Chilean earthquake and Finnish strike impact pulp prices

Chile was hit by a devastating earthquake on 27 February which had its epicentre in two pulp producing regions, while the Finnish paper industry has been facing strikes for the past two weeks.

Between them, the two countries account for more than 10% of global pulp supply and the temporary loss of capacity could put further pressure on packaging firms that are already dealing with high pulp prices.

Clive Suckling, PwC’s global forest, paper and packaging leader, told Packaging News that the pulp price increases would mean linerboard manufacturers were “facing further increases in fibre costs at a time when they were starting to play catch-up in passing previous cost rises on to customers”.

“These are cost pressures that the industry didn’t expect to have to face and the extent that they can be recovered down the line is unclear,” he said.

“A significant source of supply being interrupted for weeks, maybe months, is going to be challenging for paperboard manufacturers.”

Finnish strikes
Suckling added that while there would likely be some impact on packaging from mill closures, the bigger effect from the Finnish strikes would be on the graphic paper sector.

Sappi Fine Paper Europe has warned that the earthquake in Chile would put additional pressures on the European paper industry as a whole to increase prices.

Chief executive Berry Wiersum said: “Even prior to the earthquake, pulp supply was proving to be a constraint to the industry in Europe, with global prices moving up in excess of 40% since April last year.

“The industry now faces a severe lack of pulp, which Sappi believes will result in increased pressure for steep rises in dollar-based pulp prices, exacerbated for European paper producers by the weakening euro.”

The 8.8 magnitude earthquake that struck Chile has caused extensive damage to the infrastructure and interrupted the supply of electricity and water to many mills, as well as wood and chemicals.

It has also affected the transport of finished product to customers and damaged the main harbour serving the paper industry at Concepción.

Has your supply of pulp been affected by the Chilean earthquake or Finnish strikes? Are you concerned about further pulp price increase? How easy is it to pass them on to customers? Leave your comments below.

Click here for today’s headlines from across the packaging industry

Popular Articles