How the Global Energy Crisis Is Impacting the Paper Industry?

The global hike in wholesale gas prices, prompted by a surge in demand as economies open up again after the Covid-19 pandemic and the shift away from fossil fuels such as coal, has seen prices rise 250% since the start of the year.

Businesses, from vast corporations to solo entrepreneurs, as well as consumers across the world have all been affected by the sudden spike in energy costs, and the paper industry is the latest major industry to have sounded the alarm.

Although the paper sector had proved "remarkably resilient" during the Covid-19 pandemic, rising energy prices have been responsible for 20% of overall cost increases.

It's worth remembering European energy is supplied by far more sustainable sources than in the past, with 37% coming from renewables and natural gas. Renewables accounted for the biggest share of primary energy production in the EU in 2019, racking up an impressive 36.5 %.

Business leaders are, of course, keeping a close eye on the situation but concerns about the uncertainty of renewing short-term deals are mounting, while some companies are already warning the additional costs may have to be passed to the consumer.

Several European manufacturers have already responded to the increases with until further notice surcharges of between €50 and €150 per tonne to mitigate what it sees as unsustainable electricity and gas prices. It will remain to be seen how many others jump on the bandwagon and how high the surcharges reach.

It all comes hot on the heels of double-digit percentage increases in ink, plates, blankets, paper and transport costs which, coupled with logistics issues, including the global shortage of truck drivers and logjams in the shipping industry, caused by disruption from the Covid-19 pandemic, are having a dramatic impact in the paper industry, as well as everywhere else.

The European market isn't the only one feeling the squeeze. The energy crisis hasn't quite reached America yet, but utilities across almost every part of the country have voiced their concerns about a lack of fuel in the run-up to winter.

As we wrote previously, the tight paper supply was already prompting concerns among publishers over their ability to get their printed materials out the door, and the current situation has been compounded by the loss of more than 2.3 million tonnes from paper production over the past 18 months.

We're not immune to the headwinds the paper industry is facing, but we're constantly trying to find sustainable and cost-effective solutions for our customers, whether it's calling on our robust network of relationships with all the paper mills, to avoiding logistics problems by operating our own fleet of delivery vehicles.

We know the energy crisis will pass and supply chains will ease. In the meantime, our team will do all they can to make sure you get the quality paper and board your business needs for every project, on time and on budget. Contact them atinfo@denmaur.com or phone 01727 738750.