Learn All About Toilet Paper Cost


Toilet Paper Cost Calculator

As we all know, the main raw material for toilet paper production is pulp board, and the price of pulp board directly affects the price of toilet paper.

1. The production of pulp board requires a lot of water, electricity and natural gas, and the energy price directly affects the price of pulp board.

According to the previous report, the Russian Natural Gas Industry Corporation (Gazprom) announced on the 25th that, due to technical reasons, the gas supply of the "Beixi - 1" natural gas pipeline will be reduced to half of the current gas supply from the 27th, that is, 20% of the maximum gas supply. As the largest economy in the EU and the country with the highest dependence on Russian natural gas, Germany is in a particularly difficult situation. According to the German news agency, Germany must save more natural gas than other countries this winter to avoid the huge problems caused by Russia's suspension of natural gas supply to the German economy. The director of the Federal Network Administration of Germany, Miller, and others called for about 20% savings. Only in this way can the worst situation be avoided.

It is worth noting that if this collective rise is triggered by Suzano's warning of supply interruption, the underlying logic should be that the shortage of wood pulp is good for domestic paper enterprises. However, in the past three consecutive quarters, with the strong rise of wood pulp prices, domestic paper enterprises suffered a round of double killing of stock price and performance, which seems to be difficult to establish.

South American Pulp Enterprises Strongly Raise Prices

On May 6, Schalka, CEO of Suzano, the world's largest wood pulp manufacturer, said to the public that the company's wood pulp inventory has been gradually decreasing, the market demand for Suzano has already exceeded the company's capacity, and the supply may be interrupted in the future.

The price adjustment of Asian market in May is still pending. According to public reports, Suzano has recently raised the price of eucalyptus pulp and fluff pulp exported to North America and Europe by about 4%.

Before Suzano, Klabin, Arauco and Bracell, the three pulp enterprises, have taken the lead in announcing that since May, the price of staple fiber pulp exported to China has risen by 30 dollars/ton, or 3.8%.

The industry website TissueOnline pointed out that the global paper industry is still facing difficulties in shipping and unstable supply chains in some regions, which led to a large number of inventory consumption and the outbreak of new orders, aggravating the imbalance between supply and demand. It further said that the smooth implementation of Suzano's price increase in April this year also indicated that the price of wood pulp was still on the upward path, and there was no turning point in the short term.

Since the second half of last year, the domestic paper industry has fallen into the dilemma of high cost and weak demand. Paper enterprises generally hope that the price of wood pulp will fall back to the historical normal range.

From the current domestic demand side, maintaining a high price of wood pulp or further rising will do more harm than good to the performance of paper enterprises. From the perspective of wood pulp price, the price of imported wood pulp rebounded from the bottom in the fourth quarter of 2021 and has remained at a high level so far. With this round of strong rise, major paper enterprises have experienced a round of double killing of stock price and performance.

2. However, this shortage may also be related to the way the company produces paper towels. Lean Manufacturing is the culprit for this shortage. The number of products produced by enterprises is only about equal to the number they think customers will buy in a certain day.

Although it is not as difficult to buy toilet paper as it was when the COVID-19 epidemic first hit the United States, it is still not easy to buy them at a normal price.

In Amazon, Costco and local stores, paper towels have been out of stock. When goods are available, customers may not be able to buy the brand they want.

Part of the reason for the shortage of toilet paper is that people have been hoarding it. Procter&Gamble reported that the sales of "Bounty Paper Towels" in July showed a large-scale growth, and customers swept them away from the store shelves.

But this shortage may also be related to the way the company produces paper towels. Lean Manufacturing is the culprit for this shortage. The number of products produced by enterprises is only about equal to the number they think customers will buy in a certain day. Last month, the Wall Street Journal published an article entitled Why Paper Towels Are Still Not Enough. It said that paper towel manufacturers operate and build to minimize costs, which is also the main reason for the shortage.

Lean production is not unique to the tissue industry. In the past few decades, it has prevailed in automobile manufacturing, fast fashion clothing manufacturing and many other industries. But when a product is sold out quickly, there will be a shortage. The tissue manufacturers were unprepared because their business was not based on the sales model under the epidemic.

However, according to the Lean Enterprise Institute, a business strategy think tank, lean production is not the culprit. The organization pointed out that even if enterprises had 99% of the raw materials needed for production, they could not successfully produce paper towels. As the supply chain was frozen during the epidemic, tissue enterprises could not obtain enough production materials, so they could not increase production.

Paper towels are classified as functional supply chain products, which means that they are basic necessities for most families. The Lean Enterprise Research Institute points out that when demand fluctuates dramatically, as happened during the epidemic, no matter what warehouse management system is used, enterprises often do not have enough commodity inventory and manufacturing capacity to meet demand.

When consumers are lucky enough to find paper towels, their prices are usually higher than normal. Throughout the epidemic, Amazon has been accused of price fraud. Since the beginning of March, Amazon has been criticized for price monopoly or publishing false novel coronavirus advertisements, and the company has deleted 1 million products from its website.

3. UPM Biomore is one of the largest paper manufacturers in the world. Since January 1, 2022, their Finnish factory has been on strike due to wages and working conditions, and will continue until April 2022.

This year, there is no production of raw materials, which has had a huge impact on the paper supply throughout Europe.

Russia is an important source of wood in the world. Since the invasion of Ukraine, this trade has been completely blocked. Russian timber has also lost global certification. This means that European pulp producers, especially 2 billion tons of goods are transported by sea every year. The interruption caused by the pandemic, blockade and border closure means the interruption of the shipping cycle.

This resulted in containers being left at the wrong location, congested ports, and longer loading and unloading times. In turn, the reduction of transportation capacity leads to the increase of transportation costs. The global container transport cost rose from about 2000 pounds to more than 10000 pounds, which affected the paper price.

With the rapid rise of energy prices in Europe, paper manufacturers began to pass on the sharp rise in prices to wholesalers and consumers. There is no upper limit on energy prices for companies and consumers, so some companies doubled their energy bills!

The stock of pulp has been gradually declining until it reaches the breaking point, namely the shortage of pulp. This has happened this year.

Russia is a big pulp producer. The Russian pulp producer was unable to continue to operate without some raw materials, and a large company was forced to temporarily suspend its activities. But the Russian Ukrainian war has disrupted most of Russia's foreign trade this year. Therefore, 1/3 of the pulp is destroyed, and the shortage of pulp is a sharp problem.

2022 is a wild year. In 2022, there will be a serious shortage of organizations. It seems that everyone needs so many organizations. This is not even because of supply chain problems or paper shortages. We are just blowing our noses.

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