It’s no secret that a series of crises and, more recently, the COVID-19 pandemic have affected many industries in Europe and around the world. Unfortunately, our paper industry has not been spared! Between the logistical problems and problems with the supply of raw materials combined with rising prices and the cost of paper, the whole sector is affected.
Rising paper costs: the causes
Costs continue to rise, reaching historic levels, which has significant repercussions for the entire industry but also for the end consumer. But why is this happening, what are the causes of this increase?
The papermaking industry union (“UFIPA”) has warned of the various causes which, when combined, continue to affect the sector and the cost of paper and cardboard.
Cause number 1:
the increase in the prices of the raw materials needed for production because of shortages in the market. “UFIPA” has observed increases of, “+180% for cardboard, +70% for paper and +170% for polypropylene between December 2020 and March 2022, and +82% for paper pulp between September 2021 and February 2022 according to the latest data”.
Cause number 2:
the increase in the cost of energy and product logistics. The costs of gas and electricity have increased threefold, or even fivefold in some cases!
In addition to the rise in the cost of shipping which is closely linked to the cost of energy, “UFIPA” is also pointing out a “shortage of lorry drivers in the EU, [a] shortage of labour in maritime transport, [a] lack of containers, congestion in ports, [a] 62% increase in container prices between April 2021 and April 2022 (source: World Container Index)”.
Cause number 3:
especially true during the COVID pandemic, the shutdown or slowdown of certain production plants because of a lack of raw materials also affected end-user prices and paper costs.
This increase has been very steep for the paper industry and paper costs. The “UFIPA” management team and Laurent Proy, chairman of the association, expressed their concern: “the cost of paper pulp increased by 60% between September 2020 and September 2021 […] and cardboard by 30%”.
The results for 2021-2022
There’s no cause for panic because, even if the industry is weakened and the world demand for paper pulp is down by 4% in 2021, it increased by 3.4% on the European continent despite deliveries being affected by tensions on the logistics side.
In spite of the COVID pandemic, French paper-cardboard production is in fairly good shape with production up by 7% compared to 2020 despite the increase in paper costs. Mr Paul-Antoine Lacour, managing director of “COPACEL” (French Union of Paper, Cardboard and Cellulose Industries), even explains that packaging represented nearly 66% of sales volumes in 2021.
The picture is therefore not so bleak for the French paper industry. Indeed, with the COVID pandemic and the uptick in e-commerce sales (and deliveries!) during the pandemic, the demand for paper and cardboard increased, skyrocketed even! This rise is also linked to the withdrawal of plastic packaging, including the plastic packaging used for magazines.
Great news for France! French paper and cardboard production was relatively well-placed in European rankings for the year 2021, i.e. 5th place, with 8% of the total production of paper and cardboard. Between 2020 and 2030, the French sector is expecting growth of nearly 1.8% per year, with strong growth forecast in the packaging and packaging sector in particular (projected increase of +29%).
So what’s the snag? With the strong demand for paper and high inflation, an increase in additional paper costs is unavoidable. Indeed, given that paper pulp is rare to come by and more expensive on the market, the prices have to be reviewed. Indeed, COPACEL is warning about the obstacles to the production of French paper and cardboard and the need to make prudent forecasts despite the positive results. The two main issues? The rise in paper costs combined with the rising cost of energy, in particular, but also the protracted delivery times.
Solutions at GDP Emballages
There’s no need to panic because, at GDP Emballages, we are doing everything we can to find practical long-term solutions to continue to supply high-quality paper while keeping the price increases to a minimum.
Thanks in particular to a large stock of raw materials in all the paper grades that we offer, the GDP Emballages team is able to maintain control on waiting and production times.
Our team has genuine expertise in paper and cardboard, and will be able to give you the best possible assistance and advice on how to manage your costs according to your specific needs!Request a Quote