Why Promises of Core Price Stability Do Not Reflect Market Reality
This is a longer piece than we would normally publish. We make no apology for that: the case for further price movement rests on the detail, and we would rather set it out than ask you to take our word for it.
At Just Paper Tubes, we do not believe it is credible to suggest that cardboard tube and paper core prices can now be held with confidence for the foreseeable future, or that the latest round of coreboard increases has settled the market.
That is not an accusation that the recently announced increases are unjustified. Quite the opposite. Our concern is that increases decided towards the end of August were based on an energy and supply position that has already deteriorated materially.
On 25 August, a major EMEA producer announced a €/£60-per-tonne increase for uncoated recycled paperboard, effective from 15 September. At that point, UK and European gas prices were already high and suppliers were warning about energy, fuel and transport costs.
Since then, however, European gas, UK winter gas, UK winter electricity and Brent crude have all risen by approximately 16–19%. Saudi Arabia’s principal route for bypassing the Strait of Hormuz has been shut following drone attacks, the Red Sea outlet has become less secure, and Washington has declined direct military intervention against the Houthis for now.
In our view, the market has moved beyond the assumptions on which the late-August increases were made.
This is not an announcement of a further JPT price increase. It is an explanation of why we believe further movements in coreboard and cardboard tube prices are now more likely than a prolonged period of stability.
We adjusted our own prices from 1 October to reflect the mill increases confirmed at the end of August, and we are not suggesting that anyone who has chosen to hold is wrong to do so. Our point is about the market, not about any individual decision within it.
The market used to set August’s increases no longer exists
The clearest way to see the change is to compare wholesale prices around 24–25 August—when the latest public paperboard increases were being announced—with settled prices on 15 September.
Market | 24–25 August 2026 | 15 September 2026 | Movement |
European TTF gas, day-ahead | €68.19/MWh | €81.18/MWh | +19.0% |
UK NBP gas, day-ahead | 166.15p/therm | 197.50p/therm | +18.9% |
UK NBP gas, Winter-26 | 169.76p/therm | 201.53p/therm | +18.7% |
UK electricity, Winter-26 | £138.50/MWh | £161.05/MWh | +16.3% |
Brent crude | $92.17/barrel | $108.75/barrel | +18.0% |
Sources: 25 August UK energy market report, 16 September UK energy market report and European TTF market update for 25 August.
These are not marginal changes. Nor are they limited to volatile day-ahead prices. The Winter-26 gas and power contracts—the prices most relevant to businesses securing energy for the coming heating season—have moved sharply as well.
Paper mills do not necessarily buy all their energy at spot prices. Many hedge part of their requirements, so an 18% rise in wholesale gas does not translate immediately or pound-for-pound into an 18% increase in paperboard costs.
But hedges expire, contracts are renewed and forward prices influence the cost of replacing them. A sustained rise across both prompt and winter contracts cannot simply be ignored.
Why higher gas and power prices matter to coreboard
Coreboard is predominantly manufactured from recovered paper, but recycled does not mean energy-free.
Recovered fibre must be collected, sorted, processed, baled and transported. At the mill it is repulped, cleaned, formed and pressed. The resulting sheet still contains a large amount of water, which must be removed through an energy-intensive drying process before the board can be wound into reels and transported to cardboard tube manufacturers.
Gas, electricity and fuel therefore enter the coreboard cost base repeatedly:
diesel used to collect and move recovered paper;
electricity and heat used to repulp, clean, press and dry the board;
energy used in chemicals and other mill inputs;
fuel used to transport finished reels; and
the mill’s wider labour, finance and maintenance costs.
This is why the latest movement in gas, power and refined fuels matters more to coreboard than a general headline inflation figure.
The Saudi East–West Pipeline was the safety valve
The most significant change since late August is not simply that oil has moved from approximately $92 to almost $109 per barrel. It is the deterioration in the physical routes used to move Middle Eastern energy.
Saudi Arabia’s East–West Pipeline, also known as Petroline, runs approximately 1,200 kilometres from the kingdom’s eastern oil-producing region to the Red Sea port of Yanbu. It has capacity of up to around 7 million barrels per day and had reportedly carrying up to around 5 million barrels per day before its closure.
