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Sappi announces further price increases

Sappi has said it will increase the price of its coated fine papers by "at least 10%" and will stagger increases for its mechanical coated papers across the rest of the year.

The 10% increase will apply to woodfree coated (WFC) sheets and reels for deliveries from 1 June, and is in addition to the rise of 10% for WFC sheets and reels implemented by Sappi last month (8 March).

According to the South African company, input costs have continued to rise because of pulp, chemicals and oil prices going up substantially, which has resulted in the need to put up prices.

A weaker euro has exacerbated the situation, it said, affecting manufacturing and distribution costs and cutting Sappis margins on coated fine papers to "unacceptable levels".

Elsewhere, the company said recent market demand for lightweight coated (LWC) and medium weight coated (MWC) paper grades indicated "a steady recovery leading to improved capacity".

Sappi claimed that current prices for these grades are "at an all time low", having declined "substantially" since the autumn of 2009. The group is in discussions with customers to stagger rises over the remainder of the year.

Marco Eikelenboom, sales and marketing director of graphic papers, Europe, said the price increases resulted from a general rise in input costs. He added: "Although the events in Chile have tightened the pulp market further, it has been the general increased demand for pulp, oil and oil-based products that is causing the current pressure on our margins."

The company has also been hit by the 16-day port workers strike in Finland, which has since been resolved. Eikelenboom said it had caused "a serious disruption of material to and from Finland".

He refused to rule out any further price rises, saying this would depend on the continuing global demand for raw materials and Sappis products.

Follow is the what sappi have siad before with the influence of the earthquake in Chile.

The paper manufacturer said the 8.8-magnitude quake, which struck on 27 February, would hit the global supply of pulp and put additional pressure on the company.

The countrys pulp industry accounts for around 8% of the worlds output, but most mills in Chile are expected to be out of action for "at least one month". The country has also continued to suffer many aftershocks following the initial quake.

Sappi Fine Paper Europe chief executive Berry Wiersum said that, even prior to the earthquake, pulp supply was proving to be a constraint to the industry in Europe, with global prices having increased in excess of 40% since April last year.

"The industry now faces a severe lack of pulp, which Sappi believes will result in increased pressure for steep rises in dollar-based pulp prices, exacerbated for European paper producers by the weakening euro," he added.

The news follows additional announcements in February by european paper manufacturers to put up the cost of paper.

UK merchants then announced in March that they are to pass on the increases and put the price of paper up by between 8-12% as of 6 April. Sappi itself is set to raise the price of its coated fine papers by "at least 10%" in March.

Although demand for European woodfree papers has shown signs of recovery, Sappi said that European selling prices had declined to all-time lows.

"Sappi will insist on the speedy implementation of its recently announced prices for its woodfree papers in Europe," Wiersum said. "We cannot rule out the need for further price

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