I was recently talking to some people who’d postponed their planned home update because the cost of the lumber needed had jumped by $40,000. The pandemic has played havoc with the wood market, and thus the paper market. If you can get two or three times more for lumber, why would you chip it up and make paper from it? As Vox tells us “For years, the price of 1,000 board feet of lumber has generally traded in the $200 to $400 range. It’s now well above $1,000.” Prices have moderated a bit recently, and will probably continue downwards as the bump in home improvement work while we were all confined to home eases off.

As if we needed any more trouble in the printing paper market, The Economist points out that demand for commercial printing has collapsed over the past 15 to 20 years, and many mills have turned their focus to packaging rather than printing papers. “Some big European wood firms, such as Metsa of Finland, have abandoned print paper (it still makes cardboard and tissues). After shutting two mills this year, Stora Enso, which is also Finnish, will derive 10% of revenue from print paper, down from 70% a decade ago.” Book paper is a pretty small subset of the printing paper industry, so pressure on book manufacturing is likely to be even harsher.

Printing Impressions tells us that the price increases in March are likely to be followed by others as almost all mills are working at near full capacity, and putting customers on allocation. It was ever thus. A paper machine is an immense beast. Deciding shut one down because of lack of demand is a huge decision — because opening it up again will take months. And constructing new capacity is an off-puttingly large investment, especially in a market which has bobbed up and down so much recently. This makes the industry’s response to changed market conditions rather slow: indeed it has often seemed in the past that the industry was able to gear up to a surge of demand just in time for the next recession to make the expansion irrelevant. “For a decade, mills have been shuttering doors one-by-one to try to control the supply-demand equation. Today, however, mill operating rates are well above 95%, have put all its customers on allocation (which prevents hoarding and is typically a function of historic usage), and have little to no flexibility in scheduling.”

Fortunately for publishers demand for books continues high, so to some extent paper price increases can be amortized over longer runs. However, we are simultaneously facing a capacity crunch in the book manufacturing sector. As always the balancing act between demand and price must continue to evolve — but don’t bet against price increases for the books you keep on buying in mass quantities.