Paper Industry in Europe Saw Sharp Decrease in Paper and Board Production in 2023

The Confederation of European Paper Industries (Cepi) has released its final summary and statistics report for 2023.

July 9, 2024 (Press Release) - In an economic context that continues to be exceptionally difficult and marked in 2023 by low consumption linked to massive destocking, many pulp and paper companies have seen a turnover decrease in the past year. A record high annual recycling rate indicates the industry's autonomy and circularity.

The decrease in paper and board production in 2023 (-13%) resulting from low demand was far more pronounced even than during the Covid-19 crisis (-4.7% in 2020). This is a trend that is not particular only to Europe, but the global slowdown has been worsened in the EU by comparatively high costs for production inputs, notably energy. The European economy as a whole has lost momentum, against the background of a high cost of living, monetary tightening, and a weak external demand.

All paper and board grades recorded a sharp decline of production, with a varied situation across grades. The production of packaging grades decreased by 11% in 2023 compared to 2022 while sanitary and household paper registered a decrease by about 4.0%.

Despite these developments the pulp and paper industry has shown some surprising signs of robustness in 2023, with an exceptional recycling rate of 79,3% - or 74,4% on a three-year rolling average. It remains more than ever a "made-in-Europe" industry with 91% of fibres sourced from within the European Union. Adding to this was a positive trade balance for market pulp, produced to be sold on the market rather than used on-site, for the first time since data is collected by Cepi.

The trade balance for the sector overall remains high, placing it in the top European manufacturing sectors on that metrics. Still, this second consecutive year of decrease could point towards a loss in global competitiveness for Europe's pulp and paper industry.

In another area of high performance amongst industrial sectors, the decoupling of pulp and paper production from CO2 emissions continues on a steady trajectory, decreasing by 5.8% in 2023. The sector has already achieved over 46% reduction of carbon emissions since 2005.

Investments remain proportionally high, despite a continuously difficult context, and will need to accelerate in the coming years to reach the decarbonisation objectives set by the European Commission.

An early sample of company data points towards a rebound in production and profitability across all European pulp and paper sector segments in 2024. But the industry's position remains far from what it was before the Covid crisis and war in Ukraine.

Open Cepi Key Statistics Report for 2023 (17-page PDF document).

Cepi is a Brussels-based non-profit organisation representing the European pulp and paper industry. Through its 18 national associations, Cepi gathers 490 companies operating 885 pulp and paper mills across Europe producing paper, cardboard, pulp and other bio-based products.

SOURCE: Cepi

Smurfit WestRock CEO Celebrates "Momentous Occasion" at New York Stock Exchange Opening Event

July 9, 2024 - Smurfit Westrock's CEO, along with colleagues, family and friends on July 8 celebrated the new company's debut on the New York Stock Exchange.

Yesterday, Tony Smurfit, Group CEO and President at Smurfit Westrock, in his LinkedIn page, commented on the start of the new paper-based packaging company's journey.

"Today was a truly amazing day! I was so honored on behalf of all my colleagues to officially announce our company Smurfit Westrock, to the world on the NYSE at 9.30am EDT. I was privileged to be surrounded by my family and so many amazing colleagues who have made this truly historic event happen.

"Smurfit Westrock is now a company that has an unparalleled and unique footprint around the world, with the most skilled people in any company. July 8th is an incredible day for all of us who are a part of the biggest and best paper and packaging company in the world," Mr. Smurfit stated.

"This momentous occasion is a testament to the dedication and hard work of our incredible teams. As one united company, we are positioned to deliver even more value and innovation to our customers, driving our shared vision of a sustainable future.

"I am deeply grateful to our employees, shareholders and partners for their unwavering support. I also want to mention the commitment of my own family and the generations that went before us, especially my father and grandfather. Together, we are poised to lead the way in paper-based sustainable packaging. Here's to a bright and promising future as Smurfit Westrock!" Mr. Smurfit concluded.

Smurfit Westrock was created through Smurfit Kappa's (Ireland) acquisition of WestRock (USA) for about $11.2 billion. The combination of the two companies has created a paper and packaging giant operating in 40 countries with over 100,000 employees working across 500+ packaging converting operations and 63 paper mills.

Norske Skog Plans to Enter the Pulp Market with New Production Line at Saugbrugs

June 3, 2024 - Norske Skog announced the start of a study to form the basis of building a bleached chemi-thermomechanical pulp (BCTMP) production line at its Saugbrugs mill in Halden, Norway.

The potential new pulp line is based on reutilizing a portion of the mill that housed PM6, which was heavily damaged during a rockslide that occured in April of 2023. PM6, which had the capacity to produce 260,000 tonnes per year of SC (supercalendered) magazine paper, was shut down and remains idle.

In addition, Norske Skog said that part of the investment to build the new pulp line would be covered by the portion of the insurance settlement that has not yet been paid out by the insurance company, amounting to NOK 615 million, for the development of new business opportunities at the plant.

