Grim quarter century for paper pricing

Australia’s imported Printing & Communication papers are, on average, 42.9% lower priced than they were twenty-five years ago, when increased manufacturing and related costs are taken into account.

The table emphasises the point, showing the cash price per tonne of the main grades of Printing & Communication papers over the quarter century, along with the weighted average.

 

Cash Price (AUDFob/t)

 

SQ’94

JQ’19

% Change

Uncoated Mechanical

799

830

3.9%

Uncoated Woodfree

1,195

1,517

27.0%

Coated Woodfree

1,327

1,264

-4.8%

Light-Weight Coated

931

906

-2.7%

Medium-Weight Coated

942

1,052

11.7%

Weighted Average

1,080

1,114

3.2%

Source: ABS & IndustryEdge

 

However, over the same period, cost inflation for business (measured by the Producer Price Index) rose more than 81%.

As a result, despite the weighted average price of imported grades lifting 14.2% (in cash terms) from JQ’18 to JQ’19, prices continue to languish far behind their real value. In real terms, when manufacturing costs are taken into account, import prices have fallen 42.9% over the quarter century as the chart below shows.

 

Australian Real Printing & Communication Paper Prices: SQ’94 – JQ’19 INDEX: SQ’94 = 100

Source: ABS and IndustryEdge

 

To place this back into dollar terms, the real weighted average import price in JQ’19 had fallen back from AUDFob1,080/t in SQ’94 to AUDFob617/t. As the table below sets out, for imports of Coated Woodfree papers, the result is a near 50% decline in real prices over the 25 years.

 

 

Real Price (AUDFob/t)

 

SQ’94

JQ’19

% Change

UCM

799

460

-42.5%

UCWF

1,195

840

-29.7%

CWF

1,327

700

-47.3%

LWC

931

502

-46.1%

MWC

942

583

-38.2%

Weighted Average

1,080

617

-42.9%

Source: ABS & IndustryEdge

 

IndustryEdge has heard recently from two buyers that paper prices are too high and that the pulp market driven price increases of the last eighteen months should have been soaked up by paper producers.

This data demonstrates that paper prices are not too high. In fact, the opposite is the case.

What the data really demonstrates is that buyers need to pay more. Those selling the finished items – printed or otherwise – have to work to make that happen.

 

This item first appeared in the September 2019 edition of Pulp & Paper Edge (Edition 168).

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