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Soaring pulp prices to push paper costs higher

Global pulp prices are heading towards record highs, threatening higher paper and packaging costs, as supply disruptions in some of the world's biggest producing countries coincide with a recovery in demand.

The simultaneous disruptions in Chile and Finland, which together account for more than 10 per cent of the world's pulp market, have tightened the market just when Chinese consumption is soaring, analysts say.
 
Pulp is the raw material used to manufacture newsprint, fine paper, magazine paper, and cardboard and analysts forecast that paper and packaging rates will increase soon.
 
Much of Chile's pulp capacity has been shut since the country was struck by a devastating 8.8 magnitude earthquake last month. Meanwhile, several Finnish mills have been brought to a standstill by the country's longest dock strike for two decades. Finnish dock workers have been on strike since March 4 in a dispute over severance pay and job security, halting most pulp exports from the country.
 
Mikael Jafs, an analyst at Crédit Agricole says European producers such as UPM have announced a 15 per cent price increase for office A4 copy paper in the second quarter of 2010.
 
Analysts warn that even before the supply problems hit the market, pulp prices were rising as European producers took action to cut long term over-capacity in the industry.