StoraEnso is considering a complete withdrawal from the coated papers market. It has started a feasibility study into the future for the Oulu mill in Finland, the only site in the group that produces these papers.
Currently Oulu has the capacity to produce 360,000 tonnes of chemical softwood pulp, but more importantly to produce 1,080,000 tonnes of coated paper a year. Oulu is known for producing coated paper grades which are sold under the Lumi name. StoraEnso also operates the Novapress, StellaPress and MediaPrint brands as printing papers produced elsewhere in the group. Only a small amount is produced for third-party sellers.
The Finnish forest products giant is considering an investment of €700 million at the mill to create a chemi-thermomechanical pulp line and to convert one paper machine to production of 450,000tpa of brown base carton boards and the other to produce 400,000 of kraftliner for corrugated packaging.
The feasibility study will take until the end of the year and an environmental impact study running concurrently will take at least six months the company says. If the project goes ahead, coated paper production will continue until “at least early 2020” according to a statement from the company.
Oulu has stood alone since 2015 when a 285,000tpa PM at various was converted to produce kraftliner in 2015. Stora Enso also has PMs at Nymölla and Veitsuoto, currently producing uncoated woodfree paper, amounting to around 1 million tpa.
StoraEnso may be able to use these other facilities to fill at least some of the lost production, but this is considered highly unlikely. It is not withdrawing from graphic papers completely. It has significant capacity to produce newsprint, SC papers and uncoated papers around the group. However, its direction away from printing papers towards packaging has been clear for some years.
The loss of 1 million tonnes of coated paper from the European market would represent a significant chunk of production. Currently coated paper production in Europe amounts to 14.1% of the 92.3 million tonnes of paper and board produced according to the Confederation of European Paper Industries. This amounts to around 13 million tonnes.
However, while production this grade increased 1.5% in 2017 according to Cepi, production of carton boards and corrugated grew faster. And over capacity in coated papers has remained, estimated by consultants to be around 1 million tpa. This has already pushed smaller mills into insolvency or restructuring. Feldmuehle Uetersen, which StoraEnso sold to PE investors in 2015, has found a buyer for the 250,000tpa business, while Scheufelen has found a new investor, but will no longer produce commodity coated woodfree papers, but will instead concentrate of grades made from grass fibres and premium boards rather than the Heaven 42 grade it had been known for.
StoraEnso has said the alternative to the conversion would be to continue production of coated papers at the mill. Given the amount of work that has already been done on, this is considered unlikely. However, StoraEnso has pulled back from high profile projects in the past after the feasibility study stage.
Growing demand for packaging grades and over saturation in coated paper is behind StoraEnso's announcement that it is preparing to quit the coated paper market in Europe and use the Oulu mill to produce cartonboard and kraftliner instead.
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