Sept 29, 2017 (PPI Pulp & Paper Week) – The one-million-ton global thermal paper market was jolted this week when the largest supplier of leuco dye shut down in China for a minimum of three months. Hmm.. three months. Doesn’t that put us into the Chinese New Year? Folks, we’re in for a strange and stressful holiday season and beyond.
The Connect Chemicals plant shut for environmental reasons and because of the government of China’s anti-pollution crackdown on industry. Contacts said Connect Chemicals makes about 35% to 40% of global dye demand for thermal coaters.
One US contact called the shut “bad timing” on the verge of the busiest retail shopping period. Did they really call this “bad timing”? The company produces 35%-40% of the Global Dye demand for thermal coaters. I’ll just call some of the global retail category leaders, inform them of the “Bad Timing”, apologize for double digit price increases, or where tight contracts exist, plead for relief. That should go over well…. especially when if being totally honest, I admit that I have no control, nor idea, if in fact we will even have paper, at any price. Contacts expect coaters to shut if they run out of leuco dye and for coated thermal products to increase in price, as POS receipt paper demand seasonally picks up during the holiday season. Already, there were reports of converters paying higher pricing this week in the USA (LOL), on top of a price increase in July and August. Leuco dye is a main ingredient in coating for thermal and carbonless paper, and for barrier coating for packaging grades, contacts said.
“Thermal paper pricing should shoot up for a short period,” said a market contact. You can’t make this stuff up. The mills and apparently the chemical companies really do say things like this.
US thermal POS receipt paper producers, before the Connect Chemicals shut, already are again moving on a second paper price increase for converters on non-top coated POS paper rolls.
Several contacts said at least one coater run by South Korea’s Hansol had been shut because of the Connect Chemicals plant downtime. Other companies affected include Oji of Japan, Koehler of Germany, and the US’s Appvion, which are the three largest coated thermal paper producers in the world. Oji of Japan may be a meaningful global player but in the USA, the Oji owned, Kanzaki USA is certainly not at all interested in economy POS grades used at retail, nor do they have the capacity to start. You have the bankrupt Appvion and Koehler. Hansol is or will be out of thermal paper. Appvion, now in Chapter 11, has reduced capacity and likely thanking their higher power for this perfect storm, inflating prices at a pace never seen before. Koehler, the price leader in this oligopoly, simply can’t produce enough.
Connect Chemical calls itself the world’s largest producer of color former products including sensitizers and developments for thermal paper. In 2014, Connect Chemical opened a new plant for making the dye in Penglai, northern China.
I have listed several links below if you want to see some eye opening specifics on what Connect Chemical specifically produces for thermal and carbonless paper coaters under Leuco Dye.
Start by clicking the link, go to page 2 and click on each chemical, working your way backwards through page 1.