In early September, tens of thousands of Chinese manufacturers were shut down by the Chinese Government due to a renewed enforcement of environmental regulations. Chinese officials had grown tired of all the pollution caused by low value manufacturers and decided to take a more proactive approach. It is estimated that over 80,000 factories have been either shut down, fined, or hit with criminal offenses as a result of their emissions.
The closure of one Chinese company, Connect Chemical, is what has thrown the thermal paper industry in a tailspin. It just so happened that Connect Chemical, was the company responsible for about 50% of entire the world’s production of a chemical dye by the name of leuco. Additionally, several other Chinese manufacturers of leuco dye were shut down at the same time. In combination, it is estimated that almost 80% of the world’s supply of leuco dye has been halted.1
Leuco is the key component in direct thermal paper, which is the paper that is printed on and used for receipts, shipping labels, airlines tickets, and much more. Shutting down Connect Chemical has begun to put a gigantic squeeze on the thermal paper supply chain world wide and could have a huge impact on several different industries moving forward. After the announcement that Connect Chemical had been shut down, the prices for leuco skyrocketed to 5 times their normal price. At this time, it is anticipated that Connect Chemical will reopen in the summer of 2018.1 However, nothing concrete has been determined.