European sack kraft paper prices continue upwards

Restricted Supply

Strong demand from overseas means the European supply of sack kraft paper remains tight. Demand from Asia, the Middle East and North Africa remains high. As a result buyers have had difficulty getting hold of paper, with long lead times and delays in deliveries as a result. 

Temporary shut downs of plants in Sweden and Canada recently have taken tonnage out of the market while some US producers have switched production from Kraft paper to more profitable containerboard. These factors continue to affect supply. 

The supply situation may ease  a little soon with the opening of Segezhas new unbleached sack kraft paper machine at its mill in Karelia. It is not clear how much paper will be available for the market though, and whether this will be able to halt the upwards price trajectory. 

Price moves

On the pricing side, there have been 2 main waves of price increases in January and July 2017, but some prices have moved on a quarterly basis. Unbleached sack kraft paper has seen the biggest moves, rising by €80-100 per tonne on average from January to July, while bleached paper prices have increased by €60-80 a tonne. 

Despite the tight supply, paper can be sourced, but at a cost. Some producers have no paper to accomodate extra volume, and have been forced to limit order sizes. 

Further price rises may occur this quarter, with deals under negotiation. Many contracts will expire in January, when we are most likely to see a mass price move.