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Bright Spots in Europe
By David Price >> email: Dprice1439@aol.com
The 18 members of the Confederation of European Paper Industries (CEPI) had a reasonable year in 2002. By next year, CEPI's membership will increase to 28 with the addition of the East European producers (PaperAge, Jan/Feb. 2003, p.14). But CEPI does see some hopeful signs.
When I write that 2002 was a reasonable year, let's say it was better than 2001—the worst year ever for the industry. But first, some figures for CEPI's 10th anniversary:
The Confederation of European Paper Industries
1991 2001
Turnover (million Euro) 39.3 75.8
Number of companies 1,040 910
Number of mills 1,550 1,250
Pulp 250 200
Paper 1,300 1,050
No. of machines 2,200 1,800
Employment 362,100 255,300
Pulp production ('000 tons) 32,800 37,400
Paper prod. ('000 tons) 65,000 88,200
Pulp consump. ('000 tons) 37,000 43,000
Recov. paper use ('000 tons) 25,700 42,000
Recycling rate (%) 41.1 52.1
CEPI world (%) 27.0 27.9
Paper consump.('000 tons) 62,100 81,300
Source: CEPI, national associations
It is clear that:
Turnover has doubled from Euro 39.3M to Euro 75.8M
The number of companies has fallen by 15%
The number of mills has dropped by 25%
The number of machines has fallen by 400
Employment has by nearly 40%
Paper production, consumption, paper recovery and recycling have risen steadily
But, CEPI's share of the world market has risen just 0.9% in 10 years. It is now number three after North America and Asia.
The preliminary data for 2002 are better than the previous year. Paper production increased by 2.5%, with CEPI members producing about 90 million tons of paper and board. This is a return to the 2000 level. Compared to other parts of the world, CEPI performed marginally better over the year, but the margin between the regions narrowed as the year ended.
The CEPI analysts said that having suffered a difficult year in 2001, papermakers saw steady increases in output last year.
Uneven Performance
As in previous years there has not been uniform performance across the grades. Overall output of graphic grades increased by just under 1%. But this increase was soured by a decline of over 6% in newsprint production, mainly due to weakness in advertising (which we all know about).
Not surprisingly, production of uncoated graphic grades increased by 4%, while output of coated graphic grades rose by 3%. Packaging and case materials production also rose. But the "best in show" was tissue, up by 5%, from 5 million tpy to 5.2 million tpy.
In fact, tissue is the fastest growing sector in Europe. By the year 2004, 770,000 tons will come on-stream, mainly in Italy and France, with 11 capacity projects planned in Italy. Kimberly-Clark and Procter & Gamble have planned expansions in the region, but no details are available. All that has been leaked is that both companies are trialling pre-moistened bathroom tissue. The growth for tissue in Europe is considerable. While North Americans consume 22kgs/person/year, Europeans still show a modest 12.ks/person/year.
Deliveries
Based on data for the first three-quarters of 2002, deliveries have increased slightly more than production. Deliveries between CEPI countries remain unchanged. But exports outside the region have increased as much as 10% over 2001.
Exports to Asia account for 35% of CEPI's exports, and those to Eastern Europe account for a further 20%. But export growth has also been affected by weaker international demand, the loss of price competitiveness causes by the depreciation of the US dollar.
The really interesting trend is that imports to Europe from North America continue to decline and now account for 35% of CEPI imports. The winner here is Eastern Europe, which has won a share of 41% of the region's imports.
There are serious, long-term implications for North American industry here:
it is losing market share in Europe,
it badly needs massive, domestic investment,
it faces discriminatory trade practices.
At the time of writing, CEPI was meeting in Vienna, Austria to discuss the entry and membership of 10 East European producers next year. When they become full members, they will bring to CEPI an extra paper and board capacity of 7%, an increase in 35% of forest resources, and a single market of 25 countries holding a market potential of over 370 million people.
As CEPI's results for 2002 show some goods numbers for its members, they also make uncomfortable reading for North American exporters.
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