We are living in unprecedented times, and we feel the need to up date you on market conditions as it is becoming hard to keep up with the increases. Whilst we have sent out notification, we thought we should list the pattern of events on paper increases:
- November 2020 – 5-6% increase
- March 2021 – 6-7% increase
- June 2021 – 6-7% increase
- September 2021 – 8% increase
As you can see this is approximately a staggering 25% increase.
Then in November 2021 – 14-15% – Very aggressive and unexpected – both in amount 15% and timing – only 8 weeks after their last increase. (40% increase in a year!)
The November increase is now coming into effect as all stock at the pre price increase pricing has been sold. What has really made it worse is shortages (from all mills) with extended lead times. This is due to increases in raw materials, energy costs, shipping cost and delays causing long back orders etc
There has also been another letter of an increase in February! If we order now, this stock will not come till after the increase date (an alarming 18% min).
22/3/22 UPDATE:
Since our last update, the market has moved very fast and we are having to implement the staged increase far sooner than expected. All paper mills are working to full capacity and there is no extra available stock. We are wanting to support all our customers and ask that they continue to order in historic quantities. In addition, we are striving to reduce the carbon footprint and would desire that you include all requirements when ordering.
Along with the massive energy increases, Russian production has been taken out. We have had other paper merchant wanting to buy paper from us, but we are wanting to supply and support all our loyal customers and will endeavour to uphold this.
How will the war in Ukraine effect European paper supplies?
Due to to terrible news and war going on in Ukraine a paper mill in Russia will no longer be used to export paper, this will leave a shortfall of 720,000 short tons of pulp, paper and paperboard.
It will come as no surprise to readers that Russia’s invasion of Ukraine has negatively affected the supply of raw materials used in packaging throughout Europe. Given the status of Ukraine and Russia as key suppliers of timber, with exports alone worth in excess of £12 billion, it’s clear that the paper packaging industry could be acutely affected by the crisis.
How much paper and board does the EU export to and import from Russia and Ukraine?
Pulp and paper trade between the EU and Ukraine goes mainly one way: about 440,000 tonnes of paper and board are imported by Ukraine from the EU. Ukraine’s exports are very limited. This is the same thing with Belarus, which imports even lower volumes: 60,000 tonnes of paper and board from the EU.
When it comes to Russia, this is another story. Around 900,000 tonnes of paper and board are imported by Russia from the EU, while Russia exports close to 700,000 tonnes to the EU. Regarding pulp, EU-Russia trade is quite balanced with around 400,000 tonnes traded in total.
Is the paper industry concerned about gas prices that might rise further?
The paper industry is an energy-intensive industry and, for that reason, current energy prices are a concern. The EU Commission’s Green Deal and the carbon net-neutrality 2050 target, which is supported by Cepi, will lead to higher energy prices and carbon costs. The war in Ukraine and the related sanctions will add to this trend and further increase energy prices, which have reached very high levels already today. Locally, energy prices and availability might be further impacted by the fact that some regions in the EU are highly dependent on the supply of Russian natural gas.
MPS trying to keep value for money
Through this we are endeavouring to keep the best value and service, to stage increases where possible but feel the need to update you for your budgeting forecasts. It is also very difficult for us to offer the call off provision and this will be a discretion, or the pay as you go system.