Here we go again ... Groundhog Day for paper price rises

Paper mills are announcing price rises across the whole range of printing papers and this time they are determined to make them stick.

In what has become almost an annual event, the paper mills are again pushing price rises onto the merchants and large customers trying to claw back some of the eroding margins that have defined the paper industry for the past decade. This time there is a sense of desperation as pulp prices follow rises in the general costs of doing business.

Previously announced price rises have met with stiff opposition from the printing industry and in the face of opportunistic price cutting from some merchants have failed to stick. The industry is hoping for a better result this time around.

Paul Teague, Stora Enzo, confirms price rises are being put to the industry now. He says there is no question but that this time they have to stick. According to his reading of the situation, if the local industry knocks them back there will be no European paper in the market.

“Paper machine utilisation rates in Europe are running at over 95 per cent. They can sell all the paper they have to their local market. Asian machines are also running over 90 per cent. It’s becoming a suppliers market,” he said.”

“It’s taken a long time but prices are definitely going to rise.”

Melbourne-based Asia Pulp and Paper confirms the movement recently putting through an increase of US$40 across the board from the Indonesian paper mill. Paul George, managing director, lists increased shipping costs, not the escalating price of pulp as the main driver behind the company's decision.

"It is all cost recovery-related from increased shipping," he said. "It [the increase] wasn't pulp or currency-related which gives you the indication that there could be another [price rise] fairly soon."

Local fine paper producer Australian Paper, which has always considered itself a price follower rather than a price setter, has also announced increases for some of its grades in October/November this year. "We have put selected increases in the market," said Wayne Stanistreet, general manager, printing and industrial.

"We have taken the first opportunity for some time to do this and it's well needed due to the costs and general market improvements."

Sappi Paper is another importer that has lifted its prices to local printers, but only for its web grade, according to Tim Schafer, managing director Australia.

The news comes after constant speculation and uncertainty in the industry. Simon Doggett, managing director of K.W. Doggett said that he was aware of the chance of price increases. "There's a lot of talk from suppliers of price increases to be announced in the near future," he said.

Like George and Stanistreet, Doggett agreed that factors such as freight costs, devaluing of the Australian dollar and pulp shortage were behind the trend. He expects that there will be several price increases occurring throughout the year. "You've only got to look at what's happening in the European market," he said.

Australia is feeling the flow on effects of a worldwide trend in paper increases. In France, Arjowiggins Carbonless Papers announced a six per cent price increase on carbonless products which takes effect from all new orders. Arjowiggins listed a strong and continuous increase in pulp and other raw material as the reason for the increase. European company Tullis Russell also confirmed a new round of price rises that has so far reached eight per cent on certain products.

Given the cost of pulp, George also predicts that price increases are only going to continue well into the future. "Energy and shipping costs are a big factor," he said. "If pulp keeps going the way it is there will be another one later in the year."