March has certainly started out like lion and there's no sign that the roaring will stop any time soon. For those who are in print - it's more important than ever to shore up your supply chain. Just when we thought there was light at the end of the tunnel, the forces that be are wrecking havoc on the paper supply chain. Here's a snap shot of the turmoil besieged on the paper industry since the beginning of March:
March 4th, Finnish port stevedores commenced a strike. Some paper mills have already been shut down because they can not store the paper anywhere. All Finnish ports have shut down, affecting goods flowing into or out of Finland. This affects approximately 600,000 tons annually of coated paper in the US. (Finnish mills UPM, Stora Enso)
Pulp prices in the US reached $900.00/ton last week - the biggest seven day increase in six years. Pulp in Europe could top $1,000/ton within a few weeks - that's higher than the last peak seen in 1995. Due to the earthquake in Chile, and the strike in Finland, which together comprise 12% of the world's pulp, mills have come to halt.
The US has had one of the worst winters on record, due to the unusually wet weather in the Southeastern US, mills are not able to harvest the pulp needed for production - further impacting the pulp shortage.
St Marys Paper announced plans to curtail production of specialty Supercalendered paper grades on paper machine #5 at its groundwood pulp and paper mill in Sault Ste Marie, Ontario for an indefinite period starting March 12, 2010. This is causing a scramble at the bottom of the coated paper chain to secure tons, affecting availability.
New Page Corp. announced a moratorium on any new #4 or #5 orders, along with a price increase of approximately 3-5% on its #3 and #4 coated web grades, due to the above circumstances.
All of these things are coming together right now to cause a perfect storm for securing paper tons. I'd advise against panicking, instead use this as an opportunity to have conversations with clients, stressing the importance of securing paper buys and planning for the remainder of the year. If you don't already have a relationship with at least two different paper distributors, now would be the time to begin to reach out to those suppliers. You'll weather the storm a lot better if you and your clients are prepared, and anticipate for the volatility that lays ahead. Here's a great article by businessweek, that offers a more detailed recap. Click here if you'd like further information on pulp and paper prices or paper availability info.