The agreement wipes out all the amendments approved by the EU Parliament during its plenary in mid-November, including the creation of a new category of countries posing “no risk” on deforestation in addition to the existing three categories of “low”, “standard” and “high” risk.

An EU official told Fastmarkets that the provisional agreement will most probably be endorsed on Wednesday December 4 by both the Council’s Committee of Permanent Representatives (COREPER) and by the Parliament’s Environment, Public Health and Food Safety (ENVI) committee. The agreement will then have to be voted by the Parliament during its last plenary, which will take place on December 16-19 in Strasbourg, and then formally adopted by the Council, signed and published in the Official Journal before December 30, 2024.

According to the original Commission’s proposal, the EUDR will be applied on December 30 2025 for large companies and on June 30 2026 for micro and small enterprises.

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The new text will have to be endorsed by both the Council of the European Union and the European Parliament, then published in the EU Official Journal by December 30, the regulation’s original enforcement date. The Environment, Public Health and Food Safety (ENVI) committee is now in charge of negotiating with member states.

“The Hungarian presidency has taken good note of the voting results of the European Parliament plenary and will reflect on the way forward together with Member States,” an EU official told Fastmarkets.

The last plenary of the Parliament will take place on December 16-19 in Strasbourg.

EUDR entry into force delayed by one year

If the postponement is finally approved by both the Parliament and the Council, the EUDR will come into force on December 30, 2025, for large operators and traders and on June 30, 2026, for micro- and small enterprises.

The Parliament also approved other amendments, including the creation of a new category of countries posing “no risk” on deforestation in addition to the existing three categories of “low”, “standard” and “high” risk. “Countries classified as “no risk”, defined as countries with stable or increasing forest area development, would face significantly less stringent requirements as there is a negligible or non-existent risk of deforestation, the European Parliament said, adding that the Commission will have to finalize a country benchmarking system by June 30 next year.

New EUDR guidance document published

Elsewhere, on November 13, the European Commission published a guidance document with the aim to further clarify parts of the regulation including the definition of “operator,” and “negligible risk,” as well as product scope for “packing and packaging materials.”

According to the document, packing material placed on the market as products in their own right and containers which give a product its essential character (such as decorative gift boxes) will be subject to the regulation. On the other hand, packing material presented with goods inside and used exclusively to support, protect or carry another product and user manuals accompanying shipments, unless they are placed on the market in their own right, will not fall under the scope of the EUDR.

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“This postponement will allow third countries, member states, operators and traders to be fully prepared in their due diligence obligations, which is to ensure that certain commodities and products sold in the EU or exported from the EU are deforestation-free,” the European Council said in a statement.

The Council will now inform the European Parliament, which is expected to vote on the Commission’s proposal in a plenary session on November 13-14. After the Parliament vote, the Council will also have to vote on the formal adoption of the regulation, but this is considered a formality. “The aim is to have the regulation formally adopted by both co-legislators and published in the Official Journal of the EU so that it can enter into force by the end of the year,” the Council said.

The coordinators of the political groups in the Environment, Public Health and Food Safety (ENVI) committee of the European Parliament decided on October 14 to use the urgency procedure without a committee stage, according to article 170 of the European Parliament internal regulation, to speed up the approval process.

During the ENVI committee on October 14, members of parliament (MEPs) from the European People’s Party (EPP), the Progressive Alliance of Socialists and Democrats (S&D) and Renew Europe clearly expressed their intention to vote in favor of the proposal to postpone the implementation date of the EUDR. The three parties together account for 401 seats out of the total 720 seats of the European Parliament.

“A one-year delay is necessary I guess, but we need a clear commitment from the Commission that this year will be used for a proper implementation and for a real dialogue with partner countries to establish common strategies to reduce the logging of forests […] and to overcome this damage we had in the last year” Bernd Lange from the S&D group said during the committee.

A similar position is shared by Renew Europe, which accuses Commission President Ursula von der Leyen directly of not releasing the guidelines earlier, thus making a delay necessary. “The technical work by the Commission was done and then it remained for weeks or months on the desk of Ursula Von Der Leyen, therefore companies did not receive the technical details allowing them to get ready, and now everyone is saying well, that’s too late. And that is a political choice,” Pascal Canfin from Renew Europe said. He added: “The Renew group will be acting responsibly, that is to say, we will support the delay by a year, but no more than that, and we will not be open to other amendments because otherwise the text will not be applied.”

The Left group also blamed the Commission for the delay and said it might also vote in favor of the proposal, although it could also ask for improvements to the text. “Can you commit to no more than one year of delay for the implementation of this regulation? […] Are you prepared to commit not to weakening the content and the aims of this regulation?” Jonas Sjöstedt from The Left asked a Commission representative during the committee meeting. “We believe that we need to use this opportunity to improve the content of the regulation.”

The Greens also criticized the Commission and asked for assurances that there would be no further delay after the proposed twelve-month postponement. “We must now ensure that the postponement does not open Pandora’s box and that the law is not weakened,” the Greens MEP Anna Cavazzini said in a statement.

On the right-wing side of the Parliament, all the biggest groups are asking for the delay to be approved, with some differences. “As things stand, there is a huge amount of uncertainty and the relevant points have been raised. […] From the global south we have had clear information that at the moment they are simply not in a position to implement this [regulation], so this is also a great threat to our trade and that means that, as regards to this extension, we would be ensuring that the law isn’t directly applicable,” Christine Schneider from the EPP group said during the committee meeting. “Now we need to adopt this extension very quickly. We will go through that procedure in the plenary and then have a vote in that November plenary because our business partners need that certainty.”

Beatrice Timgren from the European Conservatives and Reformists Group even called for the whole regulation to be reconsidered. “It’s good that the commission has finally recognized the issue with the regulation and delayed it, but why only a year? […] Let’s be clear, this regulation, as it stands, will not work. We all support protecting forests, but piling more bureaucracy on European businesses, especially the small ones, isn’t the answer. […] The whole regulation must be reevaluated,” she said. “This regulation poses huge risks to our industries and the bureaucracy will be enormous. […] We need to completely change or even delete this regulation completely,” Anja Arndt from the Europe of Sovereign Nations group echoed.

