As many of you may have noticed, the labeling industry has seen multiple price rises lately, and many people are wondering why.
The answer is quite simple. Pretty much everything that goes into creating labels has seen a massive price increase. While everybody is facing identical problems, there are companies out there that are still working hard to ensure you get the best possible labels for your money. This is, however, a challenge given the current climate.
Today I am going to take you through why these price increases are happening.
Paper Price Increase
The issue of paper price is no secret; the demand for pulp used in creating paper is at an all-time high.
It is a widespread belief that these price increases are a result of the elevated demand for recycled boxes. Chinese paper manufacturers are bulk buying vast amounts of pulp for the production of corrugated boxes, and this is leaving very little pulp available for the labeling industry.
Over the last two years, pulp prices have risen by almost 40%, and this doesn’t show any signs of slowing down.
Another huge factor in the price of the paper increase was down to the number of paper mills that have lost money and closed down. While some of the reasons for this were unavoidable natural disasters, others were closed due to the economy.
The U.S silicone producers are in a desperate struggle to get their hands on the raw materials they need nowadays. This struggle is due to tariffs and demand on the supply that is mainly found in China.
These tariffs have seen the price of silicone almost double. Unfortunately, these tariffs are becoming unavoidable as over 60% over the world’s silicone supply comes from China.
Just like the silicone market, the market for adhesive has also seen a considerable rise in the cost of the raw materials.
The adhesive used for labels and stickers is made from methyl methacrylate and propylene. The price for propylene has rapidly climbed by up to 50%, and methyl methacrylate has risen to 25%.
Unfortunately, in 2017, one of the world’s largest producers of leuco dye was shut down. The factory was shut down due to the Chinese government’s crackdown of environmental regulations.
The factory that was shut down was responsible for more than 50% of the world’s production of leuco dye. Although this was a massive blow to the industry, it wasn’t the last. Over the months that followed the closure of this factory, further facilities were closed down.
The additional closures resulted in 80% of the world leuco dye supply being no more. Leuco dye is one of the essential components in thermal paper. As a result of this enormous shortage, the price has jumped exponentially.
Leuco dye used to sell for $5 per kilo; now, it trades at around $90 per kilo.
Other Material Price Rise
There are, of course, huge price rises at the moment with polystyrene and PET, which are also having a considerable impact on the labeling industry. The price rise is due to the chemicals used in these materials, and it’s at around a 20% rise.
While there are significant price rises out there, there are companies producing quality labels who are striving to deliver the highest quality even with the current challenges in today’s market.