Rising pulp prices, higher input costs and higher shipping costs are combining to push global paper prices higher, with the flow-on to Australia and New Zealand anticipated to take effect before the end of the year, says pulp and paper industry analyst IndustryEdge.
"When price increases were announced and locked-in, seemingly across the board, in early 2017, there was every prospect of further rises later in the year," writes IndustryEdge MD Tim Woods, in the latest IE Pulp & Paper Edge report. "The expectation was alive because it was clear that the now six month long rally in pulp prices was showing no signs of abating and other announced input prices, including for some chemicals and shipping, appeared to have been introduced relatively easily.
"IndustryEdge understands that for most, the early 2017 round of price increases will commence with deliveries from the start of July."
The paper industry bible says its latest analysis shows that in the March Quarter of 2017 alone, Bleached Eucalypt Kraft (BEK) pulp prices rose 6.3%, while Northern Bleached Softwood Kraft (NBSK) pulp prices rose 3.9%.
As the chart above shows, this continues a period over which pulp prices have risen, while paper prices have barely moved. The exception is Uncoated Woodfree papers, which have tracked pulp price movements, but remain typically below them.
Just as relevant, pulp prices rose again in April (by 4.0% for BEK), and smaller increases have been recorded for May for both major pulps, but not for most paper prices.
Although the magnitude of rising pulp prices is important and relevant to the question of future paper prices, the really telling point is paper suppliers to Australia have carried the cost of rising pulp prices, over the recent period.
"Adding further to cost pressures, containerised shipping costs have grown as much as 15% over the last year," says Woods.