Toner prices set to rise in next few years, though third-party suppliers mean that the market has a “high level of competition” that forces a “slower pace” of price increases.
Virtual-Strategy reported on IBISWorld’s market research study of the toner procurement market, which has “been updated” as a consequence of rising toner prices “during the past three years”. As a result of market factors, prices are set to continue rising, but “at a slightly slower rate” than over these three years.
The analysts note that manufacturers of toner powder “have been raising prices” over the past three years in order to “boost profit in the face of increasing demand”, and predict that over the next three years, input costs “are forecast to rise at a slower pace, resulting in smaller price growth”. These changes are IBISWorld’s rationale for updating its report on the market, as well as the motivation to “help procurement professionals make better buying decisions faster”.
IBISWorld added that toner procurement has a “buyer power score of three out of five, which “reflects moderately favourable market conditions for buyers”, but with prices pushed “upward because the price of plastic material inputs has been increasing”, the average price has increased annually at a rate of 4.4 percent, which “reflects an unfavourable price trend for buyers”.
The aforementioned input costs are said to be “largely” the cause of the price rises, with both plastic materials and resin prices increasing at an average annual rate of 5.3 percent in the past three years as well. To add to this, demand has increased as “more businesses and consumers have been spending on printing needs”, with the “increased reliance” on digital documents “mitigating some of this demand”.
The “proprietary shapes” of the toner produced by many manufacturers also contribute, as manufacturers “have been able to raise prices to boost revenue and profit” because their certain types of toner are “required” for use of the printers and copiers consumers have. IBISWorld noted that the input costs mentioned are “highly volatile” as well, with oil and iron ore “highly volatile” source materials used in toner through plastic and iron oxide respectively.
Despite this, the input cost rises “have not translated to wide fluctuations in toner prices”, with suppliers enjoying “some cushion[ing] when input costs rise unexpectedly, because manufacturers earn high profit margins on printer toner”. This does unfortunately result in “some risk for buyers”, and a “low availability of substitute goods” compounds the issue, as the “lock[ing]” in of users allows manufacturers to “raise prices without significantly harming sales”.
The analysts conclude that despite the rising prices, the “level of market share concentration” for toner is “low”, thanks to a “large number of suppliers operat[ing] in this market”, and while OEMs dominate, “less expensive third-party alternatives are widely available”. IBISWorld believes that this “high level of competition” stop suppliers from “raising prices too quickly”, and that a “low level of product specialisation allows buyers to easily switch suppliers”.