Explainer: Why is there a price-hike on recycled cardboard products?
The demand for cardboard boxes has drastically increased during these extended COVID lockdown. A sudden shortage in supply of cardboard boxes and mixed papers causing an unusual price-hike!
There has been a lot of commentary in the packaging press determining the factors behind this inflation when it comes to cardboard & waste paper prices, here's our insider summary.
The surging demand for paper waste is partly being fuelled by many small traders coming into their own during COVID-19. Many of JPT's smaller customers have seen phenomenal growth over the past 12 months on platforms such as Amazon, Ebay and Etsy.
This growth sector has increased the overall need of cardboard products such as postal tubes, transit packaging cores & boxes.
Some paper manufacturers have not been able to unlock all of their expected tonnages, due to lockdowns, unable to mix shift rotations & carry out large CapEx projects due to the requirement for engineers from around the world.
A Perfect Storm
This extremely tight supply is driven by 3 factors fundamentally:
1: Reduced waste collection from key sources (hospitality etc).
2:Growth of Cardboard packaging from an ecommerce only retail sector due to lockdowns.
3: Long term movement from plastic to cardboard packaging.
A question we get asked often is, will this cycle of short supply and price increase come to an end anytime soon? I just want a stable prices for my cardboard tubes or carpet tubes!
Truthfully no-one has an answer to this question, while part of the economy are in stasis then its hard to see it coming to an end anytime soon. A third wave of infections and slow vaccinations in Europe looks likely to extend the situation for longer than expected. The UK market can't be looked at in isolation as its very much part of Europe's paper market. We expect that once the wider European economy returns to "more like normal" than we should start to move back to a period of supply and price stability. However if you are a buyer of Cardboard Tubes, Label cores or Industrial cores, we expect there to be a few more bumps in the road for the cardboard & paper industry.