Interested in learning about the impact the EUDR will have on the market over the long term? Access Fastmarkets director, Europe packaging and graphic papers Alejandro Mata Lopez’s forecast examining the challenges the regulation will pose to the European pulp and paper industries here.

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Woodfree paper supply fell at the end of 2023 due to the closure of Sappi’s Stockstadt mill in Germany and its Lanaken mill in Belgium, while paper consumption improved in Q1 and continued to be higher than last year through April, before weakening towards the beginning of May.

“Paper mills are quite busy at the moment because merchants and printers have been restocking during the first two months of the year,” a market source said in April. “But, in terms of sales, coated woodfree (CWF) paper demand is down 10% compared to last year in Q1, while demand for uncoated woodfree (UWF) and cut-size [paper] is quite fine,” he added.

According to the latest statistics provided by Euro-Graph, the European association of graphic paper producers, CWF demand increased by 18% year on year to 784,000 tonnes during the first four months of 2024, while UWF paper demand improved by 15% to 1.6 million tonnes.

At the end of February, The Navigator Company announced plans to lift UWF paper prices by up to 5% in Europe for deliveries from March 25, citing “structurally higher prices of most input costs essential for paper manufacturing,” as the reason behind the price hike. “The recovery in demand visible in the global markets also contributes to this price adjustment,” the company said.

Then, at the beginning of April, Suzano said it would increase prices for all of its paper product lines by 5% as of April 1, while Burgo announced a 7% increase on UWF paper prices from April.

In the cut-size segment, some market participants mentioned increases of £10-25 per tonne in the UK and Euro 25 per tonne in continental Europe being implemented from the end of April to the beginning of May.

Prices for UWF offset paper also started to increase towards the end of April, particularly on the reel side of the business, where they grew by Euro 10-15 per tonne in continental Europe and by up to £10 per tonne in the UK.

Stockists were the first to pay higher prices, while in the indent market, major buyers managed to postpone the price increases until May.

CWF reel prices also increased in April for publishers and printers relying on three-month contracts, rising by approximately Euro 20-40 per tonne in continental Europe, thus completing the implementation of price increases initially announced in Q1.

Some other customers had prices rolled over into May. On the sheet side, prices increased by roughly Euro 10 per tonne in Germany and France and by up to Euro 25 per tonne in Spain, while staying flat in Italy. “Prices for UWF paper in both sheets and A4 format have increased, but orders are not there,” a source told PPI Europe.

Generally speaking, price increases were uneven and were applied at different times, or sometimes not applied at all, depending on the producer, the customer and the country.

Looking for more paper prices? Explore our graphic paper hub for prices, news, forecast and more.

Paper prices increase with higher demand and rising production costs

Improved paper demand during Q1, together with the strikes in the transport sector in Finland and reduced supply from Asia due to the shipping problems in the Red Sea, helped tighten the market and bolstered producers’ ability to either further raise prices in May or to actually implement already announced price increases in order to offset rising production costs.

Between the beginning of the year and May, northern bleached softwood kraft pulp prices increased by $335 per tonne on average, reaching $1,635 per tonne, while bleached eucalyptus kraft pulp increased by almost $380 per tonne to $1,440 per tonne.

In April, Sappi announced its intention to raise prices for both UWF and CWF paper to reach the 10% increase originally announced for Q1, with implementation by May 1 at the latest. “Cost levels, particularly for pulp and transport, have continued to increase heavily and are expected to escalate further in the coming months,” the firm said.

In separate moves, Lecta also said it would hike CWF paper prices by Euro 50 per tonne from May 6, while Burgo said it intended to raise woodfree paper prices by at least 5-7% for deliveries to all markets from May 1. Asia Pacific Resources International Limited also announced its intention to increase uncoated fine paper prices by $30 per tonne for global orders for April intake.

“We are very well booked at the moment. The pulp price hike will go through, it is not negotiable. It is a fact, and it is dramatic for the next month. So, either the [paper] price increase goes through, or the industry will face serious issues,” a market participant said in April.

“Paper demand is stable but soft. Still, production cost levels are rising like hell, so the chance of losses is high. Therefore, I think there will be a strong push by the industry to increase prices before May. Let’s see if we manage to,” another market player said.

Despite the announcements, price increases did not go through easily in May, and while some producers managed to lift prices somewhat, others had to postpone the hikes until June, or even later.

“Paper mills were very busy in Q1, but they have gone very quiet since the end of March. They started to see a market drop, particularly from April into May; that’s why price increases take time to be implemented,” a market participant said.

“The problem is that there is not much business so it’s difficult to implement price increases,” another source added.

One market participant even mentioned small price reductions in UWF prices in May from a producer that had increased its sales prices in April.

The situation was particularly difficult in CWF reels, where many buyers have tended to move to much less expensive mediumweight coated paper. “The May price increase is postponed or even cancelled because the market is not there,” a market source told PPI Europe.

UWF sheet prices rose by some Euro 10-15 per tonne on average in May in continental Europe, and by £10 per tonne on the lower end of the range in the UK, while reel prices increased by £15 per tonne on the lower end of the range in the UK. On the coated side, reel prices improved by Euro 10 per tonne on the higher end of the range in Germany and sheet prices by Euro 20 per tonne on the higher end of the range.

Paper production capacity set to decrease

Continued overcapacity in the graphic paper market has led to further consolidation. At the end of May, UPM announced it would permanently shut UWF PM 3 at its Nordland mill in Germany, as well as its Hürth newsprint mill, also in Germany, by the end of the year. PM 3 can produce some 280,000 tonnes per yr of UWF paper.

According to one market participant, this news provoked a change in the market mood and heightened expectations that the price increases would go through.

UWF paper prices remained fairly stable between May and June in Europe, with the exception of the UK, where UWF offset sheet prices rose by £15 per tonne on average. On the coated side, CWF reel prices rose by a further Euro 40 per tonne on the higher end of the range in Germany in June, while sheet prices increased by Euro 20-25 per tonne at the high end of the range in Germany and Italy.

