/energy/europes-rising-energy-prices-will-force-factory-closures-kemp-2021-10-01/

https://www.theguardian.com/business/2021/oct/08/energy-crisis-could-halt-factory-lines-industry-leaders-warn

https://www.reuters.com/business/energy/energy-crisis-could-threaten-global-economic-recovery-says-iea-2021-10-14/

 

Relying on your kind understanding,

John Georgantzakos

Managing Director

 

 

 

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