Why is there a Toilet paper shortage now? Once again, the cost of toilet paper is rising. It is due to the unexpected cause of the housing market downturn. The decline in the housing market has produced a crisis in lumber. Sawmills are closing as a result. This caused futures to fall more than 60% in the previous year. Canada is the world’s largest producer of softwood lumber. Nearly one-third of the sawmill capacity is now closed in British Columbia.
The worldwide paper supply chain depends on the byproducts produced by the facilities. Now, it is affected by this. A global shortage of wood pulp is the main component of goods like toilet paper. Let us explore this issue further in this article.
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Why is there a Toilet paper shortage now?
The paper manufacturing industry is experiencing a supply chain shortage. It is suffering like many other industries around the world. Paper prices have risen, and paper stock availability is becoming limited. These are all happening as the costs of raw materials rise. Also, mills install rising prices and allotments, and labor shortages persist.
Due to this supply chain shortage, many commercial printing businesses have been unable to compete in the marketplace. For more than a year, the paper supply chain has experienced stress. Some paper industries declared a 10% price increase on coated and uncoated paper in June 2021. This was the first uptick since 2014.
Later in the year, we faced a further shortage of raw materials. The pulp used by paper mills to make customizable paper has become rare and costly. Thus, it makes it difficult for print businesses to run at full capacity. Yet, a scarcity of raw materials is only one factor in the supply chain’s scarcity, and there are several causes. These includes:
- In 2020, paper mills will cut their workers.
- As the epidemic hit, many paper mills focused on producing cardboard rather than using paper.
- Online sales were flourishing as a result of everyone working from home. Also, distributors required cardboard boxes. There was a discontinuation of paper types and grades.
- The airline pushed its pilots to retire early in 2020. The trucking industry reduced staffing levels and tightened timetables. The price of freight also grew 20 times from 2019.
Industry analysts predict that there will be paper shortages and rising prices into 2023. It is mainly caused by a potential increase in demand during the summer of 2022.
Causes of Toilet Paper Shortage
Pulp is the main component of paper. A prohibition on Russian birch exports has sparked it. Those woods contain short fibers that soften sanitary items. Rolls of toilet paper that are smaller and more costly are being produced worldwide due to the cascade impacts.
It is the most recent problem to affect the availability of toilet paper. This shortage has troubled the commodities markets ever since the pandemic first began. A precursor to the huge economic disruptions that were about to occur was the scarcity of 2020. It saw worried people flee for toilet paper and other home products as they were subjected to severe lockdowns. Wood fibers used to make paper were again disturbed by more container ship delays in ports.
Russia banned the export of birch wood in March. This was in response to new sanctions by the US and the EU after Putin’s incursion into Ukraine. As a result, the industry predicts that between 800,000 and 1.2 million metric tonnes of pulp will be removed from the market. As a result of the growing cost of the power process of turning wood chips into cellulosic mash, the cost of pulp has increased by around 45% in 2022. Paper manufacturers are now forced to compete worldwide. This is to get their raw materials as Europe’s largest producers begin to feel the pressure on supplies.
According to Santander research analyst Rafael Barcellos, the pulp industry will likely be strong into the second half of 2023. He expects costs to decrease only when mills are now under construction in Chile and Uruguay starts selling its goods in 2023.
Why is Toilet paper more expensive?
Due to the rising cost of pulp globally, toilet paper manufacturers like Kimberly-Clark Corp. have increased prices. This is an effort to increase profits. The price of toilet paper in the United States increased by roughly 20% between July 2021 and the end of the previous year.
The toilet paper crisis shows how challenging it is for world-class supply chains to recover from their limitations. Because it has troubled commodity markets over the past few years. Increasing volatility, logistical difficulties due to the pandemic, and Russia’s attack on Ukraine have all led to huge price changes. This demonstrates why supply-driven volatility has proven challenging to control.
In response to the tougher market, manufacturers of softwood pulp worldwide have raised prices by $30 to $970 per metric tonne. This is according to the Brazilian pulp business Klabin. Customers are attempting to cope with rising toilet paper prices. They are now shifting to less expensive brands, purchasing smaller quantities, or cutting back.
According to a research analysis, retail unit sales of Kimberly-Clark toilet paper fell 2.9%. This happened in the three months ending on January 28, as the business raised prices by 9.7%.
Kimberly-Clark is a manufacturer of diapers, paper towels, and other goods. It announced the implementation of increased pricing in late January. But it didn’t name any particular items. To control rising expenses, the firm has decreased box sizes and the number of sheets on several items.
Conclusion
There are hopeful indicators for customers that comfort is on the way. The Canadian sawmill closures are currently squeezing the pulp market. But the impact on prices will soon be offset by reduced usage and greater supplies from Northern Europe.
By the second half of 2023, companies in Sweden and Finland will have boosted their manufacturing capacity by 1 million metric tonnes annually. This is according to Patrick Cavanagh, a senior economist at Fastmarkets. Even if the closures there go on all year, it will balance the losses.
“The problem now is whether a phase of tight market conditions will emerge well before the majority of the extra supply occurs,” Cavanagh stated. Let us hope for the best.