Last February, the Confederation of European Paper Industries (aka: CEPI) released its 2022 preliminary statistics in which it describes the state of the art of the entire sector, affected by the rise in energy prices and therefore displaying a decreasing output but, nonetheless, still highly resilient.
As for several other industries, 2022 was a controversial year for paper, whose criticalities were recently summarised by CEPI in its Preliminary Statistics report. The Confederation of European Paper Industries, led by director general Jori Ringman and representing 18 national associations and some 500 companies, pointed out immediately that the sector proved indeed resilient. At the same time, the 5.9% production that board and paper providers had to experience over the last 12 months could not be hidden. The main reasons for the decrease are to be sought in «the heavy impact on the industry of high energy prices» together with the «abrupt slowdown of the European economy during the second half of the past year». The result is that total production was as high as 84.8 million tonnes and a decrease was recorded «in almost all paper and board grades with the notable exception of household and sanitary grades». Nevertheless, CEPI’s view is that consumption remained stable despite the EU’s Gross Domestic Product showed a negligible +0.3% growth rate, witnessing a stagnating economic framework, especially over the last two quarters of the year. On top of that, forecasts suggest no optimism, since European economy is predicted to gain a mere +0.8% in 2023 whereas a further 1.6% increase is only to be expected for the following year.
Hard times for recycling
It is worth to notice that the Continent was not alone in facing the consequences of rocketing energy prices – that forced many mills to temporary halt their activities – plus, much likely, those of the Russian-Ukrainian war and raw materials supply. In fact, «a decrease in production was also observed in the largest producing countries worldwide», namely «Canada, Japan, the United States and South Korea». These nations also observed a declining output, ranging between 0.5 and 3.5 percentage points. The Confederation, as anticipated, pointed out that the structural divergence in the production trends for graphic grades and packaging as well as sanitary and household grades continued in 2022» and added that criticalities also impacted the crucial aspect of recycling. «The utilisation of paper for recycling by companies in the geographic area covered by CEPI members decreased by 6.4% compared to 2021», it reported, once again indicating gas and electricity’s persistent turbulences as the major sources of problems. Their behaviour has «significantly affected recycling mills and non-integrated paper mills especially in the second half of 2022». Yet, «paper recycling is even more than before performed in Europe, with 96% of European paper for recycling being recycled by European paper mills, while at the same time exports went down by close to 10%, partly due to extended lockdowns in Asia». The Covid-19 pandemic still represents an issue.
At close range
In detail, data demonstrate that paper and board consumption experienced no noteworthy variation, especially thanks to the favourable economic climate that characterised the first six months of the year, in 2022, as opposite to the weakness it suffered from over the following quarters. «As a result of recent consumption patterns changes», in CEPI’s opinion, «demand for sanitary and household grades has grown by 3.6% in 2022. Demand for graphic paper remained was negatively impacted (-1.8%), because of the declining demand observed in printing and publishing. Packaging paper and board demand remained relatively stable (+0.5%) based on figures available for the first 9 months». A declining trend was also recorded in the segment of packaging paper, since «the production of packaging grades is estimated to have decreased by 4.6% compared to 2021». Furthermore: «Within packaging grades, case materials – mainly used for transport packaging and corrugated boxes recorded a decrease of 4.8%. The output of carton board plus other packaging board», destined to retail packaging especially, «decreased by 4.1%» whereas «the production of wrapping grades», which are generally addressed to paper bag production, marked a 5.2 percentage points fall. Packaging grades accounted for 59,8% (59.1% in 2021) of the total paper and board production, in terms of overall share, with graphic grades accounting for 26.1% (27.7% in 2021). «Output of all other grades of paper and board – mainly for industrial and special purposes – decreased by 6.1%, with a share of 4.8% of total paper and board production. Sanitary and household paper output increased by about 2.2% compared to 2021, to levels close to those reached during the Covid crisis and accounted for 9.3% of total paper and board production», CEPI stated.