More price increases on the horizon?

Despite low paper demand and with sales volumes expected to further decrease during the summer, paper producers are still hoping to increase prices in July in order to partially offset continuously rising pulp costs. The Navigator Company is the only paper producer to have publicly announced its intention to raise UWF paper prices by 4-6% as of July 1. On the other side, paper buyers mentioned special offers below normal stock prices already in June, both for offset and A4 paper.

On the coated side, a few buyers said producers are asking for at least Euro 50 per tonne more on deliveries from July, while noting that this request is not actually supported by the supply and demand balance.

“Some big printers didn’t have the price increase in June, but they should have new prices at the beginning of July. All suppliers are saying that business is bad but that production costs are increasing,” a market source said.

“Until the end of April, the supply and demand balance was good for us, but now demand is going down, another contact said. “Lead times are becoming shorter, and availability is higher. I think it will be necessary to close more CWF paper capacity,” he added. A number of market participants shared this opinion, saying such closures were necessary in order to improve prices and increase margins.

On the other hand, not all customers believe prices will increase further in the coming months given the low paper demand. “Some producers tried to lift prices and then had to retrace their steps. It’s difficult to read the market. Some suppliers offer stability; others are after price increases,” a European buyer said. “It’s true that pulp costs are quite high, but on the other hand, producers need volumes, so those who want to increase their market share are willing to offer stability,” they added.

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The regulation, which came into force on June 29, 2023, and which gave stakeholders 18 months to implement the new rules, aims at minimizing the EU’s part in deforestation and forest degradation worldwide, as well as reducing its contribution to greenhouse gas emissions and global biodiversity loss. The scope of the regulation includes commodities, namely cattle, cocoa, coffee, palm oil, rubber, soya and wood, as well as relevant products including pulp, paper and printed products.

According to the regulation, relevant commodities and products shall not be placed or made available on the European market or exported, unless they are deforestation-free, they have been produced in accordance with the relevant legislation of the country of production and are covered by a due diligence statement.

The due diligence obligation is actually one of the pivotal points of the EUDR: every company trading one of the listed products in or out of the EU must ensure traceability back to the specific plot of land where the fibers originated. The due diligence statement requires the collection of the exact geographic coordinates for each plot involved plus other information, documents and data which demonstrate that the relevant products are deforestation-free. The due diligence also includes risk assessment and risk mitigation measures.

While industry bodies and firms recognize the importance of the regulation in fighting deforestation and therefore protecting the environment, they are worried that an excess of bureaucracy and lack of essential and suitable tools for implementation could create issues for European companies that buy pulp, paper or printed products comprised of virgin-fiber material originating outside the EU, but also within.

Need for due diligence fine-tuning

The pulp, paper and printing industries are concerned about the implementation of the regulation because they say the European Commission still needs to provide a working due diligence information system, while some legal provisions still require clarification, and they still do not know which geolocalization tool can be used.

“Companies may not be able to comply [with the EUDR], considering the fact that the European Commission will not provide the IT tools needed to process the due diligence statements until shortly before the deadline of application and that many legal provisions of the legislation still require clarification,” Laetitia Reynaud, policy advisor at Intergraf, the association representing the European printing industry, told PPI Europe. She added: “Once the tools are in place and the legal requirements are clear, it will be a matter of adapting to administrative work required by the legislation. The smaller the companies are, the more challenging the compliance work will be because the legislation implies a significant administrative burden – even when trading within the EU. There is also a risk Member States will not be ready [to meet] their own obligations. At this stage, 11 Member States have not appointed a competent authority [to oversee the regulation’s application].”

Jori Ringman, director general of the Confederation of European Paper Industries (Cepi), shares similar worries. “A pilot testing of this IT tool by several companies has revealed serious technical issues. With only eight months remaining until the compliance deadline of December 30, 2024, the information system is still under development, leaving companies uncertain about how to proceed,” he told PPI Europe. “It is clear now that we will not know until a very late stage – potentially, until the very last day of the transitional period – how the information system established by the European Commission actually works in detail. How can we then be expected to comply with the EUDR? This is just one example, but there are many more,” he added.

Industry players expressed concerns as well. “The challenge with the EUDR is that it most likely will create enormous amounts of administrative work, while not really benefiting forests. Currently, many of us are somewhat nervous, and this is mainly linked to a lack of transparency and information from the European Commission. Once the question marks have been resolved and we have a clearer path forward, I do think we will manage this somehow,” a market participant said.

In a joint letter to German government ministries, five German printing and publishing industry associations also expressed their concerns. “The associations demand clear legal terms with no room for interpretation so that the resulting obligations can be implemented in a legally secure manner throughout the entire supply chain,” the associations said. 

Industry associations also highlighted the fact that the lack of clear benchmarking rules is a problem. According to the regulation, a benchmarking system will classify countries under three categories – high, standard and low risk – according to the risk level of producing in the countries commodities that are not deforestation-free. Shipments from high-risk countries will be subject to enhanced scrutiny from competent authorities and a high-risk classification will entail a specific dialogue with the European Commission to address jointly the root causes of deforestation and forest degradation. When the regulation came into force on June 29, 2023, all countries were assigned a standard level of risk. The risk level might change once the assessments by the European Commission are made public by the end of 2024.

“These rules were expected to incentivize operators to shift their sourcing from ‘high-risk countries’ or regions to ‘low-risk countries,’ while also reducing the regulatory burden for those sourcing from low-risk countries or regions,” Cepi’s Ringman commented. He added: “One would expect low-risk countries to include those located in Europe and many other parts of the world. Without the benchmarking system, the effectiveness of the regulation during its implementation is compromised.”

Another cause of concern is geolocalization. According to the German printing and publishing associations, it is currently still unclear which tools can be used for geolocalization of the commodities and the products produced. “The associations are calling for clarification as to which tools are classified as suitable for legally secure geolocation and assessment of the risk of forest damage and deforestation. This clarification must be made well in advance of the entry into force of the resulting obligations for companies,“ they said.

