CATEGORY UPDATE
Just as the paper industry was enjoying a glimmer of hope, 2022 has gotten off to a rocky start with labour shortages and an energy crunch compounded by mill strikes and a war. OPI looks at the ramifications – by Michelle Sturman
www.opi.net
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espite the struggling global supply chain, labour shortages and economic difficulties as the world tries to bounce back from COVID, global demand for uncoated freesheet (UFS) grew last year. According to the Cutsize Monthly Monitor, January 2022 report from paper sector consultants EMGE, cutsize paper demand across Europe in 2021 rose by just over 2%, shipments increased about 8%, while capacity dropped 7%, drastically improving operating rates versus 2020. Worldwide demand for cutsize paper, meanwhile, grew 2.3%. EMGE says industry feedback in January 2022 revealed the cutsize market index in Europe fell because of weaker apparent demand – due to buyers facing difficulties obtaining paper – and worsening short-term business prospects. This was regardless of delivery lead times and prices attaining their highest levels since EMGE’s survey started in 2011. In addition, buyer inventory levels dropped to their lowest in more than a decade. Opinions canvassed in January revealed that although market conditions remained positive, the index slipped slightly compared to the previous month. Domtar Customer Marketing Manager John Parke believes the US market for office paper had a slight recovery versus 2020. “The sector has been declining annually by about 4%. So, to see growth in 2021 represents recovered demand lost during the beginning of the pandemic.” He adds that there is the potential for additional demand recovery when more corporate offices reopen.
TOPSY-TURVY For the full year of 2021, Mondi reported year-on-year revenue growth of 11% for its Uncoated Fine Paper segment. Sylvamo – formerly International Paper’s Printing Papers division – reported sales that were almost 17% higher.
There is the potential for additional demand recovery when more corporate offices reopen Portugal-based Navigator benefitted from a surge in demand for its uncoated woodfree (UWF) paper, with sales increasing 23%, while those for the Communications Paper division at Finnish manufacturer UPM grew by 8%. However, although taking advantage of higher pricing, sales at Packaging Corporation of America’s Boise division fell as it was unable to offset rising energy costs. Finland-based Stora Enso reported a decline in revenues for 2021, although paper remains a diminishing concern as the company continues its transformation into a renewables packaging firm. The net result is the closure of several mills in Sweden and Finland and the conversion of another to kraftliner production. It has also put four of its five remaining paper mills up for sale. But Stora Enso is by no means the only manufacturer to shut down mills or convert machines. This scenario is being repeated by
