Paper price rises soar into new year

Falling Australian dollar fuels dramatic Australian paper price rises before Christmas, with promises of more to come in early 2009.

The two main PaperlinX merchants – Spicers Paper and Dalton Paper, along with CPI Paper, Focus Paper and KW Doggett have all announced 10 to 15 per cent increases in their prices from mid-December. Harsh currency changes that have seen the price of imported paper go through the roof will have a major impact on printers, even as merchants maintain they are still absorbing much of the hike.

According to Rohan Dean, PaperlinX Merchants, the rises proposed for December represent only an Australian 80 cent to the US dollar recovery, a long way from the current mid-60 cent exchange rate. This leads the company to flag a further increase early in the New Year. The PaperlinX rises are 10-12 per cent on coated, six to eight per cent on uncoated grades and eight per cent on carbonless.

In a statement, Spicers Paper added that: “The paper industry has been confronted with very serious conditions of rising costs, due to factors of energy, raw materials and other input costs. This, combined with a lack of profitability and mill closures has seen prices climb in 2008. However, the most significant factor now confronting the industry is the high devaluation of the Australian dollar.”

Paul Cruickshank, regional manager for Dalton Paper in Victoria said that such action was inevitable. “We are striving to minimise these increases, however the global conditions experienced are beyond our control.”

PaperlinX merchants are not on their own in forecasting further price hikes. All the merchants contact by Print21 confirmed that another price rise was likely to take place in February 2009.

Simon Doggett said that the grim global economy meant there was no other option for paper companies in Australia to increase their prices. “We have no control over the exchange rate and the effect that it has on the price of paper,” he said.

Ian Harry of Focus Paper was equally adamant that the rises are inevitable and that they won't stop here. "We're preparing for another rise in February. There's no way to avoid it," he said.

For David Bull, director of CPI Papers, the across the board price rises are a sure sign that the external currency factors are driving the industry agenda. He noted that this time around no single merchant was exposed to criticism from printers for arbitrarily lifting its prices.

In an industry that has often seen its proposed price rises fail in the face of printer intransigence, the apparent unanimity among paper merchants indicates that these prices rise will stick and will have to be passed on to the end user.