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ALGERIA
NO SIGNIFICANT CHANGES
Although capacity exists for white lined chipboard, the GIPEC group mill in Bouroba has been idle for two years due to technical and maintenance problems with its online coater.
The coating unit, which is on a Black Clawson paper machine, was due to be overhauled but the necessary financing and investment did not materialize. At the same time the public authorities moved away from the commercial sphere leaving the GIPEC group in a hard situation, seeking to obtain financing from a banking system that was reluctant to invest.
These setbacks have hampered the repairs to the coater and its upgrading. Algerian output is focused on white paper grades on the two GIPEC paper machines at the Babou Ali and Mostaganem sites.
Unlike production of coated grades over the last few years, the commercial side is rather healthy and gaining momentum. Imports and local sales are improving and taking a wider segment of the local market.
Both glossy and matte grades find favor with the main customers found in the following sectors:
* The National Enterprise for Graphic Arts (ENAG) uses double-coated paper in a range of 90 to 115 g/m for its publishing requirements.
* The National Enterprise for Tobacco and Matches (SNTA) uses a single coated grade for cigarette packs.
* The National Group for Detergents and Powders.
* The German company Henkel has taken over two former ENAD facilities. It now holds a majority stake in these two mills and uses coated board for packaging its produce.
Finally, despite the lack of production, coated paper use is likely to increase, reinforcing their place in industrial and economic life for the coming years. Consumption will be fuelled mainly by imports. The Algerian Trading Paper company is taking the lead in this sector.
Omar Chabane
BRAZIL
AN ADDITIONAL COATING CAPACITY OF 30%
The three companies that make woodfree coated paper in Brazil, Suzano, Votorantim Celulose e Papel (VCP) and Ripasa, plan to add about 120,000 tonnes to the capacity of their machines toward the end of this year, increasing domestic production by about 30%.
The extra will all come from debottlenecking and optimizing existing capacity; it will not involve any new machines. The economy is expected to grow by 3% this year and it is hoped that demand for coated paper will grow equally fast as well, in contrast to 2001 when consumption of coated woodfree fell by 2.7%.
With the new and re-built coating machines installed by the VCP and Ripasa companies in the past two years moving toward full capacity in 2001, 281,000 tonnes of coated woodfreee were made in Brazil last year, 9.1% more than in 2000. This resulted in 37,000 tonnes less coated woodfree being imported in 2001 compared with the previous year.
Economic problems beset most of Brazil's neighbors last year, to which virtually all of the country's small exports of coated woodfree are normally destined, leading to a 16% reduction in exports. However, as so little is exported, this meant a reduction of only 4,000 tonnes.
VCP managing director Raul Calfat said that its coating machines were operating at about 85% of their installed capacity last year. He hopes that with demand set to rise, VCP will be able to use 93% of its installed capacity this year.
Calfat said that most imports are of types not made in Brazil, notably triple coated, for which there is insufficient demand to justify local production. As predicted a few years ago, Brazil is now selfsufficient in most types of coated paper.
Because demand is not anticipated to increase by anywhere near the extra capacity to be added later this year, the Brazilian companies plan to export much more in 2003, so will be looking for new customers.
Patrick Knight
BULGARIA
COATED BOARD BUT NO PAPER
Bulgarian production of coated paper and board for export or internal consumption did not change much in 2001 compared with 2000. In fact, production of coated paper has been stopped in the country for some time because of the poor state of the equipment and outdated technology. Existing coated papermaking equipment is quite old and could not achieve sufficient quality to be competitive.
The coated board situation is quite different. In northern Bulgaria a comparatively new, and modern paper machine produces multi-layer cardboard to a good quality. This board is intended mainly for cigarette production, pharmaceuticals and the graphics industry.
Basis weights range from 200 to 500 g/m². Part of the production, 5,000 tonnes/yr, is exported to neighboring Balkan countries, as well as to Asia and Africa. Bulgaria imports certain grades of coated board from European Union countries for specialized end uses. These are mainly "luxury" grades, coated two sides, that cannot be produced in Bulgaria.
Stefan Zaprianov
CANADA
PRODUCTION, SHIPMENTS DECLINE
North American demand for coated mechanical papers declined 5% in 2001 as a result of declining North American demand for printed advertising, in the magazine market in particular. This decline strongly affected Canadian shipments and production of coated mechanical papers, which declined 19% and 21%, respectively. Shipments to Canada decreased 10%, shipments to the US dropped 21% and offshore exports declined 11% (these only account for 5% of total shipments). Imports remained flat year-over-year.
