Cepi has recently released its preliminary statistics on the performance of the European industry last year and as expected good news are few. A significant decline affects a large majority of the relevant sectors, whereas outside the EU the decrease in volumes and values was less pronounced.
Energy fares and inflation rates, together with a widespread destocking trend and high labour and manufacturing costs are only a few of the reasons undermining the performance of the European board and paper industry last year. These are at least the first important evidences that Preliminary Statistics released by the Confederation of European Paper Industries (CEPI) brought to light recently. In fact, analysts noticed that across the countries that CEPI covers and gathers (Austria, Belgium, Czech Republic, Finland, France, Germany, Greece, Hungary, Italy, Norway, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, the Netherlands, UK) production decreased by 12.8% compared to 2022, falling to 74.3 million tonnes. Volumes were down everywhere but, for instance, «Canada, Japan, the United States and South Korea recorded paper production falls ranging between 2.0 and 9.8%». Of course, figures diverge depending on the segment considered. For example, packaging board and paper highlighted a less pronounced decline than graphic paper, while sanitary and household products displayed flat. Nonetheless, the diminishing output from packaging industries impacted the paper for recycling’s behaviour. It lost 6.9 points due to the weaker request from the packaging sector, one of its top customers. Additional damages came from the closure of certain graphic paper mills whose processes usually build upon paper for recycling. The pulp market is instead lively in the EU: production marked a sound +4.8%.
Segment by segment
According to the Confederation of European Paper Industries apparent consumption of board and paper, driven downwards by «a depressed economic environment» that influenced private demand negatively, slipped in the European Union by 15.3% in 2023. Meanwhile, economic indicators showed moderately positive, given the 0.6% growth recorded last year and the 1.2% progress predicted for the next quarters of 2024. And yet, the ongoing crisis is considered more severe than that occurred over the most dramatic months of the Covid-19 pandemic, when losses were about 4.7%. Sanitary and household paper, whose consumption decreased by 3.7% only, was quoted among the most resilient sector, especially when looking at the at-home applications (tissues and toilet paper) that outperformed the away-from-home category. Nevertheless, sanitary and household paper manufacturers – accounting for 10.3% of total paper and production – archived a 4.4 percentage points decrease in comparison to 2022. As for graphic paper, its figures proved worrisome, weighed as they are by the lacklustre demand from printing and publishing as well as destocking strategies. Therefore, the request for graphic paper was down by 27.5% and packaging paper was also down, albeit in a less dramatic way (-12.2%). «The production of packaging grades», as CEPI noticed, «is estimated to have decreased by 9.1% compared to 2022. Within packaging grades, containerboard – mainly used for transport packaging – and corrugated boxes recorded a 4.7% decrease. The output of carton board plus and other packaging board mainly used for retail packaging decreased by 17.3%; and wrapping grades for paper bag production by 15.9%».
Bad news for the news
The share of packaging grades accounted for 62.3% (it was 60.1% in 2022) of the total paper and board production, with graphic grades accounting for 22.6% (versus the 25.9% recorded in 2022). Output of all other grades of paper and board, mainly addressed to industrial and special purposes, decreased by 12.2%, with a share of 4.8% of total paper and board production. Among graphic grades, that experienced a significant 24.6% year-on-year loss, newsprint posted a 19.9% fall, whilst machine closures and conversions contributed to the 25.4% decline of printing and writing papers. Observers pointed out that «the production of printing and writing papers used for magazines and catalogues, direct mail, directories and more, decreased at different rates, depending on precise grade categories». To give an example, «output of coated mechanical paper and uncoated
mechanical paper decreased by 24.4% and 23.4% respectively» whereas «uncoated woodfree grades such as copy paper have decreased by 23.9%». Undoubtedly, coated woodfree grades suffered from the heaviest impacts and thus displayed a 31.2 percentage points fall. «Overall», CEPI suggested, «this indicates that the production of coated and uncoated graphic papers decreased by 27.9% and 23.7%, respectively, and that the production of woodfree graphics showed a decrease of 26.4%. At the same time the output of mechanical graphic papers declined by 23.9%».
No country for exporters
Figures indicate that over the first three quarters of 2023 exports weakened across all regions. At the end of September, they were down by 15.7% in the European Union, but a slowdown was also observed in Latin and North America (-30% and -33.8% respectively) and neighbouring European nations (-18.2%) as well as in the rest of the world (-11.8%). China represented the sole exception, with its 29.6% increase. CEPI underlined that other EU countries still represent the major source of revenue for European exporters, given their 36.9% market share, followed by Asia (25.3%); North and South America (12.5; 7.7%) and all other countries (17.5%). The Confederation’s preliminary data also witnessed how paper and board imports resulted 14% lower than they were in 2022 and volumes from other CEPI member nations hit a -29.3% low. Other European countries, outside CEPI’s membership, represent 38.9% of imports to the EU, whereas North America accounts for 28.2; Asia for 21.6% and Latin America for 6.1%, followed by the rest of the world (5.3 points). These estimates prove that although the trade balance declined by 16.4% between 2022 and 2023, still it remains positive. Finally, total pulp production decreased by 6.2% while market pulp production increased by 4.8% and the aggregate integrated and market pulp output (as high as 33.5 million tonnes) has decreased by 6.2 percentage points, if compared to the previous year. Output of mechanical pulp recorded a 12.2% slowdown; whilst market pulp marked a 4.5% decrease.
A new chairman to manage the green transition
Brussel-based Sappi Europe’s CEO Marco Eikelenboom has been appointed as the new chairperson at CEPI’s, replacing his predecessor and CEO of Metsä Group, Ilkka Hämälä. Eikelenboom, whose career started in 1997, has held various high-level positions within Sappi. As for Hämälä, he strongly supported a more open dialogue between the industry and the EU Institutions and backed the launch of Circular Choices, a coalition for a more competitive and ambitious EU bioeconomy. This is the broadest coalition yet of European trade associations representing providers of high-quality wood-based products, fibre-based paper and board products as well as packaging and renewable energy solutions, which is also supported by EU forest owners and managers. Marco Eikelenboom’s mission takes place in a crucial moment of change for EU institutions, given the forthcoming election period, the new mandate expecting members of the European parliament and the establishment of the new College of EU commissioners. It is also about time for Europe to turn the Green Deal promises into concrete actions, focusing on emission reduction-removal targets and CEPI is ready to play a role in the green transition, thanks to its broad experience on sustainability.