Global Paper Shortage 2022: What You Need to Know
The price of paper is on the rise. In 2021, we saw paper demand grow and supply sink, and although experts predict a return to pre-pandemic rates in late 2022, new supply problems are adding to the uncertainty. At the Phoenix Group of Companies, our print specialists are committed to transparency—both in our processes and our relationships with clients and partners—so let’s break down the latest updates and discuss what’s on the horizon for American companies needing printing papers and paper packaging materials.
Is There a Paper Shortage in 2022?
Yes, there is a paper shortage in 2022 for coated and uncoated papers. Manufacturers, wholesalers, marketing companies, and printers continue to experience difficulties securing materials and producing goods for a number of reasons. Industry experts agree that we’ve never seen a shortage this big before. COVID-19 lockdowns and global supply chain issues have had a significant impact on the availability of paper products. As we emerged from the lockdown period, demand for printing paper and direct mail services increased faster than supply was able to rebound. Now, demand for paper is actually greater than pre-pandemic 2019 levels.
What Exactly Is Going on?
A few key events are contributing to the ongoing shortage. Issues from 2021—such as raw pulp pricing increases, mill closings, and rising transportation costs—continue to carry over into the new year. Prior to the COVID pandemic, several large domestic paper mills planned to convert to packaging material production, and during the pandemic, some mills navigated the shortage by switching from paper to packaging, producing cardboard, kraft papers, and other materials to cater to increased online shopping demands. UPM pulp and paper mill strikes in Finland also had an impact on the market, limiting the availability of lightweight and medium weight coated papers primarily used for magazine and catalog production.
The Russia-Ukraine war is causing supply chain blockages and heightening the cost of gas and freight as a result, since Russia is a major fuel supplier to countries around the world. Russia is also major exporter of uncoated paper to the European market, and the newly implemented bans on Russian goods will contribute to an additional deficit of supply.
When Will the Shortage End?
Right now, no one knows when the great paper shortage will come to an end because our industry has truly never seen a shortage of this magnitude before. The UPM strike situation has ended, which will help lower raw material prices and increase supply coated sheets. This is good news, but relief will not be immediate as paper shipments from Finnish mills take twelve weeks to reach US printers. The transition many mills have made from paper to packaging is also not so easily reversed; most companies have put an enormous amount of time, money, and resources into making the switch. Some printers and marketing businesses are ordering more paper now to prepare for the continued projected shortage, speculating that the situation is likely to remain the same through the end of 2022. These speculative purchases for future needs are also adding to the short-term shortage of paper needed to print jobs now and in the second quarter. We are hopeful that by the end of 2022 or early 2023, things may level out as lead times reduce and supply and demand approach equilibrium. Yet with so much uncertainty surrounding the paper market, experts are hesitant to make predictions on the outcomes we might expect to see soon.
How Can the Phoenix Group Help?
The Phoenix Group of Companies is determined to remain a reliable partner through it all. Our current paper inventory is three times greater than the volume of paper we carried prior to the pandemic. Every day we are searching for paper from our traditional sources and new alternative suppliers. If Phoenix can’t the find the exact paper you specify, we will offer effective alternatives. The key for printer buyers and marketers is to plan four to six weeks ahead, order paper early, and remain open to using alternatives. When an offered alternative is suitable for your project, act quickly to authorize purchase of the item; we have seen it happen many times that paper available in the morning is gone by the afternoon. Many merchants are unwilling to hold onto paper and await purchase decisions, so stay flexible and ready to put your project in motion with alternative options when necessary.
This is certainly not the first time the paper industry has moved through a shortage and come out the other side—and it’s certainly not the first time for Phoenix. If you’re looking for a reliable print provider to complete critical print communication projects, get in touch with our team to learn how we can help.