The European Paper Industry Staged A V-shaped Reversal: Packaging Paper Has Become A Life-saving Straw, And China's Data Is Even More Explosive!

The European paper industry staged a V-shaped reversal: packaging paper has become a life-saving straw, and China's data is even more explosive!

Preliminary data show that in 2024, the total production of product paper and paperboard in the member countries of the European Paper Confederation (CEPI) increased by 5.2% compared to the previous year. It is worth noting that this year's rebound in production follows a sharp decline of 13% in 2023, and the decline in 2023 follows an 18.3% rebound in total production since 2021. The rebound in 2024 has been driven by poor macroeconomic conditions, continued supply chain destocking, and persistently high energy and manufacturing costs.

CEPI's membership includes 856 pulp, paper and board mills, including Austria, Belgium, the Czech Republic, Finland, France, Germany, Greece, Hungary, Italy, Norway, Poland, Portugal, Romania, the Slovak Republic, Slovenia, Spain, Sweden, the Netherlands and the United Kingdom. Despite multiple challenges, the total production of paper and board in CEPI member countries reached 77.8 million tonnes in 2024, with an increase in production of most paper and board types.

As a comparison, China's machine-made paper and cardboard output in 2024 will be 158.469 million tons, a year-on-year increase of 8.6%. China's paper and cardboard production exceeded 150 million tons for the first time, a record high! The top five provinces alone, Shandong, Guangdong, Zhejiang, Jiangsu and Fujian, together produced 99,721,400 tons.

In terms of countries, most paper and board producing countries, including the United States, Brazil, Canada, China, India and South Korea, with the exception of Japan, will also show an increase in production in 2024, with an increase of between 1.5% and 5.5%. Flash estimates show that total global paper and board production is expected to grow by 3.6% in 2024, a full recovery from the 3.3% decline in 2023.

From the perspective of the growth of various types of paper, packaging paper is still the most outstanding paper grade, and its growth rate continues to be ahead of household paper and printing paper. European commodity pulp production remained largely unchanged at the average level between 2019 and 2022, but declined slightly in 2024 by 1 percent, a decline from the previous year's growth of 2.3 percent, mainly due to weaker export activity.

In addition, corporate paper recycling in CEPI member countries increased by 4.1% compared to 2023, reflecting a positive trend in 2024 for the paper and board production sector after two consecutive years of declining production.

According to CEPI statistics, the apparent consumption of paper and cardboard has increased significantly, by 7.5% (the first nine months of the statistical period), driven by the favorable economic environment in Europe. The latest economic assessment notes that the EU economy will grow by 1% in 2024, slightly higher than in 2023 (0.6%), and is expected to grow further to 1.4% in 2025. Despite this, the EU's economic growth rate is still slightly below the average growth rate of advanced economies.

Overall apparent consumption of paper and cardboard increased by 7.5%

According to data from the last nine months, the overall consumption of paper and paperboard in CEPI member countries in 2024 showed an increase of 7.5% compared to 2023. It is worth noting that such a strong growth rate comes after a year in which paper and cardboard consumption experienced an extremely low year. Paper and cardboard consumption will suffer more in 2023 than at any other time during the pandemic, largely because high interest rates and high inflation have severely dampened household personal consumption expenditure.

From the perspective of the growth of demand for various types of paper, the demand for packaging paper and cardboard increased by 8.6%, continuing to lead all types of paper and surpassing the growth of demand for printing paper and household paper. Demand for printing paper and tissue paper increased by 5.2% and 5.8%, respectively. It is worth mentioning that the demand for printing paper has expanded for the first time since 2010. From the perspective of paper grade, the consumption of non-mechanical pulp and paper has a stronger growth momentum than mechanical pulp and paper.

Energy prices are still two times higher than they were before the coronavirus crisis, putting pressure on the competitiveness of European industry, especially in the most energy-intensive classes. The high cost of production, including energy, is currently at the heart of the controversy in Europe, as the European Commission prepares to issue a new document articulating its plans to restore manufacturing competitiveness and promote a circular and bioeconomy, while the EU's growth rate remains below the average of other advanced economies. Production in all manufacturing sectors in the EU is still 10% below 2021 levels, and pulp and paper are no exception.

