Danske: the printing paper market has collapsed

The Covid-19 pandemic has hit Nordic paper producers hard. The demand for printing paper (newsprint, direct mail, weekly newspapers and printed material) has collapsed. In April and May, the demand for printing paper in Europe decreased by as much as 35 percent compared to the same period last year.

“The paper mills have recently used about 70 percent of their capacity and, of course, this is not a sustainable situation. With a continued digitization trend and declining demand during the corona pandemic, paper producers are bleeding and are now forced to make major changes, ”says Johan Freij, Business Area Manager Forestry and Agriculture at Danske Bank Sweden.

SCA recently announced that the paper unit in Ortviken will be closed by the end of the year. The Stora Enso mill in Oulu and the UPM paper mill in Kaipiola will also be closed at the same time. In total, the printing paper production capacity is reduced by approximately 2.6 million tonnes or up to 24 percent of the total capacity of the Nordic region.

At the same time that the paper market is in decline, US lumber prices have doubled and soared to record levels of more than $ 700 a fee per carton. The background is the unexpectedly good construction market, both in terms of “do it yourself” and new construction in combination with low inventories.

“I think everyone is surprised that this rally for wood products continues. We see extremely low stocks at the sawmills, which gives great self-confidence and now the prices of wood products are increasing on a broad front. In the US, the situation is dire and Swedish sawmills have increased their exports to the US by roughly 80 percent compared to 2019, ”says Johan Freij.

Several sawmills halted production when the corona pandemic hit, with the result that the Swedish timber stock fell as much as 18 percent in July and was 26 percent lower than in the same period last year. Therefore, after the summer, the trading situation improved even more and prices are now rising in all markets. The sawmills forecast a stable market for the rest of the year.

Skog & Ekonomi further writes that Sweden’s 325,000 forest owners are facing an autumn with an imbalance in the market. Stockpiles of pulpwood are already full and sawmills are asking for wood. The trend in prices for pulpwood is declining and that of wood is increasing, a difficult equation because a tree is made up of both wood and pulpwood.