Below is a recent letter we received from our coffee filter supplier in reference to a price increase for filters. One of the many reasons we needed to increase coffee prices.
November 1, 2018
This letter is written to address current unprecedented and historic market conditions surrounding the paper pulp industry and how they impact our current business relationship. Over the past two years, the SBSK (Southern Bleached Softwood Kraft) pulp market has experienced a drastic increase, unlike any sustained increase in recent history. The current level (as of October 1st, 2018) represents a record high for the SBSK market, $1345/metric ton. The rise of the market has been steady and historic. Since January 2017, the SBSK pulp market has increased by 41% from $955/metric ton to where it is today. In the last 9 months alone the market has increased an additional 17% over the drastic increases in 2017. Long term forecasts show a market that levels out a bit over the upward trend but shows no relief. Below is a chart that showcases the SBSK market over the past 18-24 months. Due to these raw material costs, Rockline is instituting a customer-wide price increase effective January 1st, 2019.
Pulp is far and away the largest cost driver in our coffee filter, in many cases making up nearly two thirds of the total cost. Prior to the start of 2018, RISI (Research Information Systems Inc.) forecasted an elevated but steady pulp market. Unfortunately, the market has been anything but steady. Low supply combined with historic demand, has created a volatile market that saw costs rising quickly past all-time highs. The long-term projection is for pulp to stay elevated thru the foreseeable future.
While Rockline has worked diligently to improve efficiencies within our manufacturing process, reduce scrap and waste, and countless other avenues to offset these rising costs, we are not able to re-coup all the increased costs in our business.
As a result of these high costs, we find it necessary to implement the aforementioned price increase. Attached you will find current pricing for each product you purchase from Rockline, as well as the new pricing to begin with orders placed beginning January 1st, 2019.
Thank you for our partnership, we truly appreciate your business. Sincerely,
Fred J. Fritchen
Sr. Business Development Director Rockline Industries