Another major paper mill has flagged its intention to lift the price it sells graphic papers into the Australian and New Zealand market by 5% to 8%. It joins other international suppliers that have pushed through price hikes in recent months.
The South-African-based Sappi points to a sharp rise in raw material prices as well as increasing shipping rates as the reasons forcing it to raise prices. According to John Walker, managing director, Sappi Trading Australia, the new pressure on raw material such as pulp and transport inputs is only the latest in an ongoing raft of increased costs. “We can’t continue to hold prices in the local market when our European and US businesses are increasing their rates,” he said.
Recent industry consolidation on both the supply side and among producers has kept a lid on price rises over the past year. The merger of PMP and IPMG as well as the takeover of Franklin and AIW by the IVE Group has made merchants cautious about hiking prices. On the supply side the creation of Ball & Doggett has radically changed the landscape, putting a number of similar grades in competition with one another under the same roof.
The price rise comes despite Sappi enjoying strong order books and good operating rates. However it claims margins continue to be depressed by severe input cost inflation. As a result its WFU, WFC and CMR grades will go up from December this year.
The Sappi rise follows a number of overseas mills that have done the same. In addition the sole local printing paper mill, Australian Paper, lifted its prices in July. According to Walker there are likely to be more in the pipeline. “The mills can't continue to hold down prices. It’s important that we go public to help our customers understand what’s happening,” he said
He maintains that printers are enjoying record low prices with some grades costing half as much as they did ten years ago. The Sappi grades that are impacted include the popular Galerie web products and as well as the European sheets, Magno and HannoArt. From the USA Sappi’s Somerset and Flo will also rise.
In a sign of the times, Sappi is in the process of converting some of its graphic printing paper production capacity to more profitable speciality packaging grades.