What Determines the Price of Paper Products?


Quick Answer

Because paper is made from wood pulp, the price of that raw material will be reflected in the prices charged for paper products, as noted in an article presented through IBISWorld. Some paper product manufacturers will be able to use their high-volume purchasing power to leverage themselves into discounted long-term purchasing arrangements with their wood pulp suppliers. The lack of substitutes for wood pulp as a raw material required by the paper products industry can, however, lessen the industry's bargaining power, and a volatile wood pulp market can still have a considerable effect upon the prices consumers will pay for items made from paper.

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Full Answer

As of 2015, the price of wood pulp has displayed a continuing trend toward increase, and 2011 represented the highest wood pulp prices recorded in a 30-year span. The rising cost of wood pulp has been attributed to a worldwide increase in construction. Consumer spending patterns, however, point to a continued high demand for paper products that will not be significantly lessened by rising prices.

Rising prices for gas and oil have also been blamed for a rise in the cost of paper products. Paper products manufacturer Kimberly-Clark stated that rising production costs are a factor in their price increases, as reported by the Pennsylvania Times Leader. Kimberly-Clark is a major manufacturer of a variety of paper products that include consumer items such as Huggies diapers and Kleenex tissue. As manufacturers raise the wholesale prices of their paper products, retailers are placed in the position of deciding how much of their increased purchase costs are going to be passed on to their customers.

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