There was a general increase in the production of all types of paper and cardboard

The production of packaging paper is estimated to have increased by 6.5% compared to 2023. In the sub-category of packaging paper, the output of containerboard, which is mainly used for transportation packaging and making corrugated boxes, increased by 4.3%; The output of carton cardboard and other packaging paperboard, which is mainly used in retail packaging, increased by 9.9%; The output of packaging paper used in the production of paper bags has increased significantly, reaching 14.4%. Packaging paper accounts for 63% (62.4% in 2023) and printing paper 22.0% (22.6% in 2023) of total paper and cardboard production. Production of other types of paper and board, mainly for industrial and special purposes, also increased by 5.7 percent, accounting for 4.8 percent of total paper and board production.

The output of tissue manufacturers increased by about 3.5% compared to 2023, accounting for 10.2% of the total production of paper and cardboard.

Overall print paper production also increased by 2.2 percent. Among them, newsprint production fell slightly, by 1.3%, while printing and writing paper production increased by 2.9%. Specific to the various sub-categories of printing and writing paper, the development trend of production varies depending on the specific paper category and its application area, such as magazines, catalogs, direct mail advertising, etc.

The output of coated mechanical paper and non-coated mechanical paper decreased by 2.1% and 3.0%, respectively. In contrast, the output of uncoated offset paper increased by 5.8%, and the output of coated paper increased by 8.2%. Overall, the output of coated and uncoated printing paper increased by 3.1% and 2.7%, respectively.

Finally, in terms of pulp type, the output of non-mechanical pulp printed paper increased by 6.6%, while the output of mechanical pulp printed paper decreased by 2.6%.

Paper and board deliveries in EFF member countries increased by 6.0%, exports by 7.2%

Based on cumulative data for the first nine months of 2024, total paper and board deliveries for the full year are expected to increase by 6% compared to 2023. Among them, internal deliveries to CEPI member countries increased by 5.7 percent, while exports to regions outside CEPI member countries increased by 7.2 percent. By the end of September 2024, the delivery of printed paper increased by 8.5%, and the delivery of packaging paper also increased by 5.5%.

The EU and the US have been large trading partners as trade tensions have intensified, and both have benefited from a relatively stable environment with no import tariffs over the past 20 years. The EU imports a lot of pulp from the United States, but exports a lot of paper and cardboard. In terms of exports, as of the end of September 2024, the export value increased by 7.2% year-on-year, with almost all regions showing significant growth. Specifically, exports to neighboring European countries increased by 2%, exports to North America increased by 16.8%, exports to Latin America surged by 34.1%, exports to Asia increased by 4.1%, and exports to the rest of the world also increased by 4.1%.

This positive growth comes after a severe 12 percent drop in deliveries in the previous year. In terms of market share, other European countries remain the main export markets in 2024, accounting for 35.1% of Europe's total exports, followed by the Asian market with 24.6%, the North American market with 13.6%, the Latin American market with 9.7%, and the rest of the world together with 17%. In 2024, exports accounted for 21% of total paper and cardboard production.

Preliminary data show that paper and cardboard imports from the CEPI region increased by about 25% compared to 2023, compared to a 17% decline in the previous year. The increase in imports was mainly due to other European countries (up 28.4%). Other European countries, which are not CEPI, account for 40% of Europe's total imports, Asia 24.3%, North America 23.3%, Latin America 7% and the rest of the world 5.4%. In 2024, imports accounted for 8% of paper and cardboard consumption. Looking at the import and export data, the trade surplus of paper and cardboard decreased slightly compared to 2023, with a decrease of 0.9%, but remained positive overall.

Total pulp production up 3 percent, but commercial pulp production down slightly 1 percent

Total pulp production (including self-consumption and market sales) increased by 3% from the previous year to a total of about 33.6 million tons. Compared to 2023, the production of mechanical pulp increased by 3.5% and that of chemical pulp by 2.7%. Chemical pulp accounts for up to 79% of total pulp production. On the other hand, the production of commercial pulp decreased slightly, by 1%, but overall, the production of commercial pulp has remained at a relatively stable level since 2020.

Jory Lingermann, Director General of the European Paper Confederation (CEPI), commented: "We are pleased to see positive growth in the pulp and paper industry in such a cyclical industry. Whether this growth momentum can continue depends in part on what EU institutions will do to ensure that we can develop on a level playing field, not only with pulp and paper producers in other parts of the world, but also with fossil-based industries. We expect the EU to introduce a series of initiatives such as the Clean Industry Agreement, the Affordable Energy Scheme, and the Bioeconomy Strategy, as well as further promoting the development of a de-fossilized and circular economy, while simplifying the EU regulatory system. These elements are urgently needed by the pulp and paper industry today to help revitalize the growth dynamics of the European economy and boost investment confidence in the industry. "