Paper Shortage and Price Increases – Part 2

From RISI Pulp & Paper, 10/2.

Thermal market jolted after dye plant was shut by government in China.

The one-million-ton global thermal paper market was jolted this week when the largest supplier of leuco dye shut down in China for a minimum of three months. The Connect Chemicals plant shut for environmental reasons and because of the government of China’s anti-pollution crackdown on industry. Contacts said Connect Chemicals makes about 35% to 40% of global dye demand for thermal coaters. One US contact called the shut “bad timing” on the verge of the busiest retail shopping period. Contacts expect coaters to shut if they run out of leuco dye and for coated thermal products to increase in price, as POS receipt paper demand seasonally picks up during the holiday season. Already, there were reports of converters paying higher pricing this week in the USA, on top of a price increase in July and August.

Leuco dye is a main ingredient in coating for thermal and carbonless paper, and for barrier coating for packaging grades, contacts said. “Thermal paper pricing should shoot up for a short period,” said a market contact. US thermal POS receipt paper producers, before the Connect Chemicals shut, already are again moving on a second paper price increase for converters on non-top coated POS paper rolls. Several contacts said at least one coater run by South Korea’s Hansol had been shut because of the Connect Chemicals plant downtime.

Other companies affected include Oji of Japan, Koehler of Germany, and the US’s Appvion, which are the three largest coated thermal paper producers in the world. Connect Chemical calls itself the world’s largest producer of color former products including sensitizers and developments for thermal paper. In 2014, Connect Chemical opened a new plant for making the dye in Penglai, northern China.