Office paper prices continue to stiffen

Energy, raw material costs are key factors

By Maria Varmazis -- Purchasing, 7/2/2008 8:54:00 AM

Office paper prices were forecast to increase by 10% this year after a 7% increase last year, though the market looks poised to easily surpass that forecast. Cut size copier paper prices of $1,120/ton are 9% higher than in January. The latest Purchasingdata.com quarterly forecast shows uncoated bond will average $1,125/ton in the third quarter, up from $1,113/ton in the second quarter, while forms bond will increase to an average $981/ton from $970/ton in the April-June period

It’s been a perfect storm of cost increases that have affected paper prices. Most notably, as energy prices continue to skyrocket through the first half, so do the costs for many other aspects of paper manufacturing: Higher costs for pulp, higher manufacturing costs, higher chemicals costs, higher shipping costs—and it’s all being passed down to the buyer. On top of that, the weak dollar has curtailed paper and pulp imports to the U.S., all while paper producers announce mill closures and producer consolidations, adding more pressure to the market.

Paper producers are quick to point out their higher manufacturing costs as they announce price increases at previously unforeseen rates. In late May, Boise announced a $60/ton price increase on its uncoated free sheet, citing “significant cost increases in energy, chemicals, transportation and fiber” after previously hiking prices by $60/ton in February. After Boise’s announcement, other producers including Domtar, Glatfelter and Finch announced price increases, also at $60/ton, just days later. Domtar and Boise together produce 40% of all the uncoated free sheet in North America.