RISI ECONOMISTS: Will industry consolidation finally take hold in the Chinese printing and writing paper sector?
SHANGHAI , (Viewpoint) - Facing persistently weak demand and high production costs, the idea of any capacity expansion in the North American and European printing and writing paper sector remains the least attractive topic for conversation among producers and investors. Instead, capacity closures and M&A have become the "hot" topics in these mature markets. Of course, industry consolidation is usually triggered as producers struggle to survive periods of weak demand, excess supply and high production costs by closing capacity and/or merging with another company. Recent examples in North America include the announced uncoated woodfree capacity closures by Domtar and IP and the merger of Abitibi/Bowater followed by the substantial reduction of capacity in the newsprint sector. While major mergers are for now only at the rumor stage, western Europe is also undergoing a major reduction in capacity, particularly by the Nordic producers.
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