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Higher paper prices could “dent the new-found confidence” among carton printers and converters, a sector leader has warned.

John Monks, president of BPIF Cartons, said price increases by a number of paper manufacturers and merchants, including PaperCo, Antalis and Sappi, “will not be helpful to our sector”.

Price rises of between 2.5% and 8% were due to come into force at the end of March.

But Monks said: “Carton makers are just beginning to feel confident about their businesses. This will rather dent that new-found confidence.”

Monks said that in 2006 capacity and demand balanced for the first time in years, which gave carton manufacturers a renewed confidence in the prices they were demanding for their products.

However, paper manufacturers said high energy and raw material costs were forcing them to raise prices.
The paper industry also argued that the increases followed an extended period of price cuts in their industry.

Alistair Gough, managing director of merchant PaperCo, said: “If you look at the picture from a historical perspective this really is more of a question of price recovery than increase.

Over the past 20 years the true cost of paper has dropped dramatically – by up to 50%.”

Gough (pictured) said a recent small decrease in energy and fuel costs had done little to offset the significant underlying increases in pulp, chemicals, energy and fuel costs over the past two years.

“The price levels that the mills and merchants have been achieving have not provided an adequate return on investment in many instances,” said Gough, “and this is despite industry-wide improvements in production efficiency and restructuring.”