The note of caution over demand for paper came this week from the forestry and paper firms who produce one third of the 95 million tonnes of paper produced annually in western Europe.
An increasing amount of recycled paper is also being produced by the companies who all take material from UK local authorities and paper merchants. They include UPM Kymmene which owns Shotton Newsprint, M-Real which has an office grade recovered fibre plant in Kent and Stora Enso which is building a new recycled newsprint mill in Belgium which is already taking substantial volumes of material from the UK.
A statement issued on Wednesday spoke of “sluggish demand for paper and the uncertain geopolitical situation” affecting the results of forest companies and reducing profitability. The message was delivered in London by the Finnish Forest Industries Federation and said the sluggish demand for paper and the potential war in Iraq is hitting the results of forest companies and reducing profitability.
Markets for paper were described as “slack”, especially in Europe. “This is due to weak profitability in the publishing sector. Prices for magazine paper and fine papers have decreased, and there is an oversupply of the grades most in demand. We may be in for a long wait before demand picks up, even though the companies see some signs of recovery in US markets.”
Nevertheless, compared with other forest companies in the world, the Finnish firms say they have performed well. “The advantage gained from size has been utilised and regulation of production, downtime and price levels has been managed fairly well. The companies are also technically highly competitive.”
Compulsory
The companies also comment on the issue of whether or not recycling of paper should be made compulsory. The paper industry within Europe is known to be anxious to avoid any legislation from Brussels on paper recycling and instead has set voluntary recycling targets.
The Finnish companies say: “Recovered paper accounts for about half of the raw material needs of the paper industry in the European Union. Recycled fibre is an effective fibre for many paper grades; recovery and use is increasing due to natural market forces. Consequently the often expressed view that compulsory measures should be taken to promote recycling is not realistic. If paper production in Finland were to resort in the main to the use of recovered paper, a large volume of imports would be necessary and efficient use of forest resources would be jeopardised.”
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