Sappi is hoisting prices by up to 25% from the start of next month, in addition to previously announced increases.
The paper maker blames spiralling energy costs, increases in raw materials and in transportation and says that “in order to keep its entire supply chain and assets economically viable Sappi must pass on these additional costs to its customers”.
It is joining an industry wide call for action to mitigate the impact of rocketing energy costs on the European paper sector. Cepi, the confederation of Europe’s paper making associations, has joined other energy intensive industries in a call for the EU to take action or risk undermining longer efforts by these industries to decarbonise, which requires substantial investment.
Sappi is further warning that it “will continue to review the viability of each asset and cannot rule out production stoppages if the situation demands”. Whether this means temporary shut downs for some machines or more drastic measures is not clear, but reduction in capacity would surely exacerbate supply issues which are already strained.
In the UK Sappi’s distribution partner EBB has alerted printers to the wave of increases that is about to break. It has little choice, the leap is too great to absorb.
Products made in Europe account for 47% of Sappi’s overall revenue with Europe responsible for 41% of sales in the year to September 2021. In these 12 months the company managed a return to profit and reports steadily increasing demand as lockdowns across its markets eased. Sales will have been slowed by renewed action to slow the spread of the Omicron variant, but will be expected to bounce back again.
Packaging grades had enjoyed a 10% increase in sales volumes during the financial year while demand for graphic paper returned to a healthy market balance in Europe and North America in the first nine months of 2021. That rosy outlook now looks distinctly off colour because of measures outside its control.