According to Fastmarkets’ director European packaging and graphic paper Alejandro Mata, the EUDR Regulation could be very disruptive to the European pulp and paper (P&P) industry. “The fibers contained in every piece of paper will need to be traced back to the forest they came from by going through the various converting processes, back to the parent rolls and the paper machine that produced that paper. But the challenge does not stop there – the fibers used by the mill will need to be traced back to the pulp bales used in the fiber mix for that parent paper reel. Each parent reel can be associated with multiple pulp bales. And each pulp bale can relate to thousands of plots of land, if not more,” Mata told PPI Europe. He added: “If companies cannot provide evidence that the products they are selling or producing in Europe are deforestation free, they will not be allowed to distribute their products in Europe, or even sell EU-made products abroad.”

P&P imports to fall? 

Some European market participants fear that difficulties complying with the EUDR might disrupt European imports of pulp, paper and printed products by third countries. “If, in the end, the administration around EUDR becomes too excessive, I can clearly see some producers actively avoiding the EU market and instead targeting other regions such as Asia,” one market source told PPI Europe. He added: “To be honest, this will not have a huge impact for standard softwood [pulp] grades, as imports are already at low levels. But the EU market is highly dependent on imports of standard hardwood [pulp] and softwood fluff [pulp]. [There are] big challenges for these segments.” 

According to Reynaud, imports of printed products could also be affected. “It will all depend on the level of preparedness of non-EU paper suppliers and on the benchmarking of the importing country, as there is a significant difference in terms of obligations when you are importing from a low-risk country, which implies only data collection – or from a standard – or high-risk country, whose obligations include, in addition, risk assessment and risk mitigation,” she commented.

Meanwhile, Cepi noted that most of the burden of the EUDR will be borne by European producers, because it will have implications for both domestic deliveries and exports to global markets. 

The regulation also poses concerns for some of the EU’s partners. “The US pulp and paper industry is not linked to global deforestation and forest degradation. As such, the EUDR – in its current form – poses significant concerns for our country. The rule presents severe compliance challenges, would disrupt sustainable supply chains, and imposes unwarranted and costly requirements for doing business with the EU,” American Forest & Paper Association (AF&PA) president and CEO Heidi Brock said in March when commenting on a bipartisan US Senate effort urging the country’s trade representative to engage with the European Commission on the challenges posed by the EUDR.

According to PPI Europe’s sister publication PPI Latin America, a Brazilian delegation led by the Brazilian Tree Industry (Ibá) and including the Brazilian Paper Packaging Association (Empapel), travelled to Brussels at the beginning of March with the aim of discussing with EU representatives its points of concern over the regulation.

In order to address the fundamental flaws in the regulation and to be better prepared for the implementation, several EU industry bodies, including Cepi, as well as some EU Member States, have asked the EU Council to postpone the enforcement of the EUDR. “The paper industry is against deforestation, as our industry, our investments and our future depend on healthy forests. We have a strategic interest in having an EU Deforestation Regulation that works. Tackling deforestation is too important to be hindered by an unpracticable regulation,” Ringman said.

Despite the many doubts, not everyone is worried about what will happen from December 30, and some even see the glass half full. “For a European pulp producer owning or controlling large areas of forest land, managing their forests extremely well, with good control of their fiber supply, a high level of self-sufficiency and high-quality assets, the EUDR will most likely bring some competitive advantages – if played cleverly,” a market source said.

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According to data from the European Rotogravure Association (ERA), the number of publication gravure presses in Europe plummeted by 31.7% to 69 between 2019 and 2021. In 2021, the estimated capacity of the rotogravure printing segment was 1.9 million tonnes/yr.

During the period, 11 presses were closed in Germany, nine in Italy, four in France and the Netherlands, three in Finland and one in Poland.

Consolidation continued over the last two years

In December 2022, Prinovis, part of Bertelsmann, closed its rotogravure printing site in Dresden, Germany, which operated five printing presses. It then permanently shut its Liverpool site, the UK’s last gravure plant, which operated four machines. In a final turn of the screw, the firm announced it would exit the rotogravure printing market altogether, with the closure of its Ahrensburg printing plant in Germany in January 2024. The plant operates nine printing presses.

In September, France’s Riccobono snapped up German gravure printer Tiefdruck Schwann-Bagel, becoming Europe’s largest rotogravure printer. The firm said that as part of the acquisition process, a restructuring plan involving a reduction of rotary presses from six to four was also approved.

“This takeover is the Riccobono Group’s most important development abroad and fits in perfectly with our external growth strategy. It will enable us to gain a foothold in the German market, which is the largest for high-volume printing, while at the same time enabling us to size our industrial facilities below the expected workload in order to anticipate the market’s future decline,” the firm’s CEO Guillaume Riccobono said at the time of the takeover announcement.

Following the closure of Prinovis’ Ahrensburg plant in 2024, the number of publication gravure printing presses in Europe will stand at 48, corresponding to a 30.4% decrease compared to 2021 and a 61.6% drop compared to 2015.

According to the 2022 Intergraf Economic Report, publication gravure printing in Germany, Europe’s biggest market, decreased by 9.5% year on year in 2021.

The retailer segment in particular has abandoned rotogravure printing – or printing altogether – as more and more consumers started to increasingly shop by e-commerce than printed catalogs. The move has allowed retailers to reduce costs while allegedly reducing their carbon footprint. Last September, UK retailer Freemans announced its decision to stop production and distribution of its catalog after 118 years, thereby reducing its graphic paper consumption by 650 tonnes/yr.

Freemans is only the latest of a long list of retailers including UK’s Argos, Sweden’s Ikea, Germany’s Otto and France’s Monoprix, that have stopped printing their iconic catalogs during the last five years.

Impact on paper production

The decrease in rotogravure printing has forced paper producers to redirect their focus more to offset paper production. In late 2018, German lightweight coated (LWC) paper producer Leipa decided to stop producing rotogravure paper in 2019, as it believed that the sharp increases in raw material costs would have required a price increase in the rotogravure segment that would have made gravure paper prices nonviable for clients. According to some market sources, Leipa has restarted some rotogravure LWC production recently, in light of the situation at the Duino mill.

