European publication paper market in a critical phase of consolidation

Demand for newsprint declined sharply in the middle of the COVID-19 crisis
15 Sep 2021 − 

Capacity cutbacks offset market downturn.

The removal of a tremendous amount of publication paper capacity in Europe is showing results. Since the second quarter of this year, newsprint, LWC and SC producers in Europe have been reporting that their machines are typically running at good workloads and order intake has staged a strong recovery from the pandemic-related slump. Prices edged higher at the start of the second half, and producers are seeking additional substantial markups in the fourth quarter or from the start of 2022 at the latest, given that prices remain relatively low and manufacturing costs are high. A number of buyers of publication paper in Europe are complaining that they are having a hard time sourcing enough paper in the third quarter. One factor leaving its traces on the publication paper market in the past few months was that a few paper producers had curbed their output because they were not covering costs at very high recovered paper and pulp prices and historically low sales prices.

However, the reversal in market conditions compared with the fourth quarter of last year is in large part due to the industry having shed production capacity. At least 1.7 million tpy of newsprint capacity, including improved grades, will have been removed in Europe this year and last year.

A longer-term shortage on the market is thought to be on the cards if demand ends up being more robust in the second half of 2021 than in the first six months – something that many market players anticipate.

A similar set of circumstances is playing out on the SC paper market. Europe's LWC market has also experienced a sharp downturn in demand over the past 18 months but is currently staging a solid recovery, like the newsprint and SC paper businesses. 

This article is an excerpt from our latest report on capacity closures and demand trends in the European publication paper market. The full report is published in EUWID Pulp and Paper 37/2021.

Our premium subscribers can access the full report here.

For full access to company news and in-depth market and price reports on major paper and board grades, raw materials and consumables consider subscribing to EUWID Pulp and Paper or start a three-week free trial.

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