The abrupt closure of Connect Chemical and other leuco dye suppliers has left several of the 7 direct thermal coaters scrambling to meet thermal paper demand. Those that were most heavily impacted were the coaters located closest to Connect Chemical. In an attempt to stay lean, these coaters were practicing just in time (JIT) inventory.
Rumors have it that South Korea based conglomerate, Hansol Papers — one of the world’s top 7 paper coaters — allegedly had only a 2 week supply of leuco dye when the closure of Connect Chemical was announced. Additionally, the global shortage of leuco dye, and consequently thermal paper, has stopped several international paper coaters from taking on any new US customers.
Other thermal paper producers, such as Mitsubishi have sent letters to their customers describing how dire the situation just might become:
“The possibility cannot be ruled out that due to this situation there may also be a production shortage or stop as of January 2018”
These price increases have already begun to reverberate through the thermal label supply chain. Industry titan, Avery Dennison, has let its suppliers and customers know that a 4-6% price increase is expected to take effect in 2018. Additionally, several of the largest label laminators in the United States have announced price increases. For example, UPM Raflatac, one of the largest laminators in the US, messaged their customers with the following statement:
“The magnitude of the increase leaves us with no option but to pass on a price increase of 6-8% on all film and paper pressure sensitive laminate products…”
Price increases throughout the supply chain will have other converters, wholesalers, dealers, and end users looking at price increase in the very near future.