U.S. Paper Industry Anticipates a Progressive Increase in Rates by 2022/2023

By administrator

Jun 13, 2022

Paper is an essential part of our daily life, with many people relying on printed information to support businesses, culture, and education in one way or another. However, this vital industry is seeing prices rise exponentially.  

In the bigger picture, Covid 19 has spread a worldwide backlog in the supply chain, having seen the disruption in production and sea freight. Lockdowns across the globe came to a halt for raw materials and goods transportation, severely impacting manufacturing and commerce.

Furthermore, oil prices have surged, and it seems likely that further increases will come in the months ahead.

This, of course, leads to a rise in operational costs and supply chain issues. The effects are already noticeable within the paper industry, as with the price of badge printer paper. 

In addition, the staff of one of the biggest paper production companies in the world, UPM in Finland, went on strike at the beginning of the year. This has added tension to the paper supplies internationally and impacted the label-making materials industry in North America. 

At Choose 2 Rent, we provide all badge supplies, but we want you to stay updated on the factors leading to increases in rates within the field.

Understanding the factors at play within the paper industry can explain how even the smallest of market shifts can affect supply and demand and, therefore, overall costs and price increases.

The following factors play a part in the paper market, including product availability and costs. Each factor will continue to affect the industry in the near future. 

Global supply chain issues and fuel costs

Because the supply chain is incredibly interconnected, it is susceptible to large-scale events like global contagion or warfare. 

In terms of the economy, the Russian invasion of Ukraine indicates a negative impact on oil  prices and therefore increases the transportation cost of paper. This is even more concerning because the negative supply shock comes after a global supply shock due to the COVID-19 pandemic. 

The pandemic triggered a surge in purchasing of goods, causing a strain on the supply chain worldwide. Also, China’s zero-COVID policy has led to even more difficulties.   

Within the paper industry, this increase in consumer spending means a more significant need to transport pulp and paper products, which affects other costs such as fuel, the prices of which are already soaring. This had led to record high shipping and freight rates.

This heightened demand for transportation and less availability of it impacts transportation costs and paper costs overall.

Additionally, recent strikes at paper mills in Finland have exacerbated these issues in Europe, directly affecting industries that rely on paper and labels.

The effect of volatile electricity prices on paper price increase

The production of pulp and paper relies heavily on electricity as a source of energy, meaning that a significant portion of utility-generated electricity is purchased. This cost can have a heavy impact on operation and production costs within mills. 

Currently, energy prices are highly volatile due to geopolitical tensions and the increased global demand described in the previous section. This means that papermakers cannot take on these costs without passing them along, causing prices to skyrocket across the industry.

Will there be a paper shortage?

Mills have faced enlarged costs across the board when it comes to raw materials. According to Statista, the global pulp demand rose from about 42.8 million metric tons in 2005 to around 58.9 million metric tons in 2018, with estimates that it will reach some 66 million metric tons by 2023.

Unfortunately, the hike in operational costs has caused many mills to decrease operations or go out of business. This includes major mills such as Georgia Pacific, which had to dial back operations and reduce its capacity. Others have re-routed their efforts on more lucrative paper products such as containerboard. 

Is the badge printer paper price increase inevitable?

Luckily, at Choose 2 Rent we rely on a large stock of paper to continue offering you the quality products you need for your printing needs, including badge supplies. However, keep in mind that recent mill closures, supply chain issues, and high consumer demand for pulp have caused price increases and will most likely continue to do so in the near future.

Despite all the problems that the paper industry is facing, we are doing everything to continue providing high-quality solutions for your printing needs, so don’t hesitate to reach out to us. If you would like to learn more about paper prices, contact us today and request a quote!