Where are paper prices heading

Paper used to be a major consideration in print all along. The importance increased considerably in recent years, however. Not only did the printing industry experience supply shortages, also the prices increased drastically. This has a major impact on what media executives are ordering – specifically print or an electronic alternative. These shifts are usually not done on short notice, rather they need to filter through a marketing or corporate strategy. Accordingly, it is important to see where are paper prices heading in the mid term to gauge the impact.

Paper prices and availability do differ by grade, however, for a general outlook it can be better to have a look at general statistics, like the production price index published by the German statistical office. The most recent data shows the production price index up to June 2023. As an index, the data is based on the production costs in the year 2015. Paper production costs remained essentially flat until 2020. A small rise in 2018 and 2019 was wiped out during the early years of the pandemic. February 2021 marked a low point with an index value of 98.6, essentially indicating that production costs were lower than 6 years before. The cost basis changed drastically with the index reaching a high of 183 in October 2022. After hovering at a very high level for a shirt while, costs declined, dropping to an index value of 157.6 in June 2023.

Where are paper prices heading
Paper production price index in Germany

Costs for corrugated had a similar trend, although rising not as dynamically as paper costs. Also, corrugated costs tailed off in 2023, although to a smaller extent.

Paper production prices are driven mainly by the cost of energy and of pulp. Energy prices went through the roof in Europe after Russia started their war against Ukraine. Energy prices have come down somewhat since, but remain high. Also, pulp prices increased as wood is in high demand for a number of activities, from packaging to sustainable buildings, to using wood as a source of energy. This shortage is not going to change as wood is increasingly being seen as an environmentally preferable option.

The high paper prices do have an effect on the printed volumes. Publishers are shifting towards electronic channels. Advertisers move to digital media, especially mobile devices to avoid rising print costs – even if environmental considerations are often cited as a reason for the switch.

Lower paper prices will help to avoid losing more print volume. Although the underlying cost factors remain unfavourable, there should be some more potential for cost declines. However, paper prices will remain noticeably higher than five years before.

In this respect, it is good news that the German state of Nordrhein-Westfalen is funding a joint research project among paper producers, suppliers, and researchers. It is also encouraging that paper production is seen as a core industrial activity, worth funding research for. The aim is to save 80% of the energy demand in paper production by 2045.

This will not help printing companies in the short term, however. It will be critical to monitor the production price index to have an indicator on where are paper prices could be heading and to position print as a future-proof media channel.

Print Magazine launches doubling – chart of the week

The pandemic did show us many processes moving digital. Communication is no exception. There is a huge push to move books to digital, although there are grave disadvantages. Magazine has been a bit under the radar and the declines in circulation in many countries are known. The better to see that launches of print magazines rebounded after the pandemic slump in 2020. According to Mr Magazine, Samir Husni, U.S. print Magazine launches were doubling in 2021 compared to 2020.

US print magazine launches 2019 - 2021

Popular in the pandemic – Google searches analysed

What analysts and marketers like about the internet is that everything is measurable – as pointless as it may be in many cases. Yet there is a bunch of internet stats that are helpful or at least entertaining. The latter is in my view a website that analysed Google searches and looked at how popular product search terms were in the pandemic.

For the printing industry most categories are of limited interest as mostly consumer goods made it to the searched item roster. Keywords and categories were sourced from Google product taxonomy. Results are restricted to searches on Google Shopping in the US only. The analysis ranked products and their search terms into three groups.

European print production 2021 – Chart of the week

Starting into the new year is a good time to have a look at the European print production developments in 2021. For the full revenue data to trickle in we have to wait several months – even for the first countries to report. The full data on Eurostat might be even two years out as Eurostat just about managed to publish 2019 revenues now.

The next best thing is to look at the monthly production index data published by Eurostat. Data is now available until October 2021. The best fitting category in the database is “print and reproduction of media” – with print production making up the lions share in that category. The data is based on the average 2015 volumes as being 100 index points. Starting values in the 90s for 2019 shows that print production volumes already declined before the pandemic hit in early 2020.

Print production index data

Recovered paper prices – chart of the week

If something is illustrating the current shortage in paper it is the rising costs of recovered paper. The chart shows German recovered paper prices – indexed for 2015 as 100%. China, once the main destination of recovered paper closed their borders for most waste materials in 2018 – which includes most recovered paper. This sent recovered paper prices into a tailspin. The bottom was reached during the first wave of the pandemic in 2020, when everything came to a standstill, at about 20% of the 2015 prices.

Recovered paper prices – chart of the week
Recovered paper prices Germany 2018 – 2021