- Tags : Packaging & Printing | Paperboard & Packaging Papers | Price trend | Price forecast | Procurement research | Category market forecast
Recent Price Trend - Paperboard & Packaging Papers
In the three years to 2017, the price of paperboard has been rising at an estimated annual rate of 0.6% due to growing demand and slightly higher paperboard production costs. Moreover, prices for paperboard have been highly volatile during the three years to 2017.
Demand for paperboard from industrial sectors has grown as improvements in the economy have spurred construction and manufacturing activity. During the period, the industrial production index has risen, which has resulted in more paperboard and packaging papers have been used to package and transport various goods. Rising consumer spending also feeds demand increases because paperboard is commonly used to package consumer packaged goods. The rising domestic population has boosted demand for paperboard as well; a larger populace consumes more food, which is often transported with paperboard and packaging papers. Together, these trends have stoked demand for paperboard and contributed to price increases during the three years to 2017.
With rising demand suppliers have been able to pass higher wage costs and pulp, paper and allied product prices on to buyers. Pulp, paper and allied product prices have risen due to higher lumber prices while an increase in paperboard mill wage costs reflects a broader uptick in wage rates for workers in the US. Faced with higher production costs, suppliers have passed some of these cost increases on to buyers in the form of higher prices.
Moreover, paperboard prices have been highly volatile. Prices grew in 2014 and 2016 but declined in 2015 due to falling pulp prices in that year. In late 2016, prices rebounded strongly as a host of major paperboard producers announced price hikes in order to account for higher operating costs. High price volatility increases the risk of drastic price shifts for buyers, and makes it more difficult for buyers to project and budget for future costs. Therefore, buyers should strongly consider engaging in contracts with suppliers to lock in prices and avoid the potential cost escalation. Engaging in contracts will also allow buyers to leverage a larger total order value to seek more sizable discounts from suppliers.
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