Coated mechanical capacity is slated to increase 4.2% in 2002 and 3.7% in 2003. Capacity will most probably increase slightly more than 3.7% in 2003 as Kruger announced it would complete a new 200,000 tonne/yr lightweight coated (LWC) paper machine by the fourth quarter of 2003. The new machine will produce lightweight and ultra-lightweight coated paper.
North American demand for coated woodfree papers dropped 13% in 2001 as demand for high-end advertising suffered from the economic downturn. Canadian production of all coated woodfree grades declined 10% last year and shipments declined 11%. Most of the decline was concentrated in shipments to the US, which dropped 13%. Shipments to Canada were down only 2.6%. Offshore exports of coated woodfree papers are not significant.
Canadian coated woodfree capacity will remain unchanged over the next two years as no new projects have been announced.
Paul Leclair
CROATIA
MORE IMPORTS EXPECTED
Production of coated paper in Croatia has declined compared with last year. It seems this trend will continue due to new economic circumstances, the result of Croatia joining the WTO and CEFT. New market conditions, resulting from the reduction or lifting of protective customs duties, will decrease the competitive strength of local paper and board production. Therefore, the Croatian market is expected to be flooded with various grades of coated paper and board.
Due to such market situations and increasingly present globalization trends, the Croatian paper and board producers are re-evaluating their rebuilding and modenization plans, especially in the field of coated paper production.
Ante Klaric
FINLAND
MORE ADVANCED PRODUCTS
Finnish forest product companies have acquired extensive additional capacity in recent years. Last year, the focus in production-related investments was on developing more advanced products and eliminating bottlenecks. M-real, for its part, launched a new paper: Galerie One.
UPM-Kymmene completed the modernization of PM8 at its Kymi mill in September and commissioned a new coating line at the same location in December. Following the investment, its largest in 2001 at a cost of Euro 280 million, PM 8 has a capacity of 400,000 tonnes/yr of coated fine paper.
The company's coated fine papers are now marketed under the UPM Finesse brand, and its uncoated grades under the UPM Fine brand. UPM Finesse competes, for example, against M-real's aspen-based paper, Galerie Fine, which is produced at Kirkniemi in Finland and Husum in Sweden.
UPM-Kymmene's other investment in coated paper grades last year was the Euro 60 million modernization of PM 1 at Kaukas. The machine, which started up in January 2001, now produces double-coated magazine paper.
UPM-Kymmene now has 380,000 tonnes/yr of additional LWC capacity thanks to its acquisition of Haindl. This is produced on very modern machines, as 60% of Haindl's machines have been built or modernized since 1999. Haindl recorded an operating profit equivalent to 22% of its net sales in 2001; this compares to 14.1% at UPM-Kymmene, excluding capital gains.
Stora Enso's production-related investments in coated paper during 2001 were small. Modernizing PM 6 at Oulu cost Euro 57 million, while investments at Uetersen's PM 2 cost Euro 22 million. Both modernization projects focused on eliminating process bottlenecks, and both included installation of a shoe press.
The mills operated by Stora Enso's Consolidated Paper produce some 800,000 tonnes/yr of coated fine paper and more than one million tonnes of LWC. Some paper machines at these mills will certainly need to be modernized in the future.
M-real strategy is increasingly focusing on wood-free paper, and the company is aiming to switch a growing proportion of its attention from uncoated grades to coated ones. As part of this, M-real has converted one machine at its Husum mill in Sweden to producing coated fine paper at a cost of Euro 290 million. This currently produces Galerie Fine, and obviously appears set to concentrate on heavier grades, with lighter grades being produced at Kirkniemi.
M-real has started producing its new Galerie One paper on two machines at its Kangas mill. PM 2 was used previously for producing copy paper, and PM 4 for producing the Studio range. PM 4 now produces the heavier weights of Galerie One (115-150 g/m²) and PM 2 the lighter grades. PM 2 incorporates single blade coating and online calendering, a solution not used elsewhere in Europe. The investments at the Kangas mill were accompanied by the construction of a BCTMP unit at the Joutseno pulp mill to supply Kangas with BCTMP aspen pulp. Together, these investments cost Euro 230 million.
Customized long-fiber pulp is supplied by Metsä-Botnia's Äänekoski mill. Studies at M-real have shown that the 70 g/m² Galerie One provides the same thickness and opacity properties as 90 g/m² papers offered by other producers for the same applications. Galerie One has been designed specifically for high-volume direct mail publications. The latter are a growth area; figures show that this segment, which currently accounts for some two million tonnes of paper use in Europe, is growing at an average of 7-8% a year.
