Smurfit Kappa is planning to close its containerboard mill in Le Pontet, southern France. The company said that Smurfit Kappa Recyclé France (SKPRF) had presented a restructuring plan to union representatives which envisages the closure of the Smurfit Kappa Alfa d'Avignon mill.
Due to the development of the market, SKPRF has fundamentally reviewed all of its activities in recent months, the company said. Smurfit Kappa announced that it had to react to the difficulties of the market and maintain its competitiveness, which is why restructuring measures were unavoidable.
The Alfa d'Avignon mill has an output capacity of 75,000 tpy and produces brown recycled corrugated case material, primarily testliner. The mill employs around 60 people.
Altogether Smurfit Kappa has numerous sites in France for the production of containerboard, corrugated board, corrugated packaging, other packaging paper and board as well as recycling and distribution centres. Besides Alfa d'Avignon, the company operates the Cellulose du Pin (white-top kraftliner, white-top testliner, brown kraftliner), Rethel (testliner) and Saillat (testliner, recycled fluting) paper mills in the country.
The background to the planned closure is the significant decline in demand for corrugated board and corrugated case material that has been evident throughout Europe for the past twelve months. In addition, extensive production capacities for recycled corrugated case material have recently come onto the market and more will follow in the near future. As a consequence there is significantly more output capacity available than the market can currently absorb. Paper producers have so far responded to this market situation by cutting back production, but in view of the production capacities still to come onto the market, the consensus in the market is that it will be virtually impossible to achieve a balance between supply and demand without closing down capacity. According to estimates by market insiders, production in Europe has been cut by around 3 million tonnes this year in order to prevent stocks from rising further. It is assumed that this is also the approximate current level of overcapacity in the market for corrugated case material in Europe.
In France in particular, further production capacities for recycled corrugated base paper will be coming onto the market in the near future. Norske Skog is rebuilding a paper machine for newsprint at its Golbey mill in eastern France. The planned start-up has been postponed twice, but is now scheduled for the second half of 2024. It will bring 550,000 tpy of new capacity for recycled containerboard to the market, with full production expected to be achieved within two to three years after the start-up of the machine.
In the second quarter of this year, the Belgian packaging and paper group VPK started production at the rebuilt Alizay mill, where Double A used to produce woodfree uncoated paper. The PM will have a capacity of up to 500,000 tonnes per year, most of which will be further processed within the VPK Group.
There is also a conversion project for the former UPM Chapelle Darblay mill: Fibre Excellence and Véolia are planning to convert the decommissioned PM for newsprint into recycled containerboard. Last year, the two companies announced that capacities of around 400,000 tpy are to be created at the mill, which is to be up and running by 2026 at the latest.
Further new capacities for recycled corrugated case material are under construction at Heinzel Laakirchen (500,000 tpy, September 2024) and Model Eilenburg (620,000 tpy, March 2024). Modern Karton's Shotton mill in the UK is expected to have a further e 750,000 tpy of capacity when operations begin in early 2025.