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Unpredictable environmental influences, such as the severe earthquake in Chile, the low-pressure system “Xynthia” over south-west Europe and the continuing cold winter in Scandinavia are causing a shortage of raw materials in the paper industry. The environmental influences have brought pulp production practically to a halt and have interrupted the supply chain to Europe and North America.
Within a short time this has caused a raw material shortage and significant price increases in the supply of pulp for all paper mills. The manufacturers argue that these critical factors can not be compensated and that increased prices is inevitable.
Price increases, as well as supply and production issues for uncoated and coated graphic papers and photo inkjet products for the architectural engineering CAD print sector are now an inevitabile. Some manufacturers have even issued warnings that if polymer, resin and pulp prices continue to rise it is likely we shall see further increases between 8-12% in June and this has already led to speculation that there might be concerns of continued supply.
The plain facts are quite straightforward. The Chilean earthquake resulted in the temporary shutdown of about 4.5 million metric tonnes/year of market pulp capacity. These pulp mills were temporarily shut down due to destruction of infrastructure and also because of the disruption to the country’s power transmission. Pulp mills consume an awful lot of power and this too costs money. If we look at the bigger picture, the leading destination for Chile’s pulp exports is Europe with some 36% of all tonnage coming here. Most of the rest of Chile’s pulp exports are shared between China and other Asian countries. In addition to the Chilean earthquake, the pulp industry has suffered further disruptions to the supply of raw materials caused by severe flooding in Southern USA and Indonesia and now faces a severe lack of pulp, which Sappi believes will result in increased pressure for steep rises in dollar-based pulp prices, exacerbated for European paper producers by the weakening Euro. As a result, pulp prices have risen in the United States, Europe, and China and more rises are anticipated because suppliers have limited ability to build inventories before normal spring maintenance downtime.
Therefore as a supplier of paper based consumables to the architectural engineering CAD print sector, our message to our customers is simple. We want to assure them that while distribution channels within Europe and the UK seem uncertain at present, our aim at Landor is to invite dialogue with other distributors to put into place additional stock levels and for us to pool any such additional resources that can then be extended to customers anxious of the impact that it may have on their business. Therefore our objective is to maintain the strength of supply, support and price competitiveness of consumables to the architectural engineering CAD print sector in the UK and to remind them that reliability of supply and distribution in the immediate future remains strong.
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