In the recent months, there have been a lot of concerns among our customers and stakeholders about the increased prices for our Cardboard and Paper Tube. products at Just Paper Tubes
In a gesture of complete transparency and full disclosure, we want to explain as best as possible, the reasons for our price hike and the challenges the paper industry is currently facing. There have been a series of events and changing trends in the paper industry at a global level which are adversely affecting the demand & supply equilibrium under which we’d been operating so far.
1. Decrease in supply:
We depend on various large-scale paper manufacturers across Europe for our supply of paper to manufacture our paper tubes and cardboard products.
Over the past 5 years, a lot of these manufacturers have either closed down or sold multiple mills, impeding our ability to source paper.
2. Increase in demand:
The demand for European Coreboard across global markets such as Europe, Middle East and Africa has been increasing steadily in the past few years. The global demand has been further pushed up by recent policies and initiatives implemented by China which is relying on quality paper waste from trusted sources in Europe to fulfil its increasing demand for packaging products to support its burgeoning ecommerce industry.
3. Paper makers hiking prices to offset high demand:
As the global demand for paper and cardboard products continues to rise drastically, the paper manufacturers have been unable to meet this demand. Hence, in an attempt to achieve a demand & supply equilibrium, the paper makers have increased their prices significantly.
Even after a price hike of 30-40% for paper in the year 2016-17, the global demand continues to be strong and steady.
4. Brexit:
Brexit has had a huge impact on the British Pound, which has been underperforming against the Euro since the Brexit referendum on the 23 of June 2016, not only has paper been affected by GBP/EUR exchange rate; transport costs have gone up accordingly and have to be taken into account in the reassessment of the current costs.
How is Just Paper Tubes addresses these challenges?
We want to be really open and honest with you. In the current market scenario, the paper sellers are dictating the supply terms. We’ve been witnessing the rise in prices since early 2017 and had been absorbing the costs so far owing to our ample stocking procedures and huge warehouse space. The outlook was that the market will eventually stabilize and go back to normal.
However, now almost after a year of absorbing losses, along with new price increases been imposed upon us we’re compelled to take certain steps to address these challenges.
While we do have enough supply to meet our current customers’ demands and fuel our customers, and our own future growth plans, any shocks to the market such as a significant breakdown at our suppliers’ mills can have an impact on our production.
Here are the steps taken by Just Paper Tubes:
1. Negotiating hard with our existing suppliers to keep price increases as low as possible
2. We are working with new suppliers to look to approve their paper for use in our tubes, however as the supply is so tight and the demand is very high there is not a lot of room for movement
3. Passing on a small fraction of increase in sourcing costs to our customers to sustain our production volumes and costs and ensure there’s no disruption in our product supply
We sincerely hope that it is a bubble that may burst. But until then we intend to making sure that we keep our supply lines open and keep serving our customer demands as effectively as possible.
Please feel free to contact us regarding our prices or to discuss any business requirements you may have.
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