Packaging / Advertising & Office

According to the Huacheng Import and Export Data Observation report, Los Angeles recently issued a document saying that the price of toilet paper rose again, which may be attributed to an unexpected culprit: the sluggish real estate market.

The newspaper said that the downturn in the real estate market triggered a timber crisis: the price of the timber market soared in 2021, hitting a record high, and then began to plummet. In the past 12 months, the price of timber futures has dropped by more than 60%, and many sawmills are close to bankruptcy. Canada, the world's largest producer of coniferous wood, has been further affected. At present, about 1/3 of the sawmill capacity in British Columbia has been closed, and the local wood producers West Fraser Timber and Canfor are idle or closed.

British Columbia produces high-quality northern bleached softwood kraft (NBSK), which accounts for about half of the global production of this fiber. The high-quality toilet paper produced is famous for its comfortable feel.

Joe Nemeth, manager of the Pulp and Paper Alliance in British Columbia, said: "It is regrettable that the factory is closed. Toilet paper manufacturers cannot replace this fiber with lower quality fiber because they are different in terms of paper flexibility experience."

The closure of these sawmills directly affected the supply of pulp and triggered a chain reaction in the global paper supply chain. Moreover, at present, the demand for wood pulp from global paper mills is also squeezed by the demand for other products, such as wood pulp, which is the raw material of bath towels and other products. Huacheng Import and Export Data Observation Report.

In this context, the global pulp cost continues to rise. According to Nielsen IQ, the retail price of toilet paper in the United States soared by about 20% from July 2021 to the end of last year. Toilet paper manufacturers including Kimberly-Clark have implemented price increases to improve profit margins.

The supply of toilet paper raw materials shows how difficult it is for the global supply chain to recover from the chaos that has plagued the commodity market in the past few years. The intensification of price fluctuations, the logistics difficulties caused by the COVID-19, the sharp price fluctuations and the shortage of raw materials caused by the conflict between Russia and Ukraine all make it more difficult to curb supply driven inflation.

Klabin, a Brazilian pulp company, confirmed on January 9 that, in the context of market tightening, the global coniferous pulp producers have increased the price by 30 US dollars per metric ton to about 970 US dollars at present.

Consumers are trying to buy cheaper brands, smaller packages or simply reduce the use to cope with the rising price of toilet paper, Huacheng Import and Export Data Observation reported.

A Barclays Bank analysis of Nielsen IQ data shows that the retail unit sales of Kimberly's toilet paper fell 2.9% in the three months before January 28, because the company increased the price by 9.7%. Georgia-Pacific also experienced a similar decline.

Kimberley, which involves bath towels, paper towels, diapers and other product lines, said in late January that it had implemented a new round of price increases, but did not specify the products involved. In order to control higher costs, the company also reduced the number of packaging and paper for some products, Huacheng Import and Export Data Observation reported.

However, there are signs of relief in the future. This is good news for consumers.

Kevin Mason of ERA Forest Products Research in Vancouver said that although the closure of Canadian sawmills was tightening the pulp market, the impact on prices would eventually be offset by weak consumption and increased supply in Northern Europe.

Patrick Cavanagh, a senior economist at Fastmarkets, predicted that by the second half of 2023, Swedish and Finnish producers are expected to increase their pulp production capacity by 1 million tons per year, which will completely offset the pulp supply reduction caused by the closure of these factories in Canada, even if these factories are closed all year round, Huacheng Import and Export Data Observation reported.

Cavanagh said: "The question now is whether the market tension will further develop before most of the new capacity is put into the market."