Page 18 - BOSS Today Issue 39

Special Report - Paper

THE ANSWER

IS ON PAPER

BOSS Today looks at some recent developments
in the paper and paper-based stationery market.

n 1786, the German physicist providing its own answers to around plastic is creating 10% of a sole supply dealer
IGeorg Christoph Lichtenberg many of the questions posed new demand for pulp (which contract and it seems that,
wrote to a colleague, describing to it. contains cellulose fibre, from unfortunately, resellers are
an exercise in which he had which you can extract viscose) risk-averse to unsettling their
challenged his students to find Perfect Storm for use in manufacturing customers for just 10% of their
a sheet of paper which, when One of the immediate problems alternative products to plastic. spend. The logic behind why
halved, would still have the in the paper market recently has It’s a dynamic we have just never paper prices are increasing is
same length/width ratio as the been continued price increases, seen before.” absolutely clear, but because
original. In order to illustrate this as Tim Percival, Divisional Furthermore, as Robert there is a tendency for resellers
point, he decided to enclose a Director of Antalis, explains: Moore, Group Purchasing to not push prices up, the
sheet of such paper within his “In the last 18 months we have Director, SPOT Group, explains, consumer has an artificial view
letter. “Having found that ratio,” seen price increases of 20-25%, not only is there “a desire by of paper being at a depressed
explained Lichtenberg to his depending on product type, on the mills to get back into a price compared to where it
colleague, “I wanted to apply it office papers coming through profitmaking scenario, but really should be now.”
to an available sheet of ordinary to us relentlessly pretty much over the last two to three years, In other words, this is a bit of a
writing paper with scissors, every quarter. It’s been very capacity has been taken out of log jam that ideally needs to be
but found with pleasure that it challenging for us and for our the market and although there cleared: it’s only through dealers
already had it. It is the paper on reseller customers to manage.” are declines in terms of volume taking some definite action to
which I write this letter.” These increases have been demand, the capacity has come implement these price increases
The answer to what had caused by a ‘perfect storm’ of a out at a quicker rate, so it’s a that the market will achieve a
been intended as a difficult number of contributory factors: classic supply and demand better understanding of where
mathematical puzzle had currency fluctuations after scenario”. paper prices should really be.
been there all along. Paper, it the Brexit referendum have of Unfortunately, the bad Moore’s advice to dealers is a
seems, has had a long habit of course played a part. Secondly, news doesn’t end there: the little more pragmatic: “Manage
over the last 12 message coming from the your customer base carefully,
months there has been mills is that price increases don’t commit to prices for more
a sustained increase are set to continue for at least than three months at a time,
in the cost of pulp, the next 18 months. Another and ensure that you have a
and when pulp prices increase looks set for April, regular and consistent supply.”
Tim go up, paper prices with Far East producers already
Percival tend to go up. As implementing global increases Seeking Stability
Divisional Percival explains, the of about US$100 per tonne in For resellers seeking a haven of
Director, reasons for the pulp early 2018. price stability, the paper market
Antalis
increase have been What can OP resellers do – as Lichtenberg would know
twofold: “Demand for in the face of this inflationary – can offer its own possible
pulp in the Far East – market environment? Percival’s solution: recycled grades.
particularly China – has advice is simple: “Be brave! Although this is changing now,
been very high, and We completely understand a the prices of recycled grades did
that has forced the reseller’s reluctance to go to not initially increase as rapidly as
global price up to its market and pass increases on, virgin grades, making the price
highest price point in because it’s a very competitive of some recycled products more
over ten years. The market. However, paper today attractive, as Percival explains:
negative publicity would only represent around “We offer the Steinbeiss ISO70

18 BOSS TODAY | April/May 2018