Printers are making a stand against crippling rises in the price of paper, reports Bronwen Jones
SOUTH African printers are lobbying government to remove tariffs and curb paper prices that have soared more than 60 percent in the past 12 months and are set to rise much further still.
The Printing Industries Federation (Pifsa) has asked the Board of Trade and Tariffs to abolish all import duties on paper. Sappi and Mondi have until February 6 to make their counter claims. Their document, stuffed full of comparative tables, is just awaiting the chairmen’s signatures. But, with paper slings and ink arrows, each side is confident of success.
Eric Kuhl, Pifsa technical director, says: “Sappi and Mondi have had protection for long enough. They don’t supply all the grades, they’re international players and together only do about a third of their business in South Africa.”
He says it’s obvious why publishers print overseas. There’s no import duty on books. He insists that the paper makers have it made. While they import some of their pulp “it is free of duty”. Mondi admits to importing 25 to 30 percent of the pulp it uses, Sappi somewhat less.
Kuhl insists that paper companies can hide their profits by planting twice as much as they use and transferring profits between their different concerns. “They show a three percent net profit on their statements but in essence it’s totally different.”
While the printers are angry, showing statements with 10 percent price increases every two months, the paper makers are saints-to-be, open palmed and wistful. The middle-men paper merchants seem simply arrogant.
Bert Ibertson, managing director of Sappi Fine Papers, admitted to paper price increases on average of 35 to 40 percent in the past year. He said: “It’s steep but it’s no different to what’s happening elsewhere in the world. The supply and demand fluctuates markedly every three to four years.”
To Ibertson the bete noir is pulp, the raw material for paper. “In 1989 it was US$840 a ton. This fell to $360 at the end of 1993. Now the price for March delivery is
There’s a big debate as to how high the price will go. “Some have forecast that it will go as high as $1 000. Others say it will level off or decline.”
His message is not encouraging. If the printers are complaining now, wait until the end of the year. Costs to the paper industry have risen, with timber prices up 30 percent in the past 12 months, caustic soda cost has doubled,coal has gone up at least 18 percent and imported pulp has risen 100 percent. There will be at least two more increases in South African paper prices this year.
Derrick Minnie, managing director of Mondi, sees the paper industry on its upward curve and he’s determined to recoup losses of earlier years and to get wind back in the sails of expansion.
Nevertheless, Minnie says: “We don’t enjoy putting the prices up in two month cycles.”