Market update – Paper packaging

Since the pandemic hit, the paper market has experienced some turbulent times, from lockdowns and the home shopping boom of 2020 & 2021, moving now into 2022 and the unprecedented energy price rise and most recently the impact from what’s happening in Ukraine.

Like many other industries, paper and board production is heavily energy reliant. With the huge hikes in gas and oil prices, cost pressures are now becoming a major issue. With such a high reliance on energy for production, and as a relatively low value/high volume product, the additional associated costs – such as transport -are also adding to mounting cost pressures.

This is on top of a post-pandemic backdrop where there are already transport and labour issues, and events such as the ongoing strike at the UPM mills in Finland, which has been ongoing throughout 2022 and is seeing an impact on the industry across Europe.

Aside from the production of paper and board products, supply of the raw materials is also proving problematic. Both Ukraine and Russia are key players in the supply of timber to Europe, which will undoubtedly have a knock-on effect for the paper packaging industry across the continent.

Furthermore, the ongoing instability and uncertain caused by the conflict will be multifaceted with issues from energy costs and raw material shortages combined with staffing problems and any further sanctions to contend with.

In short, this means that the outlook is hugely uncertain. However, for the foreseeable future, we see there being pressure piled onto supply chains, along with unavoidable cost implications too. For consumers and businesses it is a good time to review stock holding arrangements with suppliers to minimise exposure to these market pressures.