Many UK paper merchants have already been urged by manufacturers to increase prices and suppliers have begun negotiations.

Paper giant Sappi said it will raise the price of its coated fine papers by "at least 10%" in March.

Elsewhere, Will Oldham, general manager for UPM UK paper sales, said the company has announced increases to its wood-free coated papers due to ongoing cost pressures.

Mondi will increase the price of uncoated fine paper grades in cut-size, folio, and reels by 5-8% as of 1 April 2010.
M-real will also raise coated and uncoated white-top kraftliner prices by £50 per tonne in the UK.

Ian Collinson, managing director of commercial printer Parker and Collinson, said merchants will have to pass on the increases, with potentially severe consequences.

He said: "It's a disaster. Our customers are still looking for price cuts and cannot understand why our costs are increasing, even with inflation on the rise now. 

"There are plenty of printers who will have to try to absorb this one and the consequences for some will be terminal."

John Roberts, site director at envelope supplier and printer Mekvale, added: "I don't think it will be possible to pass on any increase fully,  we will have to cut what are already very small margins.

"The recovery is very weak, and in my view this is not a time to increase prices at all."

The price hike is being caused by a severe upward pressure on pulp prices, according to Paul French, managing director of Robert Horne Group, who said pulp prices have gone up by a third in the past 12 months and are expected to continue to rise.

Antalis has also been notified of price increase across a range of grades. However, purchasing director Gary Bowle said that while freight, energy and pulp costs have risen, the market is still fragile with poor demand and overcapacity.

Cliffehanger managing director Nigel Cliffe added that with demand dropping, the laws of economics would determine that prices rise.

"However, hedged against falling demand, low interest rates and increased bad debts, I would not put any money on which way this will go in the long term," he said.