The sudden fall in crude oil prices from $107 to $45 per barrel has been widely welcomed by UK motorists and business leaders.
Whilst “crude” is unlikely to remain below $50 per barrel for very long; the current low demonstrates that fuel costs can actually go down and prompts the question:- will lower crude oil costs filter through the supply chain and effectively lower print prices?
Paper market analysts expect that the current low oil price will simply counter the potential pulp increases projected in Q2 2015; most likely leading to a period of price stability, rather than price reduction in global paper markets.
However, as oil is an essential input in the manufacture of inks and plastics; it is reasonable to expect some small reductions in print component costs may filter through in time.
The reason why there is a deferred impact in component price influence lies with the longevity of the supply chain. In order to strategically protect against supply chain price increases, commercial printers have historically ensured that core components like inks and plastics are purchased as far in advance as possible. Consequently, it is likely that it will now take quite some time for any price reductions in print components to filter through to finished print.
The area most likely to deliver savings within the total print production cycle is the resultant freight costs. On average freight equates to around 9% of a total print price and is directly affected by local diesel fuel costs.
As logistics firms access lower fuel prices at the pumps, they lower direct costs and their fuel savings are expected to quickly pass through to end-users. Potentially these fuel savings may lead to a 1% decrease in the total price of delivered print.
So all things considered, the lower price of crude oil will most likely facilitate a reduction in the price of print; providing it remains low for long enough to drive freight costs down. Any resultant print price reductions will be small, but will nonetheless be a welcome saving for UK print buyers. Every little helps!
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