Price of paper

In 2025, the cost of paper is expected to rise by 1.7% to a new level of 254.5, driven by several critical industry factors. Central to this increase is the closure of major paper mills in states like Georgia and Louisiana, operated by key players such as Georgia-Pacific and International Paper. These closures are the direct result of financial challenges caused by rising production costs and a demand landscape destabilized by the growth of environmentally safe packaging solutions. This reduction in production capacity is expected to lead to further supply constraints, contributing to the continuation of high input costs. As a consequence, the industry is likely to experience increased pricing pressure. Moreover, a rising emphasis on sustainable packaging has intensified demand for key materials such as molded fiber and virgin pulp, amplifying input costs and stabilizing elevated price levels.

Over the five years leading to 2025, the paper industry has been shaped by several critical factors, resulting in a CAGR of 5.4%. A key driver has been the economic resurgence following the lifting of COVID-19 restrictions, which brought about increased industrial activity and a revival in demand for paper products. This was paralleled by geopolitical factors, notably the conflict in Ukraine, which disrupted global supply chains and significantly increased energy costs, particularly for natural gas, a vital input in paper production. This escalation in energy prices has had a direct impact on production costs, elevating the overall expense of manufacturing paper products. Also, an emerging demand for more sustainable paper products, such as those used in packaging, has also escalated. Products like paper cups and straws, which often use recycled materials, have seen increased demand, with recycled paper pulp becoming a sought-after commodity. However, the price of pulp has risen because of ongoing production challenges and the increased energy costs previously mentioned. As a result, these intertwined elements—rising energy costs, demand for sustainable products and supply chain disruptions—have collectively driven the increase in paper prices, positioning the industry to navigate these complex challenges over the coming years.