According to Norske Skog, the new BCTMP line will produce approximately 300,000 tons of competitive pulp to meet the growing demand, especially for products in the packaging market. Saugbrugs has adequate access to green energy, and thus continue to deliver products with very low carbon footprint.

"Norske Skog will initiate a main study that will form the basis for a final board decision to build a BCTMP plant at Saugbrugs in Halden," said Geir Drangsland, CEO of Norske Skog. "The net investment in BCTMP production will range between NOK 1.5 to 2 billion (EUR 140-180 million). The construction period is expected to last for two years starting in the second half of 2025. We expect to achieve a return on net investment of more than 20%. This will be the first significant investment at Saugbrugs outside of publication paper in modern times."

The BCTMP production will be based on fresh fiber, and the mill already has access to adequate energy capacity.

Norske Skog noted that the investment will utilize existing machinery, equipment and infrastructure, reducing the total investment by approximately 50% compared to a pure greenfield investment case. There will be minor adjustments to the existing infrastructure such as in- and outbound distribution systems, raw material processing machinery and equipment, in addition to the wastewater treatment plant.

Saugbrugs will apply to appropriate authority for electrical grid access and all necessary emission permits, building construction permits and other regulatory necessities, the company said.

Final investment decisions are planned in the first half of 2025, and the start of BCTMP production is planned in the first half of 2027, and full utilisation is expected in first half of 2028.

"It is gratifying for equipment suppliers, lenders, wood and other raw materials suppliers, shareholders, and customers that we are investing in and establishing a plant for bleached chemi-thermomechanical pulp at Saugbrugs. But those who have the most reason to rejoice, are our employees at Saugbrugs. The new revenue streams from mechanical pulp, along with the production of SC paper at Saugbrugs, will make the factory more profitable and robust, ensuring job security," Drangsland concluded.

The Saugbrugs mill currently operates two paper machines for the production of SC paper: PM4 has the capacity to produce 100,000 tpy and PM5 has the capacity to produce 100,000 tpy.

Norske Skog emphasized that the Saugbrugs mill will continue to be a reliable supplier of SC-publication paper also after the start of BCTMP production.

Norske Skog is a leading producer of publication paper with market positions and customer relations in Europe and Australasia. The Norske Skog Group operates four mills in Europe, which produce publication paper, recycled packaging paper, energy and bioproducts. In addition, the Group operates one paper mill in Australia.

SOURCE: Norske Skog

UPM to Permanently Reduce Graphic Paper Capacity in Germany by 610,000 Tonnes

May 29, 2024 - UPM Communication Papers said that it plans to permanently close its Hürth newsprint mill and to shut down one fine paper machine at Nordland Papier (PM 3) in Dörpen — both assets are located in Germany. If realized, the measures would result in annual reductions of 330,000 tonnes of newsprint paper capacity and 280,000 tonnes of uncoated fine paper capacity in UPM’s portfolio. These plans are a continuation of necessary steps to proactively align with customer demand and ensure competitiveness.

Should the plans be implemented, the number of positions affected is estimated approximately at 135 in Hürth and 210 in Dörpen. The participation process with the workers council will start immediately in line with local legislation.

Both paper machines affected by the planned measure would stop graphic paper production latest by the end of 2024. Production on the remaining paper machines at Nordland Papier will continue as before.

UPM explained that graphic paper demand has continued to decline, reflecting the overall trend in paper consumption driven by digitalization. The decline in demand accentuated in 2023 and a durable recovery is not expected, resulting in significant overcapacity in the market.

“In recent years, we have already responded to overcapacities in the global paper markets with selective capacity reductions, always considering the competitiveness of our business,” said Antti Jääskeläinen, Executive Vice President, UPM Communication Papers. “The planned closures would ensure an efficient and flexible use of our remaining paper assets and will therefore enable UPM Communication Papers to stay a reliable partner to our customers in the long run.

“However, we are aware that today’s announcement is very difficult news for our employees in Hürth and in Dörpen. We are committed to conducting a fair dialogue with employee representatives to seek responsible solutions for our workforce,” Jääskeläinen said.

UPM noted that the plans announced today would strengthen the overall cost competitiveness of UPM Communication Papers and are a prerequisite for consistent, long-term paper operations. UPM would recognize restructuring charges of EUR 113 million (EUR 68 million cash impact and an impairment of EUR 45 million) as items affecting comparability in its Q2 2024 result.

The planned actions are estimated to result in annual fixed cost savings of EUR 45 million, UPM concluded.

About UPM Hürth

UPM Hürth manufactures newsprint papers with the annual capacity of 330,000 tonnes. Located in North Rhine Westphalia, Germany the site employs around 135 people.

About UPM Nordland Papier

UPM Nordland Papier produces uncoated and coated office and printing papers as well as specialty papers. The Dörpen paper mill is the largest of its kind in Europe and produces up to 1.2 million tons of fine and specialty paper annually. Located in Lower Saxony it employs approximately 1,150 people at the paper mill.

SOURCE: UPM