Rising input costs during the next three years will lead to a continued price increase for wood pulp
Los Angeles, CA (PRWEB) March 20, 2014
Buyers in the wood pulp market have a medium level of purchasing power in the negotiation process, indicated by a buyer power score of 3.0 on a scale of 1 to 5, with scores closer to 5 reflecting a higher buyer power. Large integrated suppliers with high profit margins have aided buyer negotiating power. “In addition, the commoditized nature of the product contributes to low levels of product specialization and minimal differentiation between different wood pulp suppliers' products,” says IBISWorld procurement analyst Hayk Muradyan. “The wide network of regional and national distributors has also benefited buyers, making it relatively easy to switch suppliers.”
However, moderate market share concentration among suppliers has limited buyer power. Some of the largest suppliers in the market include Weyerhaeuser Corporation, International Paper Company and Domtar Corporation. The largest suppliers have a significant market share and a large national presence that has resulted in relatively lower price-based competition. “Buyers with significant wood pulp requirements may not be able to deal with smaller companies due to inadequate supplies,” adds Muradyan.
Price growth and significant driver volatility during the three years to 2013 have negatively affected buyers. However, despite increasing lumber and resin costs, price growth has been limited as suppliers have cut down on operations and limited supplies to counteract falling downstream demand. In addition, suppliers have increasingly attempted to mitigate input price growth by investing in more cost-effective production processes to increase labor productivity and cut down on costs.
Although small average price increases are expected during the next three years, the price growth rate of wood pulp will be minimal. Buyers should expect lower volatility during the next three years due to a more stable economic environment and smaller fluctuations in downstream demand. Buyers can respond to future price increases by seeking to arrange long term contractual arrangements at current prices. In addition, with the large number of suppliers offering this commoditized product, buyers can obtain favorable agreements through bulk purchases of wood pulp at lower per unit costs. For more information, visit IBISWorld’s Wood Pulp procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to help buyers of wood pulp. Wood pulp is made by separating the cellulose fibers from impurities in wood or other materials, such as used or recycled rags, linters, scrap paper and straw. About 90.0% of pulp production is based off of wood, and the remaining 10.0% is sourced from annual plants. This report does not include pulp produced from waste paper or other scrap products.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.