Why Did Thermal Paper Prices Increase in 2019?
In 2019 several factors combined to increase the overall costs for paper. These included increased demand, availability problems, and rising pulp prices.
Paper pulp is the raw material for paper and corrugated boxes. Paper pulp increased in price 25% according to the US Bureau of Labor Statistics. As the demand for paper packaged products increased, the supply was not able to keep up.
Closing paper mills – Two major industry trends caused further price increases. First, as magazines and newspapers converted to online publishing, the demand for higher quality printing and writing paper diminished. Second, as consumers needed more packages delivered to their homes with online shopping, the demand for packaging paper increased. To gain the increased demand and profitability, some paper mills stopped producing printing and writing paper in order to produce paper for packaging. Some major mills such as Georgia-Pacific scaled back their operations. Other paper mills going out of business along with decreased US paper manufacturing capability caused additional price increases.
Imposed tariffs – Trade disagreements have compounded the rising paper costs. In early 2018 the United States imposed paper tariffs on Canada after US paper mills complained that Canadian government subsidies gave Canadian paper producers an unfair advantage.
Increasing worldwide paper demand – China is the world’s biggest consumer of paper. As China’s economy improved through 2017, the US struggled to meet China’s increasing consumer demand for paper.
2017-2019 Leuco Dye Shortage – The leuco dye shortage was the biggest factor in thermal paper prices starting in late 2017. Leuco dye is the colorless coating on thermal printer paper. When thermal printer heads create an image at high temperatures, the leuco dye changes color and the thermal paper displays the image or text.
China is home to the largest makers of leuco dye, including Connect Chemicals. The Chinese government shut down Connect Chemicals as part of a nationwide crackdown on thousands of polluting companies in late 2017. The shortage of leuco dye continued through 2018 and 2019.
Prices improved as the supply of leuco dye stabilized in March of 2019. Currently thermal paper prices have decreased slightly.