SCA has announced plans to quit the publication paper market, removing capacity for 756,000 tonnes of coated and uncoated web offset papers from the market.
The Swedish forest products group will convert its integrated mill at Ortviken, where it has three paper machines, into a pulp only facility. It will shift pulp production to the site from Ostrand where it will increase capacity to produce kraft papers for packaging applications.
The increased pulp production will be used across packaging and hygiene applications where demand is rising, says SCA. This is in contrast to high volume publication papers used in magazines, catalogues, brochures and direct mail.
Demand has been falling at 5% a year since 2008, the company says, and has dropped 30-40% during the lockdown periods. The company had already instigated temporary layoffs at the Ortviken mill to cope with the fall off in demand and reports that the operation is in “negative profitability”.
This is a sudden change in direction for the business. Only last month it had announced plans to offer its papers in sheets as well as on the reel, using Vision Paper and Board/Middleton to sheet and distribute to the UK, so filling a gap as an alternative to the loss of Lumi this year.
The same Walsall company had been named distributor for Frontier, a high bulk, high white wood containing paper that SCA announced in 2018 and which Vision has been distributing since 2019. It is positioned as a cost effective alternative to woodfree papers.
There is no timetable for the closure and consultations will begin with around 800 staff affected, 490 at the Ortviken mill itself. SCA has a total workforce of 4,000 with sales of €1.9 billion. The publication papers operation alone has produced sales of €400 million.
UK publishers buying direct from mill or via paper management companies will now need to source alternatives in discussion with the likes of Denmaur, where commercial director Nick Gee says: “These closures, while a shock, are not really surprising when the decline of the graphical paper market has been accelerated by the Covid pandemic.
“Aside from the large numbers of people who will lose their employment it will also impact on the customer bases of these mills. Obviously UPM has other manufacturing sites that will be able to manufacture many of the same products elsewhere but the SCA decision completely withdraws them from the graphical paper market.
“From our perspective, as a publications merchant, it presents both challenges and opportunities as we have access to many other products from different sources.”
SCA has announced plans to cease production of web offset publication papers despite investment in recent years to stimulate demand through new styles of paper. However, declining demand, exacerbated by the lockdowns, means that paper making has become a loss making activity.
