My supplier tells me the cost of paper is going up; what should I do?

December 22nd, 2010

How often do buyers hear this from suppliers as we come to the end of a quarter or the end of the business year?

The question this begs, is the statement true? The answer is more complicated than just saying the cost of pulp is going up or down because there area variety of pulps and the same pulp is not used for making copy or print quality paper as is made for making paper grocery bags or paper wraps. The type of pulp used for making copy or print quality paper is hardwood pulp. Hardwood fibers are suited for producing smooth papers for printing and writing. They also can achieve good stiffness and bulking ability, but this depends on the tree species and refining conditions.

The trick with the above scenario is that depending on the tracts lumber companies are harvesting there may or may not be a robust availability or supply of hardwood pulp at any given time. And as such we enter the entire supply versus demand equation.

So is it possible to conduct your own research to qualify the statements of your supplier? It is depending on how far you want to go in doing what commodity traders do every day of the week in order to time their investment with market movement.

CME Group is a good site that would allow you to follow futures on a variety of products. The following link will take you to the hardwood pulp futures market which at the moment is trending down.

Let information be your friend, and if you don’t have time call your e-procurement solutions provider.

We look forward to and appreciate your comments.

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