Suppliers limit impact of high paper costs

Makers of paper-based products in China are taking various steps to minimize the effect of the higher cost of imported pulp on export prices, including incorporating more domestic material in releases.

Higher pulp costs are forcing China suppliers of paper products to raise export prices, although several measures are being implemented to keep increases to a minimum.

One of the steps paper product companies are taking is to import more paperboard and finished rolls instead of pulp. Between January and May 2010, China purchased 1.47 million tons of paperboard and finished rolls from other countries, up 22 percent year on year. In contrast, procurement of paper pulp in the same period fell 16 percent to 4.7 million tons.

This strategy is employed because prices of paperboard and finished rolls are less volatile. Global demand for such products is not as strong as for pulp as they can be used in fewer applications. Further, the decline in consumption of traditional print media in various countries has caused a reduction in orders for newsprint.

Moreover, suppliers are taking advantage of the increasing domestic pulp, paperboard and finished roll output, incorporating more of these materials in their products. In the first five months of 2010, domestic paper pulp production grew 25 percent year on year to 9.3 million tons. Local paperboard and finished roll yield, meanwhile, went up 18 percent in the same period.

For products such as notebooks, Ningbo Tianjiu Printing Co. Ltd adopts locally made paper, which costs $ 100 less per ton than imported versions. But for upscale items such as catalogs and desk calendars, the more durable and shinier imported coated paper is still used.

Minimal price increase

For products such as paper cups, raw materials account for more than 60 percent of unit costs. As such, suppliers are often quick to adjust export prices following the fluctuation in raw material costs.

Compared with the start of 2010, current paper pulp costs are now higher by 1,000 to 2,000 yuan ($ 149 to $ 297) per ton. Consequently, prices at paper tableware products maker Foshan Yunying Paper Co. Ltd have increased by 0.001 to 0.01 yuan ($ 0.00015 to $ 0.00149) per piece.

Prices of paperboard products at Yiwu Buyi Stationery Manufacturer went from 4,000 yuan ($ 595) per ton in late 2009 to about 6,000 yuan ($ 892) per ton this year.

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