Direct Thermal Paper Prices are Going Up. Will Labels Follow?

Last week, Koehler Paper and Hansol Paper, two leading suppliers of direct thermal paper announced price increases of 8 – 12%.  Interestingly, the increases are effective virtually immediately.  February 1st is the date in their letters. Both companies blamed rising pulp prices and rising logistics costs for the increase announcements.  An industry friend, who alerted me to the increases, told me another major direct thermal player started calling big customers last week about its increase announcement. 

Recall in 2018, the world experienced shortages in leuco dye, a major component of direct thermal coatings.  In 2019, capacity came on line and direct thermal prices stabilized and even trended lower, particularly for the receipt paper market.  Maybe I have watched a few too many conspiracy theory shows but it sure seems a little strange for direct thermal paper suppliers to announce price increases in the same week after a stable year of pricing. 

As I’ve written in the past, there has been major consolidation in the paper industry.  If you go back to economics 101, less supply equals higher prices, all other things equal.  If the direct thermal suppliers are successful in raising prices, expect other paper companies to follow suit.  If that is the case, label stock suppliers will most likely announce increases.  Buckle up – it could be a wild 2020!

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