Global Pulp Rally Drives Up Cost of Diapers and Toilet Paper

(Bloomberg) -- Baby diapers and toilet paper are about to get more expensive as global supplies of wood pulp tighten and demand improves.

Procter & Gamble Co. said Tuesday that it will raise the price of products including Pampers diapers, Bounty paper towels, Charmin toilet paper and Puffs tissues. A week earlier, rival Kimberly-Clark Corp. warned that “significantly” higher commodity costs led the company to reduce its earnings outlook.

The price of pulp, a fibrous material used in many personal-care products, has risen over the past year and will remain high through 2019, according to a May Bloomberg Intelligence report. Rising demand and some unplanned shutdowns at mills -- including from a trucker strike in Brazil and unusually warm weather in Nordic countries -- have led to tighter supplies, said Joshua Zaret, a Bloomberg Intelligence analyst.

Charging more for paper-based products is “aimed to address commodity costs that the entire industry is experiencing,” David Taylor, the chief executive officer of Cincinnati-based P&G, said on an earnings call.

Complicating the outlook is China, which has imposed restrictions on imports of used newsprint and junk mail -- much of it from the U.S. -- that was recycled to make pulp for the domestic packaging industry. With less pulp from recycled material available, China is “clearly going to have an impact” on the market in the future, Zaret said.

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