Supplies of paper and board in Russia are sufficient for the next couple of months according to an official committee meeting to discuss ways to overcome the supply crisis as sanctions imposed by European countries bite harder.
The crisis is particularly acute for label stock which is not produced in the country, and producers are almost entirely dependent on imports from Europe. There is a general dependency on imports across all grades. It imports 73% of carton boards from Europe and 12% from Asia; it imports 44% of its coated paper consumption from Europe and 17% from Asia.
Russia consumes around 700,000tpa of coated carton boards while Kama, its largest local producer has capacity for 200,000tpa.
While there is no expectation that imports from Europe will begin in the near future, any hope that Chinese producers might make up the shortfall are dubious. The committee considered that China’s domestic market is growing consuming most of what is produced, that it is not clear that production in the country can be increased quickly to fill the gap in Russia and thirdly, the Chinese are also wary of any imposition of sanctions by being seen to support Russia.
It led instead to compilation of a list of urgent measures for the government in order to alleviate the problems of being able to label and package FMCG products, pharmaceuticals and other everyday goods.
The committee has called for establishment of an insurance company or fund to protect overseas transactions and enable deferred payments where necessary; recognition that paper and packaging materials are considered strategically important, with preference given to rail wagons at customs borders. It also calls for further financial support for printers and converters hit by the sanctions.
The decision by companies like Smurfit Kappa, Meyr Melnhof, CCL and Amcor to withdraw from the market can only have increased pressure in contrast to Mondi’s reluctance to do so.