M-real acquired Zanders from International Paper last year for some Euro 260 million including outstanding debt liabilities. Zanders produces a total of 360,000 tonnes/yr and employs 2,720 people. By comparison, Haindl produces 1.9 million tones/yr, employs 2,440 people, and cost Euro 2,690 million to acquire. M-real has said that it intends to cut the workforce at Zanders by 800 by the end of 2003. It is also probable that the number of grades produced by Zanders will be cut and its organization streamlined. Zanders recorded a break-even performance last year.
Pekka Rinne
FRANCE
FALL IN ADVERTISING FELT IN COATED SECTOR
After a particularly dynamic year 2000, the French market for coated papers decreased slightly in 2001. However, this evolution is not reflected by the production figure, which shows an increase of 2.3%. This reflects the change of scope of the survey, as in 2000, a major French mill stopped its production for several weeks to proceed with some investments. Regarding the different grades, one has to remark upon the upward trend of coated woodfree paper production (+5.9%), whereas the coated mechanical paper production decreased by 2.2%.
In an unfavorable international economic environment (and more specifically at the European level), French exports of coated papers decreased by 4%, but one should underline the better performance of the coated woodfree grade, which stabilized at the level reached in 2000 (-0.1%).
Added to the general economic slowdown, the fall of the advertising investments had a negative effect on the consumption of coated papers, which decreased by 4.6%. Growing uncertainty over the year led to some reductions of paper stocks by distributors and publishers, reducing demand and consumption.
Due to the weakened French market, imports of coated paper decreased by 9.8%. The bulk of this paper comes from the European Union. In 2001, the fall in imports from German and Finnish mills was not completely compensated for by the increase of southern European coated papers.
The outlook for the year 2002 is a return to positive growth rates, as the wider economy recovers. Moreover, the low levels of papers stocks downstream at the beginning of the year could mean renewed inventory building during the coming months.
Guillaume Arnauld des Lions
GERMANY
TOUGH 2001,BUT OPTIMISM FOR 2002
Coming off a record 2000, the German coated paper and board sector suffered from a weakening German economy in 2001. This included soft advertising demand, which in turn led to a reduction in the use of graphic papers. This drop in advertising had a more severe effect on coated versus other paper grades. Compared with 2000, German production of coated papers fell by 0.6 million tonnes in 2001 to 3.8 million tonnes, a drop of 12.7%. Two main products make up this segment: coated mechanical and coated woodfree papers, in rolls or sheets. Coated mechanical paper production fell by 6% to 2.2 million tonnes. Coated woodfree paper production was off by 20%, to 1.6 million tonnes.
Coated board was not affected by the downturn, with production remaining at 1.2 million tonnes in 2001. Combined coated paper and board production fell by 10%. Despite this, Germany remains a leading player in the European coated paper and board industry.
For 2002, moderate economic growth is expected in Germany as well as all of western Europe. This should help increase advertising levels and lead to an increased use of coated paper and board. There is some optimism that the 2000 levels may be reached. There is no new coated paper and board capacity expected in Germany within the next two years.
Rolf K Dohring
INDONESIA
POPULAR MOVE TO HIGHER QUALITY
The economic, political and law enforcement situations in Indonesia are not stable yet. But domestic usage of coated paper is still increasing due to people's preference for better quality papers.
Consumption of coated paper in 2001 was up by 13.5% and coated board by 9.8%, total coated and board by 11.6%. The oper- ating rate for 2001 was about 70-80%.
Imports of coated paper and board consisting of the high quality grades were up slightly. Coated and board producers are still in the wait-and-see position. The small increase in production was caused by improved efficiencies and quality improvements done to satisfy domestic as well as export demand.
HM Mansur
ITALY
NOT A POSITIVE YEAR
2001 was a tough year for the coated paper market in Italy.
For coated mechanical, at the beginning of the year, while there were positive indications from the market (a strong demand predicated rises in LWC prices in West Europe), some signs of slowdown were already evident. The main reasons for this slowdown were connected to the difficulties of the overall Italian economy and the consequent contraction of advertising investments. The most important reductions in advertising investments (down 3.2% for the whole year) came from telecommunication and computers sectors.
In the second half of the year, demand was very weak in respect to the supply: this situation induced coated mechanical reel producers to take significant downtime to balance the market.
Concerning coated woodfree, a weak demand characterized the whole 2001. At first this situation seems to be linked with a continuing reduction of inventory by printers and there were expectations for a new growth in demand during the year. However, demand remained at a low level because order inflows to printers went through a period of further decreases in the second part of the year.
Cinzia Caradini
JAPAN
STILL WAITING FOR RECOVERY
Due to the continuing economic stagnation of Japan, shipments of coated paper and board in 2001 decreased about 6% compared with the previous year. With regard to coated paper, demand from the IT sector, travel agents and salesrelated leaflets and pamphlets were especially weak. As for coated board, there was also a slump. Part of this was due to consumers' continuing efforts to recycle packaging. Japan is still waiting for a general economic recovery.