Its strategic importance is straightforward: it allows Saudi crude to bypass the Strait of Hormuz.
That bypass became increasingly important as flows through Hormuz were severely constrained by the conflict involving Iran. The market’s assumption was that Saudi Arabia could redirect substantial volumes westwards and export them through the Red Sea.
Drone attacks on pumping infrastructure on 10–11 September forced Saudi Arabia to shut the pipeline. Repair estimates vary, with no confirmation yet from Aramco, but reports point to an interruption measured in weeks rather than days.
The route’s western outlet has also become less secure. Houthi advances and the seizure of the strategically located Perim, or Mayun, Island have increased the threat to shipping through the Bab el-Mandeb Strait at the entrance to the Red Sea.
The result is a much more serious problem than a single damaged pipeline. The route designed to bypass the risk in the Strait of Hormuz now faces infrastructure risk across Saudi Arabia and shipping risk at the Red Sea end.
That removes resilience from an oil market that had already lost much of its spare flexibility.
The United States has offered intelligence—not direct intervention
It is important to describe the US position accurately. America has not abandoned Saudi Arabia or withdrawn all assistance.
However, Reuters reported that Crown Prince Mohammed bin Salman asked President Trump for direct military help against the Houthis. Washington declined direct military action for the time being and instead offered intelligence sharing and targeting assistance.
That distinction matters to energy markets.
Intelligence support may help Saudi forces respond, but it is not the immediate American military backstop that some traders may previously have assumed would be available if a major Gulf export route came under sustained attack.
In our reading, the market can no longer assume that the threat will be removed quickly through direct US intervention.
The kingdom's Gulf partners are not a united bloc, and the strains are current rather than historical. Riyadh and Abu Dhabi, once the closest of allies, have been in open dispute since last December, when Saudi aircraft bombed the Yemeni port of Mukalla to destroy what Riyadh said was an Emirati weapons shipment to southern separatists; the UAE withdrew its forces from Yemen in response, and the two have since found themselves on opposing sides in Sudan and the Horn of Africa as well.
Qatar, blockaded by its neighbours until 2021, sent its prime minister to Tehran only last month and keeps a channel to Iran that Riyadh does not.
Oman has spent the war as intermediary rather than combatant, negotiating a bilateral corridor arrangement with Tehran that Washington has at times threatened to punish.
Kuwait, with no overland export route of its own, depends on that corridor more than anyone, even while accusing Iran of striking its territory. And Bahrain, which cut ties with Iran in 2016 alongside Saudi Arabia and, unlike Riyadh, has never restored them, refused outright to attend the Iranian-convened Gulf talks Oman was due to host in Salalah on 15 September; the meeting was postponed indefinitely the night before, for want of consensus.
Six states, at least four positions, and no agreed stance. A longer, self-managed security operation may prove harder to sustain than the market has assumed.
That increases the risk premium attached to oil, LNG, shipping and insurance—even if no further infrastructure is damaged.
Additional US oil cannot simply replace the loss
It is also too simplistic to say that higher American production can replace any missing Middle Eastern supply.
The International Energy Agency’s September Oil Market Report estimates that global oil production fell by 1.6 million barrels per day in August and is set to decline by 5.7 million barrels per day over 2026. Expected growth from the Americas is much smaller than the overall loss.
More importantly for manufacturers and hauliers, the tightest part of the market is not only crude oil. It is diesel and other middle distillates.
The IEA reported that:
global refinery throughput remained 4.2 million barrels per day below the previous year;
Gulf oil exports in August were approximately half their pre-war level;
Gulf and Russian diesel and gasoil exports were around 1.6 million barrels per day below February levels; and
global observed oil inventories had fallen by 507 million barrels since February.
US shale production is useful, but much of it is relatively light crude. It is not a perfect substitute for the medium and heavier grades traditionally processed into a larger proportion of diesel and jet fuel. Refinery configuration, available capacity and the location of the crude all matter.
For the paper industry, it is the delivered cost of gas, power and diesel—not simply the headline number of barrels produced—that ultimately enters the cost base.
