02 December 2018 Paper

Paper industry in the eye of the storm

Declining demand coupled with rising prices is producing a double whammy for paper makers who are looking to shift into the growing packaging sector.

Turmoil in the European paper industry has continued this week, with the rescue of Zanders providing some good news amid the tales of shut downs, machine conversions and the continuing shift from producing coated papers for print to papers for packaging grades, many corrugated.

Zanders announced that after a lengthy period in administration, it was being restructured and that the consortium owning the business would be led by Terje Haglund, who is also CEO of Virginal Papers. This is the business that has restarted production at the former Idem Papers in Belgium, producing speciality grades, though not carbonless.

There has been no declaration of intent regarding Zanders as yet, thought the administrator had emphasised the potential of its grass-based packaging products. However, only 300 of the previous 450 employed at the German mill will retain their jobs.

Elsewhere the announcements have been more gloomy. To follow on from the second failure for Feldmuehle in the year, blaming energy and pulp costs, and the decommissioning of a small machine at Arctic Paper’s Grycksbo mill, StoraEnso has announced plans for temporary lay offs at its Oulu mill in Finland.

The company is already considering a conversion from woodfree coated paper to packaging grades and an environmental audit is underway. Now it is considering the temporary lay off of the papermill’s entire workforce for 90 days. The adjacent pulp mill is not affected.

In a statement StoraEnso said the decision was based on high raw material costs and declining demand for woodfree coated papers. The mill’s two machines produce around 1 million tonnes of paper a year. Reductions in production will help the efficiency of operation and help “optimise production according to market demand”.

In Italy, Burgo is considering 160 redundancies at Duino and Versuolo mills. At the latter site this could also include the sale of idled PM2 which produced LWC grades and its conversion to produce packaging boards. Workers at both mills have been subject to short term working since earlier this year.

Meanwhile Lecta managed to increase sales of coated papers in the nine months to September this year, albeit marginally. Sales of coated woodfree papers rose to €561 million (€556 million) while speciality papers increased sales to €352 million (327 million) and income from purchased products inched put to €130 million (€127million), though this was the result of price increases as the tonnage sold slipped slightly to 1.01 million (11.1 million).

Gareth Ward

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