We have all had a challenging decade thus far and it’s safe to say that we are not out of the woods yet. A fresh wave of COVID 19 cases has hit Europe and new lockdowns are being imposed. A new normal has yet to be reached and it’s in that theatre that we are seeing rising costs, but that leaves so many questions, why paper?, why so much?, where will it end?
Here are a lot of the reasons behind the increases in the cost of a box of paper delivered to your door.
This commodity is used in the manufacture of our printer paper, but is also used to manufacture toilet paper and tissues, cardboard and packaging, labels and books and even some sanitary pads among other things. The growth of demand for wood pulp is increasing by 8.4% year on year, but due to COVID 19, the manufacture of pulp has been restricted and higher demand for pulp has been from other sectors, particularly cardboard and packaging and toilet roll. We’ve seen the cost of wood pulp increase by over 50% in 2020.
Manufacturers in all sorts of sectors have seen demand for products change as a result of the pandemic. The cut sheet paper industry has been hit hard and demand in 2020 dropped by over 20% as our lockdowns and the subsequent home working has reduced demand for office paper. The outbreak is expected to continue to have a negative impact on businesses throughout 2021. This, along with several industries and business activities adapting to the situation by becoming virtual, limits the paper industry.
Stora Enso, based in Finland, is a manufacturer of pulp, paper and other forest products. The company has had to make the unfortunate decision of closing down two of its paper and pulp mills due to the immense decline in the use of paper products globally. Thus, the company plans to reduce its paper production capacity by shutting these two mills, one in Sweden and the other in Finland , shifting to the use of cardboard, biomaterials, and wood instead, which remain profitable, this manufacturer is not alone in it’s decision.
Energy firms buy gas and electricity wholesale and with higher demand and limited supply, prices have shot up to record levels. Prices for wholesale gas are up 250% since January 2021, according to industry group Oil & Gas UK.
Scheduled maintenance projects rescheduled from 2020 to 2021 because of the pandemic, lower than usual gas supply from Russia and less liquified natural gas reaching Europe because of increased deliveries to Asia have also contributed to spikes in wholesale energy prices and uncharacteristically low supply.
A4 and A3 cut sheet paper is not made in the UK, so all of the paper which we use comes from overseas in containers.
The shipping industry has taken one of the biggest hits, which is still being felt accross the world. As an example, a 40ft container which cost around $7000 to ship in April 2020 now costs in the region of $28000. There is a lack of containers due to empty containers piling up at docks around the world after the usual return trips were not completed. The cost of fuel for the boats has risen dramtically and coupled with the staffing shortages, lockdowns at ports, more paperwork on imports and covid safety meausures goods are just not arriving on time.
It’s fair to say that the stresses on global supply are massive. Early indidcations are that pulp manufacture will be back on track towards Q3 of 2022 meeting demand and at least levelling the cost of pulp. Wholesale gas which accounts for the production of 51% of the UK’s electricity is expected to reduce in price next year, but it could be years before the shipping industry realligns with some downward relief expected in 2023 when new vessels and containers are expected to be on the water.
The paper industry has changed forever with fewer mills and increasingly higher manufacturing, energy and shipping costs. It’s fair to assume that while these prices are still rising that a box of paper to your door will rise too.
To mitigate this rise our advice is to print only when you really need to, to ensure you print on both sides of the paper if your printer will allow it and to ask us about remanufactured toner and ink cartridges for your machine which will dramatically reduce your printing costs against the original toners and inks.