The following information provides an update on the previous market update provided and illustrates further the requirement for a price increase.

Raw Materials:

Pure Cell and Recycled Paper

Both Pure Pulp Cellulose material and Recycled material continue to rise with the availability of Recycled material severely impacting the price.

As a result, some manufacturers who specialise in recycled material have stopped producing products in this range as they simply cannot get the material.

Further impacts on the pricing and availability:

• Paper mills remain at capacity for most product lines, and some are not willing to take on new customers.
• Demands for paper products remain high.
• Pricing is no longer fixed and only provided on order-by-order basis due to the volatility being encountered.
• Certain paper mills across Europe have suspended production due to the high cost of energy and the uncertainty of pulp supply will have further consequences on available capacity.

HDPE and LDPE

HDPE Film (high-density polyethylene) has increased from Mar22 by 13.7%.

LDPE Film (low-density polyethylene) has increased from Mar22 by 15.6% and futures into Q3 and Q4 this year are showing further increases.

Chemicals

Raw materials over the past couple of months have increased significantly due to concerns within the global market around supply chain, demand and availability.  If I look at just a couple of the chemicals as follows:

Indonesia, who is the largest exporter of palm oil and accounts for 60% of global palm oil production has issued an export ban so that the product can be used domestically in place of cooking oil.  Palm oil is used in detergent products.  This has seen a spike to 7,081 MYR/T from March when it was 5,434 MYR/T – an increase of 30.3%.  in Jan22, this was 4,324 MYR/T so this equates to an increase of 63.7%. This has had a commensurate impact on the availability and price of sustainable alternatives to palm oil such as rapeseed oil, coconut oil and sunflower oil.

Soda Ash – known as Sodium Carbonate is traded on the European and Asian markets and is the main component from whereby the raw materials for Sodium are obtained.  If we look at the Asian markets:

Mar22: 2,281 CNY/Tonne

Jun22: 2,860 CNY/Tonne – therefore an increase of 25.4%.

Fuel

The impact of the fuel increase is well known.

The following table has been updated to highlight the current market pricing.

 

Brent Crude ($ per barrel)
Mar-21	$62.74
Jan-22	$89.16	42.0%
Feb-22	$97.97	56.0%
Mar-22	$106.90	70.0%
Jun-22	$120.28	91.7%
Source - ICE Futures, Brent Crude Oil Continuous Contract

 

Whilst the Jun22 price shows a 91.7% increase when compared to Mar21, its is a 12.5% increase when compared to Mar-22.

Summary

Whilst the above information does not show a positive trend, it is important to highlight what we have done as a company to protect our customers from larger cost increases:

Cost Avoidance

We are not a business that simply accepts price increases.  We have taken steps to try and minimise cost reductions by undertaking the following:

• Supply – we have access to a number of suppliers of many of our product lines, so we are not reliant on one supplier who dictates the price. We also have a supply across different geographical segments thus allowing us access mitigate some of the increases.
• Stock Holding – we have invested in a large amount of stock-holding so as to ensure that we can provide stable pricing to customers for as long as possible.
• Forward buying – we work with manufacturers who forward buy on the electricity and gas markets to reduce the impact and provide a level of stability on the cost of the product. Unfortunately, not everything can be covered with a forward contract.
• Currency – hedging is also done on the currency markets to try and reduce the impact of currency. For example, the GBPUSD saw a drop from $1.30 to $1.23 in the past month – this itself increases the cost by over 5% and parts of this element has been hedged against by us as a business.  However, the same may not be said against some manufacturers and suppliers and therefore parts of the increase are also attributed to this.

Whilst the news of a price increase is not welcome, I hope the above shows why there is a need for it at this current time.  As always, I thank you for your continued business.