Unraveling Paper Price Increases
If, like me, you received price increase letters last week from a couple of coated paper manufacturers, you’re probably really frustrated. Frustrated at the prospect of paying yet-higher costs. For me, the first thought was the time drain that’s coming my way while I put together a case to convince the mills of the absurdity.
Is this price increase demand-driven? Of course not! Then why are they doing it?
They claim “rising input and transportation costs,” but I think their reasoning was much simpler. I think they saw what just happened in the uncoated market and calculated they had nothing to lose in trying to push an increase through.
Maybe they miscalculated.
The marketplace is working out the recent uncoated increase right now. While some customers are not receiving any increase, many are accepting something in the range of $1.50/cwt and others are taking the entire $3/cwt.
In my effort to understand the current price fluctuations, I spoke with a number of friends and colleagues—printers, merchant distributors and mills.
Suppliers who instigated the uncoated increase claimed the same drivers as did the coated manufacturers—“rising input and transportation costs.” I wanted to better understand the “input” cost argument, so I asked for an explanation from a local merchant. He had no credible explanation.
First, he cited gas prices. He then insisted costs that he could not identify were going up, and informed me that the $3/cwt increase was being implemented across the board.
This is a merchant with whom I spend eight figures annually! He didn’t seem to be working strongly on my behalf, nor was he sufficiently diligent to understand what was happening in the market and why.
Another mill rep was much more straightforward; he simply explained that the two dominant uncoated mills are pushing hard, and that his smaller mill would really like to make more money by riding the coattails of the bigger mills’ increase.