Paper prices up again from Feb
All three of the big paper merchants will increase prices next year in the face of rising costs and an Australian dollar at its lowest value in four years.
The paper suppliers say prices have been stable for a while now, since the last rise in March, while the currency has fallen from about US90c in that month to 82c now, and has forced up the price of everything.
Spicers is first off the mark with its 6-9 per cent jump in effect since this Monday December 15.
The Paperlinx subsidiary wrote to its customers saying print is in a ‘difficult business environment’ undergoing technical change and structural decline.
“Spicers has been able to offset the threats to the sustainability of our models caused by the fundamental decline in our markets,” it says.
“Unfortunately cost pressures continue unabated, and recently have been exacerbated by marked depreciation of the Australian Dollar against many of the major currencies in which we trade with our international suppliers.”
However, managing director Andy Preece says if the Australian dollar were to ‘materially change’, the price would have to be reviewed and could go down again.
KW Doggett and BJ Ball are both holding off until February saying they are under intense price pressure and can only afford to keep absorbing the decreasing margins until then.
Doggett managing director Simon Doggett says prices will rise by up to eight per cent on February 2, with the most popular commercial grades being hit with the full hike because its supply out of Asia is the ‘most price sensitive’ to currency changes.
He says ‘only a couple per cent’ of the 10.5 per cent March price hike was actually realised because the dollar moved from 90c to 95c soon after.
“We are all kept honest by the market,” he says.
Doggett says the dollar has fallen 23c from its high of $1.05 early last year, so the price rises across the industry only represent a fraction of the actual hits to margins.
“It is never easy for the industry to absorb cost rises, but all imports are being hit by the currency, not just paper,” he says.
BJ Ball says it has yet to fix a date and will not decide how much prices will change until January.
The last round of price hikes in March saw BJ Ball customers paying eight per cent more across the board, KW Doggett up to 10.5 per cent, and Spicers 8-10 per cent.
The Australian dollar has seen sharp declines recently, falling from parity last May to its lowest levels since June 2010 this month, with further falls predicted as demand for commodities weakens and China’s economic growth slows.