The prices of toilet paper started to rise again, and the collapse of the real estate market in the United States is to blame, according to Bloomberg, taken by Agerpres.

Problems in the US real estate market have triggered a crisis in the timber sector, where futures quotes have fallen by more than 60% over the past 12 months.

Therefore, sawmills stopped their activity. In Canada, the world’s largest producer of lumber, about a third of sawmills have closed in the province of British Columbia.

What a connection

This reduction in sawmill capacity has shaken the global paper supply chain, which depends on sawmill byproducts.

The world is now facing a crisis in pulp, the raw material for products such as toilet paper.

Pulp costs have risen, and toilet paper makers such as Kimberly-Clark Corp. have in turn raised prices to boost their margins.

According to research firm NielsenIQ, retail prices for toilet paper in the U.S. rose by about 20% between July 2021 and the end of 2022.

The story of toilet paper shows how difficult it is for global supply chains to recover from the shocks that have rocked commodity markets in recent years.

Increased volatility, logistical challenges caused by the pandemic, and the fallout from Russia’s invasion of Ukraine have caused significant price fluctuations and commodity supply issues. This explains why supply-side inflation is difficult to control.

Pulp producers have raised prices

In the case of lumber, the market began to decline after exploding to an all-time high in 2021. The decline has prompted producers such as West Fraser Timber Co. and Canfor Corp. reduce and even cease operations in the Canadian province of British Columbia.

This region produces premium pulp that is used to produce high-quality toilet paper. Canada is responsible for half of the world’s premium pulp production.

Brazilian pulp producer Klabin SA confirmed on Thursday that pulp producers worldwide raised prices by $30 a tonne amid market turmoil from $940 to $970 a tonne.

Consumers are trying to cope with higher toilet paper prices by switching to cheaper brands, buying smaller packages or simply reducing the amount they use.

For example, retail sales of Kimberly-Clark toilet paper fell 2.9% in November-January after the company raised prices by 9.7%. Competitor Georgia-Pacific LLC suffered a similar decline.

The market seems to balance the situation

The good news for consumers is that there are favorable signs on the horizon. Sawmill closures in Canada have put pressure on the pulp market for now, but ultimately the impact on prices will be balanced by lower consumption and new supplies from northern Europe, says Kevin Mason of ERA Forest Products Research.

By the end of this year, pulp producers in Sweden and Finland will add new production capacity equivalent to one million tonnes per year, according to Patrick Kavanagh, chief economist at Fastmarkets.

This will fully offset the losses in Canada, even if Canadian sawmill closures continue this year.

“The question now is whether there will be a period of difficult market conditions until the new capacity comes on line,” Kavanagh says.

(article photo: © Chonticha Wat | Dreamstime.com)