28Jun

Normally Thermal Paper is Black or White, no pun intended.  However, Covid and the global shutdowns are playing a dangerous game with the thermal markets. 

In short, the markets are coming back faster than expected, which is great.  However, the speed of the recovery has placed a huge strain on the entire paper supply chain.  This included materials for base papers as well as the chemistry for the direct thermal coatings.  Essentially, we went from 0-100 MPH and forgot to slow down at the 55 MPH speed sign.

The rapid upswing is causing severe market shifts, based on traditional supply and demand.  The demand is High, and the Supply is Low, so pricing is jumping almost every month.  In addition, the paper mills are having issues keeping and meeting pre-announced paper delivery dates.  It is now a common practice for a paper mill to ship paper late. Then printers and converters of thermal paper are left passing on the upsetting information to their customers.

Regarding pricing, pre-covid the mills would announce a price increase and allow you time to educate the buyer of the paper and prepare the markets for the new pricing.  This is no-longer the case. For example, Mill ABC announces a 10% increase effective on “shipments” in 10 days.  This means that paper that was ordered 3 weeks ago and “pre” announcement is being “shipped” and “billed” at the 10% greater price.  Essentially this causes the Printer/Converter to handle a 10% raw material increase.

So, the big question is how you plan your Just-in-Time (JIT) inventory in today’s thermal paper market, You Don’t.  You need to focus on an extended supply chain and movements in pricing on a regular basis.

How long will we have to deal with this?  That is the Million Dollar Question!  Mills are actively seeking ways to increase capacity, hire additional workers, and find alternative raw material supplies.  If the markets continue to recover at the same pace we are experiencing, we could be dealing with these issues for the foreseeable future.

For more information or questions, contact Brandon Kent, Vice President, Telemark Diversified Graphics  bkent@telemarkcorp.com

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