Taiwanese shoppers began flocking to supermarkets and grabbing as much toilet paper as they could right after the Chinese New Year.
Prompting the scramble for toilet paper were online rumors that toilet paper, kitchen paper and boxed tissues will see a price increase of 30 percent in March.
The rumor snowballed and soon evolved into talk that Taiwan will run out of toilet paper supply in March.
As a result, many supermarkets on the island have seen frenzied crowds snapping up toilet paper in stores. All supermarkets are now imposing a purchase limit of two packs each time.
The price hike rumor has been confirmed by Yuen Foong Yu, the island’s largest tissue paper producer. The company said it will raise wholesale prices by 20 percent on average from March. Two other paper manufacturers said they would follow.
So what is the background to this price hike?
It’s reported that pulp price in Taiwan has surged 50 percent since the middle of last year, thus forcing toilet paper producers to pass on the higher costs to end customers.
The price of short-fiber pulp, which is used to make toilet paper, has risen from US$650 per ton to US$800 per ton, according to Taiwan’s Ministry of Economic Affairs.
Taiwan imports 100 percent of the pulp it needs. At the moment, US, Brazil, Canada and China are the world’s four largest suppliers.
On the supply side, forest fires in Canada and disruption to production in Brazil have pushed up pulp price worldwide.
China is part of the reason, too. It has been cutting pulp production capacity and enforcing more resurgent environmental protection requirements.
Coupled with the continued surge of online shopping, which leads to more consumption of paper boards for packaging, supply shortage worsened.
This panic buying of toilet paper could herald higher inflation.
Inflation, meanwhile, could become a popular stock trading theme. Miners, for example, stand to benefit from higher material prices.
This article appeared in the Hong Kong Economic Journal on Feb 27
Translation by Julie Zhu with additional reporting
[Chinese version 中文版]
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