As for graphic grades, their output highlighted a 11.3% decline, following a slight increase in 2021, and together with the 9.9% decrease of newsprint, printing and writing papers observed a 11.5 plunge «as a result of machine closures and conversions». The CEPI Preliminary Statistics document continued: «Output of coated mechanical paper and uncoated mechanical paper decreased by 19.5% and 13.2% respectively. Uncoated woodfree grades – copy paper – have decreased by 5.8%, and coated woodfree grades by 12%. Overall, this means that production of coated and uncoated graphic papers decreased by 15.8% and 8.5% respectively. Production of woodfree graphics showed a decrease of 8%; output of mechanical graphic papers fell by 16.3%». Taking exports to other non-European countries into account, figures do not appear less worrisome, given that paper and board deliveries are expected to slip by 13.3%; and total deliveries are likely to report a 3.3% slowdown. Both phenomena are to be considered as a side effect of the criticalities seen on the production side and therefore triggered by a lacklustre economic landscape. «By the end of September 2022», analysts noticed, «deliveries of graphic grades had decreased by 10.1% whilst deliveries of packaging grades slightly decreased by 1%. Exports decreased by 13.3% by the end of September, recording a huge decline in almost all regions: European neighbouring countries -10.5%, North America -2%, Latin America -8.9, Asia -27.9, other countries of the world: -9.7%».
… and the impact of sanctions
In the meanwhile, imports have risen by 7% approximately, «with increasing volumes coming from other European countries (+21.8%)». Those that are not represented in CEPI’s membership «account for 47.4% of all European imports». North America owns the second largest share (23.6%) followed by Asia (16.9%), Latin America (8%) and the rest of the world 4.1%. Of course, trades with Russia were negatively influenced by the conflict and its consequences, in terms of sanctions and other measures that the EU implemented in order to discourage Vladimir Putin’s special operation. Thus, «EU paper exports declined by 68% while paper imports went down by 35%». This means that, overall, «the trade balance of paper and board has decreased by 20% compared to 2021, but remains positive». Finally, the production of market and integrated pulp was down by 3.7%, indicating an approximate output of 35.9 million tonnes. Strikes and temporary downtimes hit the industry hard at the beginning of 2022 and if on the one hand «the output of mechanical pulp decreased by 5.4%»; on the other that of chemical pulp, accounting for 77% of total production «fell by 3.3% compared to 2021». Output of market pulp showed a 3.7% decline.
Non wood fibres: the road ahead
A recent study that CEPI commissioned to the Nova Instituted focused on non-wood fibre-based paper products, witnessing how interested the industry is in this very topic. Nova Institute is a German private research body and interviewed 33 producers of non-wood pulp to conclude that « the material streams hold potential to contribute to the sustainable growth of the pulp and paper sector». As CEPI itself reported, all types of non-wood raw materials used by European producers in the sector were considered: residues, by-products, side streams, dedicated non-wood fibres too. «The use of materials such as straw, flax and hemp, but also textile waste, could help the industry», as CEPI experts and Nova Institute analysts stated, «to diversify and increase the availability of fibre. It would be a driver for future innovation in processes, as well as in products, where specific properties of agricultural crops and residues could be used to develop novel biomaterials». Products already using non-wood fibres addressed in the study cover the following list: tissue, hygiene, printing, cigarette, technical, security or speciality paper, and board including for food packaging».
These developments are also expected to support the agricultural and textile sectors in becoming more circular, benefiting from the long expertise of the pulp and paper industry in recycling and the eco-design of products. Nevertheless, Nova’s report focused on the potential limitations of using non-wood pulp, such as «in land-use or stemming from applications in other sectors». It has been observed that «in some cases, it would require the development of entire value chains which do not exist yet», but it is CEPI’s intention «to monitor the developments of non-wood fibres for the paper industry in the future and remains open to collaboration with other actors interested in the topic». «Sustainable management of raw material sourcing», said CEPI’s director general Jori Ringman, «remains, along with our high level of circularity, the defining features of our industry. Non-wood fibres have a role to play, and will be an additional component of the paper mills and recycling mills of the future. Paper industry can offer a sustainable solution for using, resource-efficiently and towards a higher value-added, a stream that may not have been used or was a problem before».