European paper and board production drops by 5.9% YoY in 2022

Consumption remained stable despite the EU’s economic slowdown

Production of paper and board (P&B) in the Confederation of European Paper Industries’ (Cepi) member countries decreased by 5.9% year on year in 2022, reflecting the impact of high energy prices and the abrupt slowdown of the European economy in the second half of the year.

According to the association’s preliminary statistics, total production reached 84.8 million tonnes in 2022, with a decrease reported in almost all P&B grades. At the same time, consumption remained stable in spite of the EU’s economic slowdown, with GDP growing by 0.3% in Q3 and stagnating during the last quarter of 2022. The EU economy is now forecast to grow by only 0.8% in 2023 and 1.6% in 2024.

“The difference between decreased production and stable consumption resulted in a strong erosion of the paper trade balance,” Cepi noted in a statement. It added that, however, the decreasing production was also observed in the largest P&B producing countries worldwide, with Canada, Japan, the United States and South Korea recording paper production falls of 0.5-3.5%.

Divergence in production trends for individual paper grades

In terms of individual paper grades, the structural divergence in production trends for graphic grades and packaging as well as sanitary and household grades continued in 2022, according to Cepi. The utilization of paper for recycling decreased by 6.4% compared to 2021.

High electricity and gas prices significantly affected recycling mills and non-integrated paper mills. especially in the second half of 2022.

Demand-wise, the association reported a 3.6% year-on-year rise for sanitary and household paper. Demand for graphic paper was negatively impacted in 2022 (-1.8%) because of the declining demand observed in printing and publishing, while packaging P&B demand remained relatively stable (+0.5%) based on figures available for the first nine months of the past year.

The production of packaging grades is estimated to have decreased by 4.6% compared to 2021, according to the preliminary data. Case materials recorded a drop of 4.8%. The output of cartonboard and other packaging board decreased by 4.1%, and production of wrapping grades shrank by 5.2%.

Cepi added that packaging grades accounted for 59.8% of total P&B production, while graphic grades had a share of 26.1%. Production of P&B grades for industrial and special purposes decreased by 6.1% year on year and accounted for 4.8% of total production. Last but not least, sanitary and household paper output increased by about 2.2% compared to 2021, to levels close to those reached during the coronavirus crisis and accounted for 9.3% of total P&B production.

The production of graphic grades fell by 11.3% in 2022. “After an uptick in 2021, it seems now back on a downward trend,” Cepi noted. The association added that newsprint production decreased by 9.9% year on year, while printing and writing grades saw an 11.5% drop as a result of machine closures and conversions.

Output of coated mechanical paper and uncoated mechanical paper decreased by 19.5% and 13.2%, respectively. Production of uncoated woodfree paper fell by 5.8%, and that of coated woodfree grades by 12.0%.

Overall trade balanced dropped by 20% compared to 2021

Based on cumulative data from the first nine months of 2022, it is expected that total P&B deliveries for the year decreased by 3.3% compared to 2021, and exports to countries outside of Cepi’s membership by 13.3%. “This reflects last year’s paper production decline in Europe, which particularly impacted exports, and the global slowdown in economic growth,” the association said.

Exports decreased by 13.3% by the end of September 2022, recording a huge decline in almost all regions, according to the preliminary statistics. In terms of market share, other European countries remain the main markets for exports with 38.1% of total European exports, Asia accounts for 20.3%, North America for 15.0%, Latin America for 9.8% and all other countries for 16.8%.

Preliminary indications show that P&B imports to Cepi member countries increased by around 6.8% compared to 2021, with increasing volumes coming from other European countries (+21.8%). These countries, which are not represented in Cepi’s membership, account for 47.4% of all European imports, North America for 23.6%, Asia for 16.9%, Latin America for 8.0% and the rest of the world for 4.1%.

“The trade with Russia was impacted by the sanctions adopted by the EU. Total EU paper exports declined by 68%, while paper imports went down by 35%,” Cepi said. “Overall, the trade balance of paper and board has decreased by 20% compared to 2021, but remains positive,” the association added.

Pulp production dropped by 3.7% year on year in 2022, with total output reaching approximately 35.9 million tonnes. Cepi attributed the development to temporary downtime and strikes at the beginning of 2022. Output of mechanical pulp decreased by 5.4%, while production of chemical pulp fell by 3.3% compared to 2021.

This article was first published in our PPI Europe newsletter. Find out how you can access the latest price, news and market developments in Europe directly from your inbox by speaking to our team.

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