Burgo’s Duino mill was taken over by Mondi at the beginning of the year, and under the original terms of that deal, the mill was to continue producing LWC, but it emerged this summer that the plant had been operating only intermittently for months due to the weak market situation, leaving UPM and Kabel Premium Pulp & Paper as the only regular suppliers of rotogravure coated mechanical paper in Europe.

Also, last week, UPM confirmed that it will close its Plattling publication paper mill by the end of November. The mill’s two paper machines produce coated and uncoated mechanical paper, for both offset and rotogravure printing, and have a combined production capacity of 595,000 tonnes/yr.

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

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A topic that quickly gained attendees’ attention was the steep decline in newsprint demand registered in Europe in 2023. According to Den Danske Presses Faellesindkøbs-Forening managing director Thomas Isaksen, newsprint consumption has decreased by approximately 30% in Denmark this year. Ikaksen mainly attributed the decline to high paper costs, although he added that distribution costs will become more and more relevant, too. “In order to save money, publishers decreased the number of pages and increased the price of the newspaper,” he said during a roundtable discussion.

In France, newsprint consumption plummeted by 20% year on year to 170,000 tonnes in 2023, according to Grammeo CEO Olivier Derville, who highlighted how this decline is only comparable to the one seen in 2020 due to the Covid-19 pandemic. Derville attributed the decrease to high paper prices, the structural decline of pagination and advertising, the destocking trend and a sharp decrease in demand from retailers (-20/30% year on year), which mainly consume supercalendered paper and heatset newsprint.

“Newsprint consumption is driven by regional newspapers (80%) because national newspapers are investing more and more in digital,” Derville commented, adding that French publishers are downgrading from 42.5-g to 40-g newsprint in order to offset high paper prices and that some tests are currently being carried out with 38-g newsprint.

Andreas Ullmann, general manager of technology at German publisher Presse Druck und Verlag said the firm’s newsprint consumption showed an above-average decline in 2023 due to destocking. “In our case, we planned the drop in newsprint [consumption], we reduced our purchases by 40%, mostly because of the stocks we accumulated from 2022 to 2023. Newsprint consumption of the Augsburger Allgemeine declined by 10% year on year,” Ullmann said.

The future of print newspapers

Various speakers at the summit highlighted how media companies are still trying to figure out how to remain – or to return to be – sustainable from a financial point of view. Printed newspaper circulation has fallen drastically since the Covid-19 pandemic and digital subscriptions are rising. Still, printed newspapers are providing the highest profit to media companies.

“In 2022, 70% of our gross margin came from print, and only 30% from digital. We believe that printed newspapers’ contribution [to the gross margin] will decrease in the coming years and will stand at 30% in 2030,” Mediahuis COO Paul Verwilt commented. According to Verwilt, printed newspapers are only one distribution channel of journalism, and even if they have become less important over the years, they are still important for some consumers and thus essential for Mediahuis’ business model.

Printed newspapers have been under increasing pressure over the years due to lower revenues and rising variable costs. While scale, cross-company consolidation, maximum automation of print processes and consolidation and cross-publisher cooperations, among other things, can help keep the increase in printing costs under control, rising distribution costs are more difficult to offset. According to Verwilt, the cost of distribution per copy will double by 2030. 

Carsten Knop, publisher of Frankfurter Allgemeine Zeitung (FAZ) digital products, highlighted how the newspaper’s circulation is half of what it was 10 years ago, while digital subscriptions have grown by 30%. And still, FAZ is profiting from print, according to Knop.

However, the average age of FAZ print subscribers is 68, and for this reason, the firm is investing strongly in digital, including TikTok. “We will only be able to print and sell newspapers in the next five years if we are able to stabilize the digital part of the business. Printed newspapers still represent two-thirds of FAZ revenues. We really need to make newspapers work for the years to come,” Knop said.

Print still driving revenues

Despite all the challenges, publishers are optimistic going into 2024, and even more so in the longer term. According to the World Press Trends 2023-24 survey by WAN-IFRA, 55% of respondents said they feel optimistic about their company’s business prospects for the next 12 months and the percentage increases to 58% for the next three years. Publishers expect that revenues will rise by 15.2% year on year in 2023 and by 18.5% in 2024 because of some elections around the world and the Olympic Games.

The survey also highlighted how print revenues still account for 57% of publishers’ income, even more than in 2022. Digital circulation revenues increased by a mere 2% in 2023, while digital advertising sank by 11%. Overall, most publishers said their profits increased in 2023.

In terms of investments, publishers prioritize reader revenue, product development and other revenue streams, while they will invest much less in print production and distribution. As for technology, artificial intelligence, automation and data analytics and intelligence are the publishers’ top priorities in the next 12 months.

Publishers said 43% of their revenues in the coming year will come from advertising and 35.3% from digital subscriptions, while 21.7% will come from other sources including events, grant funding and partnerships with platforms among other things.     

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

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467 Lightweight Coated (LWC) Offset Reels 54 g Euro/tonne – date of publication: March 17, 2022

Incorrect price: 930-1,200

Corrected to: 930-1,250

Date changed: April 14, 2022

Fastmarkets RISI’s pricing database has been updated to reflect this change.

To provide feedback on this coverage note or if you would like to provide price information by becoming a data submitter, please contact Andrea Venturini by email at: pricing.risi@fastmarkets.com. Please add the subject heading ‘FAO: Andrea Venturini, re: LWC Offset Reels, Germany.

To see all Fastmarkets RISI pricing methodology and specification documents see here.

To see all Fastmarkets RISI pricing notice please see here.

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“[Vladimir] Putin has entered Ukraine from almost all sides and is waging a bloody war, including against the civilian population, women and children, stated Ukrpapir director Eduard Litvak to Fastmarkets’ publication PPI Europe.

Ukraine produces approximately 1.2 million tonnes of paper and board annually, according to Fastmarkets RISI’s economic analysis team. The country’s biggest producers include the Kyiv Cardboard and Paper Mill (KCPM), which accounts for approximately 30% of Ukraine’s total paper and board output, and the Rubezhansky Cardboard and Packaging Mill, a DS Smith joint venture.

