A severe global shortage of thermal paper that’s used in ATMs and cash registers has forced leading converter Charters Paper to travel to Europe to secure vital quotas needed by clients that include major banks and retailers.
Thermal paper is essential to running ATMs, cash registers, EFTPOS terminals, retail receipt printers, ticketing and gaming operations.
Paul Sfetkidis and son Michael, owner and GM of Melbourne-based thermal paper converter Charters Paper, travelled to Germany to meet in person with mill owners who have imposed an allocation system in an attempt to deal with the shortage.
“This is the first time we’ve had to travel to Europe to secure supplies for our customers,” said Michael Sfetkidis. “The problem is that better margins are available in higher grammage thermal and three smaller mills have stopped producing cheaper POS thermal grades. Also, the Americans have slowed delivery into Europe because of currency fluctuations.
“The lightweight grades of thermal paper are mainly used for printing receipts in retail and banking and because they deliver lower margins some mills have redirected their production into labelling stock and the heavier premium grades that are more commonly used for gaming, lotteries tickets and other ticketing.
“We saw the problem developing earlier this year then it deteriorated almost overnight so we knew we had to get in front of these people to make sure our customers were looked after," said Sfetkidis. "Over the last 6 months, converters have experienced a continued extension to the lead times, which has become a major concern. From a lead time of 12-14 weeks, it is now 26 weeks.
“We visited two of the world’s leading thermal paper manufacturers, Koehler Paper Group and Mitsubishi HiTEC Paper in Germany, and we also visited converters to find out what was really happening. Basically, at the moment, demand far outweighs supply and the mills are running to maximum capacity coping with the demand.
“Charters Paper has secured its requested allocation and we have now placed orders into June 2016 to make sure our clients are not in any way affected. The problem is that because the mills are now imposing allocations on the converters, we must do the same and ask our clients to commit long term to guarantee supply. The reality is that over the years, the thermal converting business was based on converters holding stocks and clients virtually ordering off the floor. However, things have changed and end users must order well in advance to be guaranteed of supply.
“The major customers we have spoken to are all onboard now and we’re just going to have to ride out the storm. Charters Paper still holds substantial buffer stock for our main clients. However, we feel this will be harder to maintain in the future and urge all end users to take this matter seriously."
The company’s clients include major banks, leading retailers, mail carriers and gaming and lottery companies.
Charters Paper is organising a global thermal paper forum in Melbourne (Thursday 26 November) and in Sydney ( Thursday 2nd December) to address the issue and bring customers up to date with the latest developments. Representatives of Koehler and Mitsubishi will be in attendance to answer questions.