Published - 25th Nov 2021
The last 18 months or so have been a challenge for paper based industries. In the corrugated sector the well documented shortage of raw materials, high demand and supply chain issues has made for a very difficult situation in which to conduct business. Covid-19 and the national lockdowns in 2020-21 have increased the demand for cardboard. Prior to this, production levels were already increasing worldwide from anywhere between 2 and 6%, fuelled by media attention to the global plastic ocean pollution response. In the western world and the global heavy weights such as China and India, the switch from plastic to paper-based products was already well underway before Covid based demand.
Much of the Covid related demand came from an increase in business to consumer online trade and as we head into 2022, Christmas aside, there are signs that this may be softening a little in some areas with the public spending again on holidays and hospitality, rather than home and garden improvements. Despite retailers now being open and the stronger ones recovering, businesses have adapted to online ordering, and buying habits have shifted in the same way. It is expected that demand will remain strong for cardboard and paper-based products going forward.
If there has been a softening, the situation remains very difficult. Availability, lead times and price are still being impacted and as we head through the first part of 2022, confidence of an improving situation is not high, before more capacity comes online hopefully as we progress through 2022.
It’s not just in the UK, globally, there are similar issues.
In the U.S.A virtually all paper-based products are in short supply as mills struggle with demand and inefficiencies caused by a weak labour market.
In Germany it’s a similar picture, graphic paper scarcity and prices increases could mean a European wide shortage of magazines and press publications. Prices for waste paper have tripled year on year to September 2021, and paper for packaging paper and paper board are still increasing markedly.
Similarly in the UK, the Professional Publisher Association has warned of a 50% increase in the price of paper. The Packaging Federation have warned that the HGV crisis and labour shortages are affecting the collection patterns in the recycling loop needed for cardboard production meaning the temporary shortage is being prolonged.
Japan, South Korea and India amongst other countries are reporting major carton shortages. China have stopped waste paper imports, and are now buying significantly more paper reels from South East Asia and India instead of making their own. Pollution levels and poor quality recycled paper production in China has increased paper reel imports which is affecting worldwide reel stocks. Also with higher shipping costs, many companies in Europe and the UK are looking to source packaging materials from within their own countries.
2022 is still very much an unknown, but as always we are liaising with our suppliers, our industry associates and other stakeholders and will endeavour to adapt to these situations working as closely with our customers to mitigate and control as much of this uncertainty as possible.
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