War suspends Ukraine mill operations

A KCPM representative confirmed that the plant had suspended operations. “We have stopped production and the guards are protecting the mill. All paper and board production in Ukraine has stopped – it is real war,” a KCPM representative said. They continued:

At the company level, a flurry of announcements have been made by firms with operations in Russia and Ukraine or doing business in the countries.

Stora Enso announced Wednesday that it would stop all production and sales in Russia until further notice due to the ongoing invasion of Ukraine. It will also halt all exports and imports to and from the country. “The war in Ukraine is unacceptable and we are fully behind all sanctions. We will now focus all our attention on supporting our customers and the wellbeing of our employees,” the firm’s CEO Annica Bresky said in a statement.

Stora Enso has three corrugated packaging plants and two sawmills in Russia and employs some 1,100 people there. The company’s sales in Russia account for approximately 3% of total group revenues and the impact on its sales and EBIT is not material, according to the firm.

Mondi, which has operations in Russia that total some 12% of its production revenue, said in a statement that their facilities in Russia were operational, but that its sole bag plant in Ukraine, west of Lviv, had suspended production. Some 100 workers are employed there.

Germany’s Leipa issued a statement saying that logistical bottlenecks appeared to have worsened since February 25 and that while it would stand by its customers, there would be “postponements, delays and cost increases in the coming weeks.”

Chemical producer Kemira, which obtains around 3% of its total revenue from Russia, said on Tuesday that it would discontinue deliveries to both Russia and Belarus as of March 1 and until further notice citing the “ongoing situation in the region.”

Ukrainian packaging mill employees devastatingly impacted

The Prinzhorn Group’s Dunapack Packaging, which operates two sites in Ukraine, in Oleshky and Hodorov, released a scathing statement detailing the death of its employee Pawel Borisov, a 21-year-old box-making line operator at the firm who was caught in crossfire and killed. Two other employees had their homes destroyed by bombs. “The rest of our colleagues are scattered all over, from cellars to bomb shelters to days-long queues on the borders trying to cross over to the EU,” Dunapack said.

The firm said it was “forever grateful” to its colleagues in Poland, Hungary, Romania and Bulgaria who were taking care of their Ukrainian colleagues when they managed to cross the border. “Several shells have hit our corrugated packaging plant. It is enraging and incomprehensible to see your former office destroyed. This war is meaningless. It needs to stop now,” the firm said.

Late yesterday, the International Paper spinoff Sylvamo said it was considering curtailing or temporarily shutting down pulp and paper production at its Svetogorsk mill in Russia at the end of this week due to “inadequate supplies of critical raw materials.” The mill is currently operating while the firm takes steps to mitigate supply chain issues. The mill, which is located in western Russia on the border with Finland, can produce some 720,000 tonnes per year of pulp, paper and board.

Varying global and local trade fallout

While the situation is still very much in flux, there can be no doubt that there will be varying levels of fallout both at a narrow, regional level and more broadly.

In terms of paper and board production and trade, the impact on global markets should be limited, even for Europe, according to Fastmarkets RISI’s director Europe packaging paper and graphic paper Alejandro Mata.

Ukraine, with its 1.2 million tonnes of paper and board capacity, of which some 750,000 tonnes is containerboard, accounts for less than 2% of Europe’s total paper and board capacity, according to Mata, with most of that going to the domestic market.

Read more on Alejandro Mata’s views here.

Trade-wise, Russia exports significant quantities of newsprint and kraftliner as well as some uncoated woodfree (UWF) paper. Mata noted that Ukraine and Russia have already been imposing trade restrictions on each other since Russia’s annexation of Crimea in 2014, impacting various paper grades, wood fiber and paper for recycling, so any new effects will be limited.

However, Russia imports some 800,000-900,000 tonnes of paper and board – mostly boxboard and coated graphic papers – from the EU, and this could be at risk, according to Mata, who pointed out that Russia’s import demand share is over 30% for boxboard and around 25% for graphic papers.

If trade restrictions cut off paper and board coming to Europe, there is a possibility of some short-term paper shortages in certain segments on the European market, kraftliner in particular, according to Mata. “Russia usually sends some 180,000-200,000 tonnes of kraftliner to Europe each year. However, with capacity ramping up in Europe (Stora Enso Oulu), better availability from North America while the market eases there and the ramp-up at Klabin’s Puma II project in Brazil, we should expect a certain degree of flexibility to compensate for the potential loss of Russian kraftliner,” Mata said.

”Russia does export to many other regions, with a big chunk going to China and other countries in Asia, so finding an outlet for displaced volumes should not be too difficult, especially as global kraftliner markets remain tight,” he added.

When it comes to pulp, Russia accounts for some 4% of global exports, with China, where some 60% of its exports went in 2021, being the main destination, Mata noted. He said that no disruptions to supply to China are currently expected. With Russia accounting for some 22% of the global trade in softwood lumber and pulpwood logs, however, wood supply could become an issue.

Logistics in flux and major shippers cut ties with Russia 

The logistical situation remains very fluid as well. This week, two of the world’s biggest shipping firms, Mediterranean Shipping Company (MSC) and Maersk, announced they were severing ties with Russia. MSC said that as of March 1 it would halt all cargo bookings to and from Russia, aside from essentials including food, medical equipment and humanitarian goods. Maersk said that effective immediately, cargo bookings by ocean, air and rail to and from Russia would be suspended temporarily with a similar humanitarian exception.

Developments on the roads are also likely to squeeze the logistics chain. According to the European Cargo Association of International Freight Forwarders ELVIS, the leading association of truck haulage companies, there are “immense problems looming for the logistics industry in both Germany and Europe. “The Russian war of aggression against Ukraine could exacerbate the driver shortage to an extent that many supply chains will not be able to withstand,” the association said.

