Earthquake rocks paper suppliers around the globe

Disaster in Chile is likely to set paper prices soaring in Australia and New Zealand, say paper merchants.

The market pulp capacity in Chile accounts for 8 per cent of the world’s total. Following the tragic wipe-out on February 27, production resources are under severe strain. According to local merchants it is only a matter of time before the rest of the world begins to feel reverberations.

Locally, paper merchants across Australia are already shaking at the thought. According to Rohan Dean, group strategic sourcing manager at PaperlinX Merchanting Australia, flow-on effects are imminent.

"There is no question it will have an impact; we will see ramifications right throughout the entire supply chain because that particular region is seven-to-eight per cent of the world production of pulp and supplies to some of the more developing paper manufacturing regions. Pulp will go up, which in turn means coated and un-coated wood-free sheets will be impacted,” he said.

“At this stage, it is too early to tell when the price rise will happen and how much it will be. The main thing is that people don't start to panic buy and create an explosion in price movements. The whole situation if managed sensibly should settle down quite quickly, albeit still with a movement up."

These thoughts were shared by both Simon Doggett of KW Doggett and Ian Harry of Focus Paper, who confirmed that they were each in a similar situation.

“This is a global issue that will affect everything; if there is a shortage of pulp then everyone has to compete for higher-priced pulp to make the paper,” Doggett said. “Everyone is saying that there’s nowhere to hide.”

Whenever price rises hit, Harry predicts that it will not be business as usual in the paper industry anytime soon. “It [the earthquake] certainly will have an impact but we haven’t assessed how much that will be,” he said. “Mills have been totally destroyed and it will be some time before they are rebuilt.”