As featured in several recent media reports, soaring demand for cardboard packaging amid unprecedented market conditions has led to greater pressure than ever on cardboard availability and pricing.
A perfect storm
According to the Confederation of Paper Industries (CPI) the combination of a huge increase in home shopping since the beginning of Covid lockdowns, businesses stockpiling in the run up to Brexit and the usual increase in demand for cardboard packing over the Christmas period (which has seen an estimated 200 million extra home shopping deliveries) has created an “extremely challenging market”.
These challenges have been exacerbated further by some paper mills changing their scheduled planned maintenance, leading to imbalances in supply and production delays, increased demand from buoyant export markets such as China and many cardboard suppliers being hit with Covid-19 safety measures requiring staff to self-isolate.
Unsurprisingly, this has had a significant impact on availability, with cardboard purchasing lead times rising across the board. Indeed, our own suppliers are already quoting significant variances in lead times – of between 10 days and as long as several months for sheet board products and between seven weeks and in excess of 3 months for fully finished cardboard. In addition, some suppliers are also imposing restrictive allocations on the amount of product customers can specify.
Pricing moves accordingly
The increased demand is also having a direct impact on carboard pricing. Indeed, research from media title, Materials Recycling World, indicates the midpoint value of domestic OCC cardboard has risen from around £60 a tonne in December 2020 to around £75.50 a tonne as of 25 January 2021. Export carboard has risen by roughly the same to around £92.50 a tonne.
From our perspective, we have already had to take on increased pricing from our own suppliers – of as much as almost 12% on sheet board products and 8% on fully finished cardboard, with several suppliers indicating further increases down the line may be inevitable.
Preparing for the future
Looking ahead, more encouragingly, with many paper companies across Europe bringing new capacity online all the time, the market is expected to come into greater balance during the course of the year. That said, with little sign of the shift to online shopping slowing down any time soon and ongoing concerns over import and export teething issues persisting following Brexit, careful forward planning for cardboard specifiers to ensure continued supply is more important than ever.
Our customer commitment
Thanks to our longstanding partnerships with cardboard suppliers here and overseas and by working closely with customer purchasing data to analyse likely forward buying requirements, we have been able to ensure continuity of supply to customers throughout this challenging period and are confident of being able to do so throughout the year ahead.
We offer a broad range of heavy duty and conventional cardboard solutions alongside hybrid composite alternatives made from wood-based products to meet a range of customer challenges across industry. What’s more our stock and serve facilities also mean we can assist customers with planned forward volumes whereupon, we can smooth demand and satisfy bespoke requests at short notice on an ongoing basis.
Being mindful of the prevailing market conditions however, we would urge all customers to continue to work with us and plan for their future cardboard purchasing requirements as far ahead as possible to ensure they enjoy continued supply of cardboard packaging over the weeks and months ahead. In the meantime, we will continue to update customers on developments on this important issue as they occur…