Printing customers are undoubtedly concerned about the sudden multiple increases in paper costs over recent months.
Beginning last summer, paper manufacturers began raising their prices by 5%-10% on all grades and finishes: newsprint and coated and uncoated freesheet and groundwood. Since prices had been falling or were flat for several years, it was not clear immediately if these increases would hold.
By December 2017, however, it had become clear that important factors were driving changes in the paper market. Another round of 5%-10% increases was announced for the new year … and there are even more increases expected in the coming months.
What is causing paper costs to go up so dramatically over a short period of time?
Paper industry experts have explained that dynamic factors are behind the shifts in the printing paper markets. The following are among the most important:
- Reduced paper mill capacity
The falling demand for commercial printing papers over recent decades has caused paper manufacturers to close mills and, in some cases, go out of business. For example, over the past 7 years, approximately 27% of the coated freesheet production capacity in North America has been shut down. The loss of Appleton and West Linn alone in late 2017 accounted for 14% of this total reduction. The dramatic fall in paper manufacturing capacity has now resulted in a tightening of the market for coated paper and been a major factor in the recent price increases.
- Rising cost of wood pulp
After several years of declining prices, wood pulp costs jumped up sharply (16%) in 2017. Pulp prices have increased primarily due to the rapid growth of consumer spending and a greater demand for packaging materials associated with e-commerce and delivery of online orders.
What you can do about the increasing paper costs
At Printwell, we are committed to keeping our customers informed about changes in the economic environment that impact your marketing, publishing and/or advertising business. We are also continuing to make investments in our technology platform and doing everything we can to keep our print manufacturing costs as competitive as possible.
There are alternatives and options available that will minimize the impact of the paper cost increases on your budgets. Please contact your Printwell account representative to schedule an appointment to discuss the creative solutions we offer to help you manage costs in this challenging environment.