It is clear that the prices of thermal rolls have risen significantly over the past few months, and this is due to the shortage on the market of the key chemical component used in thermal paper.

It all starts with the closure of tens of thousands of Chinese producers, a decision made by the Chinese government due to a rigorous application of environmental regulations. Chinese officials are tired of all that is required by low-value producers and have decided to lend a hard line. It is estimated that over 80,000 factories have been closed, fined or hit by criminal offenses because of their emissions.

The closure of a Chinese company, Connect Chemical, is what threw the application of thermal paper into a backlash. It is estimated that Connect Chimica held about 50% of the entire world production of a chemical dye called by the name of leuco. Together with C.C., many other Chinese leuco dye manufacturers were shut down in a short time with the result that almost 80% of the worldwide leuco dye supply was stopped.

Leuco is the key component of direct thermal paper, i.e. the paper printed and used to receive, shipping labels, airline tickets and much more. After the close of the Connect Chemical closure, leuco prices rose to 5 times their normal price. At this point, Connect Chemical is expected to reopen in the summer of 2018. However, these are rumors and nothing concrete has been decided.

So we all, converters, dealers and end users, keep track of what is happening in China. Without a constant and sufficient supply of coloring leucus, the prices of thermal paper will continue to rise. What is particularly problematic is the fact that the future of leuco dye production at Connect Chemicals remains very doubtful.

Many industry experts, including Gary Huang, director of Hancock International and co-chair of the AmCham Shanghai Supply Chain Committee, believe that Beijing’s anti-pollution push is an effort to push low-value / high-pollution producers forever from China outside the same, moving to neighboring countries such as India and Cambodia.

If it were really so and therefore China will no longer be a place where leuco dye will be produced, the thermal paper market could be in a much longer shortage than initially expected.

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