PAPER SECTOR UPDATE
“Of course, this is increasing competition for European mills, which makes them reluctant to increase prices again,” says Steve. Lawrence Savage, UK marketing manager for the Exacompta Clairefontaine group, adds: “Since the fallout of the pandemic, we’ve experienced some sharp increases in pricing across several sectors,” he says. “These have affected costs for raw materials, manufacturing and transportation. The industry has also been negotiating shortages in virgin and recycled paper, as well as grey board, which has been influenced by elements such as the plastic tax and the growth of online retail and the subsequent demand generated for card and paper packaging. “As we move deeper into 2023 and beyond many are predicting that increases in prices will continue, albeit at an alleviated rate of around 1.7%, thanks primarily to a greater reluctance within consumers to spend.” Lawrence adds that it is likely that price reductions will not be forthcoming in the near future at least. “Combined with consumer awareness surrounding recent inflationary pressures, the intensifying war in Ukraine is maintaining disruptions with the knock- on effect of energy costs significantly rising across Europe, particularly with gas being so heavily relied upon as one of the main sources of energy. Until we see increased stabilisation throughout these areas, anticipations of reductions should be tempered accordingly.” Price expectations Steve agrees that there will not be a return to the prices seen pre-2022, although he adds this might not be a bad thing for the channel. “I don’t think anyone wants the pricing to come tumbling down again because we’ve been selling paper far too cheaply for years,” he says. “Where it has stabilised is probably what people in the sector want to see. “With the low pricing that we had over the past decade or so we were almost giving it away. One of the first questions dealers were asked by consumers was ‘how much is your paper?’ And you were often judged on how cheaply you sold your paper, which was ridiculous.” Steve adds that it is up to those in the channel to talk to their customers to ensure that their expectations on the price of paper are tempered, and they understand that the prices of recent years are not going
to be returning. “The dealers need to educate their
customers and say: ‘this is now the price of your paper.’ But it needs for everybody across the industry to stand firm and not be pushed for reduction after reduction. Because all you’re going to do is see exactly the same thing happen where you’re pushing out your paper out at ridiculous prices with no margin or in some cases selling it under cost just to try and win business.”
Lawrence Savage UK marketing director Exacompta Clairefontaine group
exacomptaclairefontaine.fr
Many manufacturers are now signed up to the various environmental certifications that are available, and it is something dealers can flag up when talking to customers. “
Positive outlook While paper prices are not going to return to levels customers have previously enjoyed, and usage continues to gradually decline, especially with hybrid working seemingly here to stay – and the anecdotal evidence that, when at home, workers print less than when in the office – along with increasing digitalisation of businesses, there is still cause for optimism in the industry. For instance, with the drive towards sustainability and being eco-friendly, paper can play an important role. Many manufacturers are now signed up to the various environmental certifications that are available, and it is something dealers can flag up when talking to customers. “We’ve got dealers in the group who are really flying the flag for that,” says Steve. “Sustainability will be a key area not just for us but across the industry, I think.”
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