Sappi warns of further European price rises following Chilean earthquake

The paper manufacturer said the 8.8-magnitude quake, which struck on 27 February, would hit the global supply of pulp and put additional pressure on the company.

The country's pulp industry accounts for around 8% of the world's output, but most mills in Chile are expected to be out of action for "at least one month". The country has also continued to suffer many aftershocks following the initial quake.

Sappi Fine Paper Europe chief executive Berry Wiersum said that, even prior to the earthquake, pulp supply was proving to be a constraint to the industry in Europe, with global prices having increased in excess of 40% since April last year.

"The industry now faces a severe lack of pulp, which Sappi believes will result in increased pressure for steep rises in dollar-based pulp prices, exacerbated for European paper producers by the weakening euro," he added.

The news follows additional announcements in February by european paper manufacturers to put up the cost of paper.

UK merchants then announced in March that they are to pass on the increases and put the price of paper up by between 8-12% as of 6 April. Sappi itself is set to raise the price of its coated fine papers by "at least 10%" in March.

Although demand for European woodfree papers has shown signs of recovery, Sappi said that European selling prices had declined to all-time lows.

"Sappi will insist on the speedy implementation of its recently announced prices for its woodfree papers in Europe," Wiersum said. "We cannot rule out the need for further price increases due to these exceptional circumstances."