Pulp Supply Crunch Inflates French Paper Costs, Putting Tissue Prices Under Pressure

France's paper sector is feeling acute cost pressure. Tight pulp supply is driving production expenses higher, prompting some paper product companies to warn of price increases and call for higher selling prices. Everyday items such as toilet paper could become more expensive.

BFM TV reports that some supermarket chains in the United States and Canada have introduced purchase limits on several products with tight supply, including toilet paper. France has not yet reached that point, but strains in papermaking are exposing the wider paper products market to risks of higher prices and, in some categories, shortages.

Essity Group, a European tissue leader whose brands include Lotus, Okay and Tena, is among those affected. Arnaud Laville, vice president for France, Belgium and Italy, told Les Echos that production costs have climbed 30% over the past year. Measures such as packaging simplification have helped limit the impact, but he sees no clear way to avoid significant price rises: the shock is too large for one company to absorb alone, and retailers must share it.

Paul-Antoine Lacour, general delegate of Copacel, the French professional union for pulp, paper and paperboard manufacturers, said pulp cost inflation since the start of the year has been unprecedented. Over that eight-month span, softwood pulp feedstock prices climbed 44%, while hardwood pulp feedstock prices increased 47%, a burden that will inevitably be passed to consumers.

At the same time, electricity and gas prices in France continue to surge, adding further pressure to companies' production costs.

Eric Joan, chief executive of Hamelin Group, a European office stationery major, said 2022 cost inflation will inevitably show up in selling prices, and paper stationery items will see increases ranging from 15% to 25%.

The prospect of broad paper price increases is now clear, and consumers are worried about possible shortages of toilet paper, books, magazines and newspapers. Benoît Duxenne, chairman of the French National Union of Printing and Communication Industries, said supply difficulties sometimes occur for certain paper grades, but the industry is not at a deadlock. Lacour sees serious trouble in printing paper, with the press and publishing sectors particularly hit, while products such as toilet paper will depend on companies' commercial operations; delivery delays cannot be ruled out.

Before COVID-19, many pulp mills shut down due to overcapacity and structurally weaker demand. After the pandemic struck, especially during lockdowns, French consumers stockpiled large volumes of toilet paper, causing temporary supply shortages. Continued restrictions and widespread remote work also sharply reduced waste paper recovery in Europe. Using recycled waste paper in production could have eased the tight supply situation.

If toilet paper and other paper product prices rise, French households' purchasing power will take another hit. The latest report from France's National Institute of Statistics and Economic Studies shows that in August this year the consumer price index rose 0.6% month on month and 1.9% year on year.

Source: China Packaging Network (pack.cn); original link: http://news.pack.cn/show-378362.html