Today’s inflation figures show the pressure reaching industry
The latest UK inflation data, published on 16 September, provide further evidence that the energy shock is passing through.
UK CPI inflation rose from 2.9% to 3.1% in August. Core inflation remained unchanged at 2.6%, so this was not yet a general acceleration across every part of the economy. The main upward contribution came from transport, particularly motor fuels.
The average petrol price rose by 9.1p per litre during August, while diesel increased by 14.2p per litre. Motor-fuel prices were 23% higher than a year earlier.
The producer-price figures are even more relevant to manufacturing:
manufacturers’ input prices rose by 6.1% over the year;
imported material and fuel prices rose by 6.5%;
factory-gate prices rose by 3.7%; and
UK output prices for coke and refined-petroleum products were 49.1% higher than a year earlier.
The Federal Reserve and Bank of England cannot create energy supply
The problem is now influencing monetary policy as well as commodity markets.
US consumer inflation remains at 3.4%, while US producer prices are 5.4% higher than a year ago. Before the Federal Reserve’s 16 September decision, interest-rate markets were assigning a very high probability to a further rate increase. At the Fed’s previous meeting, three policymakers had already voted to raise rates.
The Bank of England is due to announce its latest decision on 17 September. At its July meeting, three of the nine Monetary Policy Committee members also voted to increase Bank Rate from 3.75% to 4%.
Central banks can suppress demand and try to prevent higher energy prices becoming embedded in wages and wider price-setting. They cannot reopen an oil pipeline, secure a shipping lane or manufacture additional LNG.
Higher interest rates may therefore sit alongside higher energy prices, increasing the financing and working-capital costs faced by mills and manufacturers without resolving the original supply problem.
Why promises of price stability are not credible yet
Any individual manufacturer can choose to absorb a cost increase temporarily. That is a commercial decision, and it may be possible for a limited period.
It is not the same as the underlying market being stable.
We do not believe it is credible to treat the late-August coreboard increase as a final adjustment when the principal energy inputs have risen by a further 16–19%, a major Saudi export route is closed, risk has increased around Bab el-Mandeb, global diesel supply remains exceptionally tight and there is no clear route to a rapid political or military resolution.
Nor do we believe customers are helped by reassuring promises that may need to be withdrawn only a few weeks later.
Energy markets can reverse quickly. A durable ceasefire, a successful pipeline repair, safer shipping routes or stronger-than-expected supply could reduce prices. We are not saying that further increases are guaranteed.
We are saying that, on the evidence available today, the balance of risk remains weighted towards further coreboard price action rather than meaningful reductions or prolonged stability.
What this means for JPT customers
Our approach is to monitor the underlying markets, challenge supplier increases where the evidence does not support them, and avoid making promises that the facts cannot justify.
That applies across everything we make.
Whether you buy carpet tubes, label cores, high-performance film cores or general-purpose cardboard tubes and paper cores, the board that goes into them comes from the same European mills and the same energy-exposed supply chain. A change in coreboard pricing does not stay in one product category; it reaches every core we produce.
If the present gas, power, oil and diesel levels persist, we expect paperboard producers to review their position again. Any further supplier movement would then be assessed against our actual material costs, our energy position and our ability to absorb it, before anything reaches our customers.
Harry Coates, Managing Director of Just Paper Tubes, put it this way:
"I know some in the market are choosing to hold prices for now, and I understand why — nobody enjoys sending or receiving these letters. But holding a price is not the same as the market being stable, and most of those holding are candid enough to say a further increase is probably coming."
" I would rather not put our customers in the position of planning around a number that both of us suspect won't last. What I can offer is an honest reading of the market, prices held for as long as the numbers allow, and proper notice either way. People can plan around that."
Our commitment is straightforward: we will remain competitive on carpet tubes, paper cores and cardboard tubes of every specification, communicate openly, and provide early visibility whenever the market changes.
For current cardboard tube and paper core requirements, or to discuss the effect of changing coreboard prices on your label cores, film cores or carpet tubes, please contact the JPT team.
And... If you got to the end... Well Done!