Eastern European transport fleets handle large parts of the truck traffic in Germany. While the share of Ukrainian drivers in this system is not precisely quantifiable, the proportion of mileage handled by Polish trucks in Germany amounts to some 17.5%, according to ELVIS, which means at least half of all transport in Germany is carried out by foreign companies. Many of the drivers employed in Poland come from Ukraine, and the majority of them are no longer able or willing to carry out their work, either because they are part of the general mobilization ordered by the Ukrainian government or are returning home to help with the war effort.

“We’re talking about an estimated 100,000 Ukrainian drivers who are currently in Poland alone and who may soon no longer be available to transport companies. That would be tantamount to a bloodletting that could hardly be compensated for,” said Klaus Meyer, chairman of logistics and mobility at the German Association of Small and Medium-sized Businesses BVMW.

Energy looms over the European economy

“Without a doubt, the largest impact for the European economy and the EU’s pulp and paper industry relates to energy and inflation,” Fastmarkets RISI’s Mata said.

EU energy ministers held an emergency meeting earlier this week to address supply risks. The EU gave the green light to link the European Entso-E power system to Ukraine’s grid after the country disconnected its grid from the Russian system last week and has asked for emergency synchronization with a European system. “This is a strategic initiative for increasing Ukraine’s energy independence,” EU Energy Commissioner Kadri Simson said during a press conference. EU officials said the link should be completed within weeks.

Simson also acknowledged that the situation could have “deep repercussions, one way or another, on [the EU’s] own energy system.” She did not rule out “retaliatory steps” against Europe’s energy supplies by Russia in response to western sanctions. The ministers stressed, however, that the EU could “get through this winter safely.”

“At the moment, gas flows from east to west continue, liquid natural gas deliveries to the EU have increased significantly and the weather forecast is favorable. The use of gas from storage has slowed down and we still have around 30% of storage capacity filled. Ministers have confirmed that their national and regional preparedness plans are ready and updated,” Simson added. Potential for additional or alternative gas supplies are also under discussion.

“Europe currently imports 35-40% of its natural gas from Russia, so the war in Ukraine has effectively put a large portion of the EU’s gas supply at risk,” said Mata. This is especially true for countries heavily dependent on Russian gas, such as the Nordics, Poland, the Czech Republic, Italy and Germany, he added, noting that since the Russian invasion, natural gas prices in Europe had increased rapidly, reaching nearly Euro 120/MWh – one of the highest levels seen in the past year.

Read an economic viewpoint from Alejandro Mata on how the Russian invasion of Ukraine will impact the European pulp and paper industry here.

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Magazine paper capacity is falling

In Q3 2021, supercalendered (SC) paper capacity decreased by some 400,000 tonnes per/yr as Stora Enso permanently idled PM 12 at its Kvarnsveden mill in Sweden. Capacity will further decrease in H1 2023 when Heinzel converts PM 11 at its Laakirchen mill in Austria from SC to recycled containerboard production.

Towards the end of last year, Smurfit Kappa Group started an environmental impact assessment (EIA) as well as a public consultation for its Parenco Renkum mill in the Netherlands in preparation to apply for a revision of the mill’s current environmental permits. According to the draft Memorandum on Scope and Level of Detail of the EIA, the firm decided to request a review of the mill’s current environmental permits because it is considering the option of producing only packaging paper at the mill and because it wants to make sustainability and social improvements at the site.

During 2021, coated mechanical reel (CMR) production capacity also dropped by some 790,000 tonnes per year due to the closure of SCA’s Ortviken mill in Q1 and the permanent shut of Stora Enso’s PM 5 at its Veitsiluoto mill in Finland.

In 2021, magazine paper production and demand were fairly in line with the 2020 figures, which were considerably lower compared to those for 2019. According to data from EURO-GRAPH, the European Association of Graphic Paper Producers, European SC shipments were stable at 2.5 million tonnes during the first 11 months of last year, while demand slipped by 1.2% year on year to 2.2 million tonnes. European deliveries of CMR improved by 2.4% on a year-on-year basis to 3.7 million tonnes during the period, while European demand increased by 2.5% to 2.9 million tonnes.

Production costs rose sharply

During the second half of 2021, the graphic paper market was confronted with strong inflation in all production costs, with prices for energy, transport and chemicals constantly increasing and pulp and paper for recycling prices stabilizing at high levels. Gas prices in particular put European paper mills under pressure and forced most paper producers to implement price increases and energy surcharges from September to November to offset rising energy costs. At the beginning of December, SC prices surged to up to £610 per tonne in the UK and up to €700 per tonne in continental Europe. On the coated side, LWC offset and rotogravure prices rose to £795 per tonne and £810 per tonne, respectively, while they reached €870 per tonne and €850 per tonne in continental Europe, although higher prices were also mentioned.

As the market balance strongly favored suppliers, negotiations for deliveries in 2022 were concluded well in advance compared to past years, at even higher prices. While some producers agreed to keep contract validities at six months, others preferred to limit them to the first quarter only. Some paper producers even decided to go with monthly paper prices due to the unpredictable situation with gas prices.

But these three- and six-month agreements quickly became outdated as gas prices surged again in December. Shortly before Christmas, one paper producer said he would apply a €75 per tonne price increase on all already agreed contracts for SC paper deliveries in Q1. At the beginning of the year, Holmen also told its customers it would further adjust sales prices for graphic paper products upwards for a period of time, due to escalating energy costs.

On the coated side, Norske Skog announced its intention to implement an energy surcharge of €125 per tonne for deliveries from January 10 through the end of Q1. Similarly, Kabel Premium Pulp & Paper said it would implement a €200 per tonne energy surcharge for deliveries in January, which has now been extended to February as well. Sappi, Burgo and Perlen also announced further price increases of 10-25%, up to 15% and €80 per tonne, respectively, from February 1.

SC prices reached a price level of €700-855 per tonne for deliveries in January in continental Europe, with slight differences between countries, while they increased to £620-790 per tonne for shipments in the UK. LWC rotogravure paper prices rose to £790-1,070 per tonne in the UK and to €790-1,110 per tonne in continental Europe, while LWC offset prices reached £700-1,050 per tonne in the UK and €790-1,110 per tonne in mainland Europe. In many cases, market contacts reported similar prices for rotogravure and offset qualities.

