Even as major merchants and agents report that the 10% price increases to come into effect this month appear to be sticking, a significant number of paper types are resisting the trend.
Office products, especially in the cutthroat A4 cut reams market, along with uncoated woodfree reels and sheets, are still trading at pre-dollar depreciation levels. According to this month’s edition of pulp & paper industry bible IndustryEdge. this is increasing the pressure on the paper supply chain as the Australian dollar becomes ever more volatile.
…the reactionary nature of the Australian Dollar’s movements is becoming more pronounced. Most recently, it rose because the US did not increase its interest rates. When it does increase its rates, you can pretty much guarantee the Aussie will fall. Global currency commentators suggest the US may keep its interest rates on hold for another three to six months. If that is the case, now is the time for everyone in the paper and print supply chain in Australia to ensure they get price increases into effect. Under the consistent pressure of the Australian Dollar’s decline, importers and overseas mills have effectively acted as banker and hedge fund, as well as supplier and storehouse, to the nation’s printers.
The welcome news is that the announced and largely overdue price increases for publishing and commercial printing grades appear to be sticking. While printers may be unsettled by the increase it’s worth noting that it’s less than half the cost carried by most overseas paper mills and importers as a result of the long running depreciation of the Australian Dollar.
Notably imports of coated woodfree papers continue to plummet (see chart) – down 13.5% over 2014-15 – reaching their lowest levels for more than three decades. Imports were down across both reels and sheets for the lighter (<150 gsm) and the heavier (>150 gsm) grades. According to IndustryEdge, the decline in imports of sheets is directly linked to falling demand.
The lighter-weight sheets perform better than the heavier weights, because they have a wider general printing application. For imports of reels, the decline in imports is considered to include the influence of substitution by major printers, especially for the cheaper medium weight coated mechanicals (MWC), which are preferred for some applications and types of publications.
For further analysis and information on the state of the paper and pulp sector, the latest issue of Industry Edge’s authoritative Pulp & Paper Strategic Review 2015 is available. Now in its 24th consecutive annual edition, the Review is the most comprehensive analysis of the paper, paperboard and fibre supply sectors in Australasia. For the first time, forecasts for New Zealand are included.
The Review’s in-depth strategic analysis sets out strengths and weaknesses and identifies the threats and opportunities. A full chapter describes the context of the industry from a macro and trend perspective, painting a picture, as well as the pathways to the future.
Demand drivers are examined in detail with particular reference to trends in:
• Advertising expenditure, especially print versus on-line
• Population, demographics and markets
• Consumption of paper and paper products