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Axxion Group

Substantial Rise in Paper Prices Announced
An important part of our honeycomb prices are influenced by the cost of raw materials, particularly paper.
From mid 2008 up to the beginning of 2009 we saw that the price of paper fell from an above normal level to an extremely low one.  This was caused by a strong decrease in paper demand from the corrugated industry as a direct result of the credit crisis. The level of around € 230 per tonne is not a profitable level for a paper mill, taking the current waste paper prices into account. The paper industry is now undertaking action to force the prices up to an acceptable level for the paper mills. This action was set in motion during the last weeks of August and should be considered to be very influential. We foresee increases of up to 30% in paper prices in September. The announcement is that the price will increase to around € 310 per tonne.

We don't expect that this will happen completely, however the increases will be substantial.  For the end-price of honeycomb, this could mean an increase of up to 25%. This price correction has nothing to do with normal market effects.  It is financially driven and is forced because of the financial underperformance of the paper mills. We expect therefore that prices will plateau somewhere between € 230 and € 310, most likely closer to the latter. This will be sustained for a longer period until the real economy picks up.
This rise, unfortunately, has an immediate effect and brings us to a situation where we are forced to change our pricing at the same pace.

Wieger Wiegersma
Founder & Business Development

Axxor Holland  
Wieger Wiegersma