UPM worker strike worsens depleted supply

“We’re only missing a locust invasion and then we’ll have seen everything,” a European buyer joked when commenting on the news that workers at UPM publication paper and pulp mills in Finland were starting an industrial action. On January 1, workers at the firm began a five-week strike to protest the company’s intention to negotiate different agreements for its separate business units instead of a company-wide one. The strike, called by the Finnish paper-workers’ union Paperiliitto, was then extended for a further two weeks until February 19, due to the fact that an agreement had not been reached.

Last week, Paperiliitto announced a further extension of the strikes, which are now scheduled to end on March 12, unless an agreement is reached before then. The mills involved produce SC paper, CMR, coated woodfree paper, uncoated woodfree paper, specialty paper and market pulp. According to Fastmarkets RISI’s Asset Database, UPM produces some 350,000 tonnes per year of SC paper and almost one million tonnes per year of LWC paper in Finland.

The consequences of the strikes are starting to significantly impact the market, especially now that customers are running out of stocks. According to some market commentators, LWC rotogravure paper and mediumweight coated (MWC) paper deliveries are particularly affected. “The strikes [at UPM’s Finnish mills] are a big issue. We notice it in the market – a lot of our customers, both printers and publishers, don’t have enough paper and therefore cannot print magazines,” one market source told PPI Europe.

“We replaced MWC [paper] with LWC [paper]. We reduced print runs for the high-brightness magazines. It’s not ideal but we are doing what we can and hopefully [the situation] will not stay like this for the whole year. But it will be difficult to get paper [from UPM’s Finnish mills] until the end of April or the beginning of May,” another one said. “If the strikes continue for two more weeks, it will be a problem for the whole industry. We are working on contingency plans,” a European buyer told PPI Europe in January.

Most producers confirmed they are receiving many enquiries for additional volumes but they can hardly help as their machines are already running full. “Clients would take any paper they can get. A customer that was buying MWC would be happy to find newsprint now, just to have something to print on,” a market source said. According to another source, Portuguese customers in particular are being impacted by the strikes because they are very exposed to deliveries by ship from Finland.

Intergraf sounds alarm on possible outcome of a graphic paper shortage

The European federation for print and digital communication Intergraf is also worried about the consequences of the strikes in Finland and, more generally, about the current situation in the graphic paper market. “It is estimated that in some countries, close to 50% of this paper for heatset printing comes from one supplier. The stocks of printing companies will not last until the strike has been settled, and printers will be forced to announce to their customers their inability to fulfil orders. This means that publishers will be forced to abandon print editions due to a lack of paper,” the association said in a statement. It added: “The shortage affects all types of print products but is particularly detrimental to time-sensitive printed matter such as newspapers, magazines, books and advertising.” Intergraf also said that, according to its members, 40% of the paper needed from mid-February onwards will not be available, and that the inability to print will cause large financial losses for printing companies and end-customers.

The paper shortage comes on top of the extremely high paper prices, which are also posing a threat to the printing industry. “We are losing loyal print buyers like catalog users due to production costs and a shortage of paper. There is a big risk that those print buyers will not come back. This jeopardizes our industry, and we will suffer irretrievable damage,” a large-format offset printer told Intergraf.

The first consequences of the current paper crisis are starting to be felt on the printing market, where a number of companies have either decided to close production sites or have been forced to file for insolvency.

In November, Dutch magazine publisher Pijper Media decided to stop its printing activities by closing its printing site and outsourcing production, while German printer Prinovis announced its intention to close its rotogravure printing site in Dresden, Germany, on December 31, 2022, where it produces magazines and catalogs. The company had already permanently idled another rotogravure printing plant in Nuremberg in April last year.

Meanwhile, Italian editorial and commercial printer Stige decided to voluntarily liquidate the company and sell all its assets, while Austria’s Queiser and Germany’s abcdruck filed for insolvency in self-administration. In January, Italian printer Elcograf, part of the Pozzoni group, announced a 37% price increase on rotogravure printing products as of February 1, and said it was mulling a temporary suspension of printing activities at its Treviglio site if the increase did not go through. The firm said the hike was much needed in order to offset skyrocketing energy costs and paper, ink and transport prices.

Also in January, German commercial printer Peschke Druckerei said it will stop production at its printing facility in Munich by the end of Q1. According to market contacts, Spanish commercial and editorial printer Litofinter has stopped production and might soon end its activities, while another Spanish commercial printer is said to be up for sale.

2022 outlook unclear to producers and buyers

The number of variables currently affecting the publication paper market makes it difficult for paper producers and buyers to predict what will happen this year. On the supply side, provided that the strikes at UPM’s mills in Finland end soon, market participants expect the situation to normalize sometime towards the end of Q2. “The market might rebalance once [the strikes] are over but it will take several months because there will be huge delays in deliveries,” a source commented. Many market players believe that paper demand will take a major hit from the current price environment as printers and publishers will be forced to reduce paginations and print runs, or even to convert some magazines to digital, because they cannot afford the current prices. “We had to increase the cover price of some magazines, let’s see how readers react,” one European publisher told PPI Europe.

On the other hand, paper producers said the tight market will continue and that their order books are full for April, and sometimes all the way to June. “We’ve got customers putting reservations in for September, without even knowing the price evolution,” one market source commented. “The French election campaign alone will use 5,000-10,000 tonnes of CMR or woodfree paper between February and April,” another one added.

As for sales prices, most market sources agree that the problems linked to gas and energy supplies will continue throughout the year, thus keeping the pressure on paper producers. Not everyone, however, shared that opinion. “Prices will go down, that’s for sure, because we’re at the peak of the curve. The question is when it will happen?” one market participant said.

Pulp producers have also started another round of price increase attempts, and wood costs are also on the rise. And then there is the transport situation, where the availability of trucks and drivers remains very low. “Sometimes you can produce paper, but you are not sure you can deliver it because there are no trucks,” one market source said. It is a perfect storm with no end in sight.

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