Growing demand for wood pulp, driven by rising construction activity and consumer spending, are forecast to allow suppliers to increase prices
Los Angeles, CA (PRWEB) October 12, 2014
Buyers in the wood pulp market have a buyer power score of 3.5 out of 5.0, indicating a medium level of purchasing power in the negotiation process. Buyers have benefited from declining prices and low switching costs, which have enabled them to cut more costs over the past three years. However, buyer power is limited by the low level of substitutes in the market. “While there are alternative materials available, they can be costly and alter the fundamental structure of end-products,” according to IBISWorld business research analyst, Jesse Chiang.
Recent price trends and low switching costs have strongly benefited buyers. In the three years to 2014, the price of wood pulp is anticipated to decrease due to declining demand for the product from key markets. Paper providers, in particular, have struggled in recent years as the demand for newspaper, magazine and other publishing markets has diminished. Demand for wood pulp has, consequently, declined in the three years to 2014, forcing suppliers to decrease prices to attract potential consumers. Buyers also benefit from low switching costs due to the commoditization of wood pulp products, which vary minimally in terms of quality and functionality between suppliers. Buyers can use low switching costs as leverage in negotiations with suppliers and, if their supplier is unwilling to negotiate, find a new supplier with little difficulty.
Buyer power is limited by the low level of substitutes and moderate market share concentration. There are a number of substitutes to wood pulp, such as waste paper or inorganic fibers, but each of these alternatives will alter certain qualities of the end-product. “Buyers must consider the effects these alternatives may have on smoothness, consistency and other factors because they could affect the marketability or usability of their end-product,” says Chiang. Buyers should also be aware of the higher costs that these substitutes generally come with. The low viability of substitutes in the market means that buyers have few realistic alternatives to wood pulp to use as leverage in negotiations; buyer power is, consequently, lowered. Major vendors include International Paper Company, Weyerhaeuser Company and Georgia-Pacific Corporation. 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 sourced from wood and the remaining 10.0% 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
About IBISWorld Inc.
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.