Toilet paper is going to get costlier. Blame Russia



Add toilet paper to the list of products facing higher costs and fragile supply chains in the wake of Russia’s invasion of Ukraine.
A ban on Russian birch exports, whose wood consists of the short fibers that make sanitary products softer, has touched off a scramble for pulp, paper’s primary ingredient. The cascading effects are rippling around the globe in the form of slimmer, more expensive rolls of toilet paper.
It’s the latest crisis to hit the supply of toilet paper, a frequent victim in the various supply chain snarls that have afflicted commodities markets since the start of the pandemic. The shortage of 2020, in which panicked consumers facing unprecedented lockdowns made a run for toilet paper and other household goods, was an early warning sign of the large-scale disruptions the economy was about to face. Subsequent logjams of container ships in ports further disrupted global flows of paper-making wood fibers.

Russia prohibited the export of birch wood in March in retaliation to sanctions imposed by the US and the European Union following Putin’s incursion into Ukraine. Consequently, about 800,000 to 1.2 million metric tons of pulp is expected to disappear from the market, according to industry estimates. Pulp prices have already risen around 45% this year as the cost for the energy-intensive process of churning wood chips into cellulosic mash has soared. Now, as Europe’s biggest producers start to feel a pinch in supplies, paper producers are having to compete further afield to secure their raw material.
“There is no relief from abroad for wood needs,” said Paula Horne, research director at Helsinki-based PTT Research Institute. Finland is Europe’s second-largest producer of pulp behind Sweden, according to data by Eurostat. The two are key producers of the type of pulp that goes into sanitary products like toilet paper or tissues. About 10% of Finland’s wood supply used to come from Russia. Other trees in the Northern Hemisphere are more suited to producing paper that resists tearing, like the type used in corrugated boxes.
Exacerbating the lack of Russian wood, several unplanned mill outages are also limiting global pulp supply. Earlier this year, a workers strike in Finland hit production for over three months. Dryness in Spain led producer Ence Energia Y Celulosa SA to shut its Pontevedra mill from July. Brazil’s Suzano Corp. is stopping one pulp line at its Aracruz mill for almost 60 days for an upgrade in the fourth quarter. The market has lost more than 1.4 million tons of pulp this year through September.
The pulp market should remain tight until the second half of 2023, said Santander research analyst Rafael Barcellos. Barcellos expects prices to come down gradually only after mills that are currently in construction in Chile and Uruguay start shipping their product next year.
Pulp customers in Europe are concerned and looking for supplies in other parts of the world. “Buyers are over-demanding from us,” said Leonardo Grimaldi, who oversees pulp sales at Brazil’s Suzano, the world’s biggest producer.
Finnish paper and packaging producer Stora Enso Oyj said it has been forced to change its recipe to use pulp from long fibers as a result of dwindling resources from Russia. That kind of pulp makes paper stronger but at the expense of softness and is more expensive.
Paper producers say their profit margins have narrowed as a result of rising pulp and energy costs. The energy crisis in Europe sparked by Russian curbs on natural gas have pushed companies to curtail production. Toilet-paper maker Metsa Tissue warned further curtailments are likely, while in Sweden, Essity AB said it’s raising prices and implementing energy surcharges.
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