Consumers will feel the pinch if costs continue to rise
IN THE past year, paper prices have gone up by more than 40 per cent, according to Industry sources. For some types of paper, costs have even doubled.
But consumers have not been feeling the full impact of the increases because the costs are being absorbed partially by some printers, publishers and makers of paper products, a check by Life! showed.
Yet, if prices continue to go up — and they are likely to this year and possibly next, according to industry sources — it is inevitable that a larger proportion of the increases will be passed on to the consumer, say several makers of paper products.
The market situation has arisen because of a worldwide surge in demand for paper due to the economic recovery in a number of Western countries last year and the booming economies in the Asia-Pacific region, ~ay industry sources.
At the same time, supply of pulp, the main raw material in the production of paper, is extremely tight. As a result, there is not enough paper to meet world demand.
Mr Eric Tan, product group marketing manager of Shriro Pacific Paper (Singapore) and secretary of Singapore Paper Merchants Association (SPMA), said: "We are having problems buying enough paper to sell because most of the mills have already sold out for the whole of 1995. Customers can only buy ac-cording to what they have been allocated."
This has caused prices to edge up continually, giving printers headaches when quoting for jobs.
Mr David Gob, executive director of Master Printers’ Association, which represents printers here, said:
"Printers can no longer give quotations that are valid from three to six months. Now, they need to know when you want the job done first."
A spokesman for Times Printers said: "Because of the extent of the price rise, more than 100 per cent in some cases, some of the increase has to be borne by the customer."
Customers include a number of leading domestic and regional magazines. However, most of the latter have not raised their cover prices.
"Magazines in general have coped by increasing the amount of advertising in ~ editorial," said Mr Ronnie Poon, production manager at Singapore Press Holdings.
Two book distributors here said they also had not seen unusual increases in book prices.
"We haven’t been affected much," said Mrs Aileen Chai, assistant vice-president, STP distributors. "A few publishers have raise prices, but I don’t know if it’s because of paper costs.
Mr Eddy Teo, manager (books division) of distributors, said that cost of paper was just part of the total books which included item like authors’ royalties promotional expenses.
Home-grown publisher EPB has not raised pr of its textbooks this year "As most of our books co-published with the (Curriculum Development Institute of Singapore, we cannot raise prices unilaterally," said production manager Steven Lee;
"But even for other books, like assessment books and general titles, we cannot increase prices too. much because it will make -them uncompetitive in the market."
Market forces appear to be conspiring to keep prices low — makers of paper products would rather live with lower margins than fully pass on rising paper~’ costs to consumers. But the burden may be getting ~ heavy to bear.
Lecture-pad maker A’zone has yet to increase prices but it intends to soon. "We have been reaping economies of scale from our expanded production. capacity, so we have been, able to absorb the cost increases so far," said managing director Bernie Lee.
"But there has been a 100 per cent increase in paper costs, so we have to increase prices. However, we will do so gradually so as not to cause hardship to our student customers."
What will happen if paper prices continue moving~ up inexorably?
SPMA’s Mr Tan said, people may switch to CDROMs and computer diskettes. "The technology is there but the cost is currently too high. But if paper prices keep going up, companies may be forced to look for cheaper substitutes, like what happened when oil prices shot up in the ‘70s."
Source : The Straits Times 16th Mar 2000
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