Thanks to the appreciation of the yen and weak domestic demand, exports of coated paper and board increased greatly. However, imports decreased for the same reason.
Coated paper and board makers are taking downtime. With regard to capacity changes, there is little to be heard about new machine start-ups. It was reported that Hokuetsu Paper would increase capacity on PMs 6, 7 and 8 by 100,000 tonnes/yr.
The Japanese Paper Association forecasts domestic demand for coated paper will be comparable to 2001.
Satoru Mitsui
KOREA
DOUBLE COATED EXPORTS SOAR
The transition from single to double coated production continued in 2001. This was particularly true in export grades.
Double coated woodfree exports increased by 55% in 2001, while single coated woodfree exports decreased by 5%. Domestic consumption of double coated woodfrees, however, actually decreased by 7%, compared with the 13% increase in single coated woodfree consumption in 2001. This explains the fact that Korean producers are exporting more high value added grades.
Of the six major fine paper producers in Korea, Hankuk Paper and Shinmoorim Paper mostly concentrate on double coated paper; approximately 90% of their production is double coated woodfree paper. Approximately 20% of Hansol Paper's coated woodfree paper is double coated.
Hankuk Paper started up its new PM 3 in September 2001 with an online IHI coater at the Onsan mill. It has a capacity of 80,000 tonnes/yr and is designed to run heavier weight coated woodfrees - 180 g/m² and up. It can produce various specialty grades. Hankuk, which closed its original mill in Anyang permanently in November 1998, has now regained the capacity that was lost with the closure.
CB Lee
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LITHUANIA
DEMAND IS GROWING
Five paper and board mills are operating in Lithuania. Coated paper used to be produced at the Kaunas paper mill. However, in 2000, the mill stopped production and by early 2002, it was in bankruptcy. It is awaiting the judicial process that will decide its future. This began on February 28, 2002. Demand for coated paper and board is growing continually.
Ceslovas Svetkauskas
MEXICO
HOPE FOR THE SECOND HALF
The Mexican economy had a lackluster year in 2001, when GDP barely showed any growth and compared very dramatically with an almost record year of 7% growth in 2000.
As a result, overall paper and board demand and apparent consumption dropped significantly. For local producers, this situation has been compounded by the weaker demand in the US and by the continued strength of the Mexican peso that make local production less competitive.
In the coated products segment, coated paper production had a decrease of 18% and imports remained practically equal, whereas coated board production decreased 3% but imports increased 12%.
Kimberly Clark de Mexico, the only coated paper producer, revamped its Orizaba mill coated paper operation, including the addition of precoating equipment. On the coated board side, Cartones Ponderosa invested in improved drying capacity at its machine in San Juan del Río.
The economy started on a weak note in 2002. However, the slow but apparently solid recovery of the US economy will have a favorable impact in Mexico, likely during the second half of the year.
Xavier Llamas
ROMANIA
COMSUMPTION COVERED BY IMPORTS
Coated paper and board consumption in Romania is almost totally covered by imports. From the existing installations at the end of 1989 with a capacity of 30,000 tonnes/yr duplex and vellum board and 8,500 tonnes/yr of coated paper, there is a mothballed plant with a capacity of 5,000 tonnes/yr of LWC at Comceh Calarasi and a 5,000 tonnes/yr duplex board machine in operation at Petrocart Piatra Neamt. The remaining machines have been dismantled. Until now, there are no plans for new investments in coated paper and board.
Gheorghe Borhan
RUSSIA
DEMAND AND CONSUMPTION ON AN UPWARD TREND
Consumption of coated papers and boards continues to rise at an extremely rapid rate, although from a very low base: use of LWC, for example, was virtually zero until 1998 and has gone from 5,000 tonnes in 1999 to nearly 20,000 tonnes in 2001. Coated woodfree consumption has increased from just over 20,000 tonnes in 1998 to nearly 70,000 tonnes in 2001. Production of both of these grades in Russia is still almost non-existent, although several mills are trying to start production of high quality papers. The reason for the low consumption of coated papers in Russia for so long was the lack of modern printing capacity, hampered by a tax and customs tariff regime which favored imports of print. Taxation policies are now changing and import tariffs are being relaxed on equipment and materials not available from Russian industry. Imports of printing presses are increasingly rapidly, although many are still elderly second hand models. Almaz, the only Western quality magazine printer, is expanding long capacity, boosting demand for LWC, and is likely to be joined by at least two more major modern printing plants within the next couple of years. One slight problem will be the discovery by the Russian customs authorities that the declared value of imported coated papers is often less than that of newsprint; minimum values for coated papers are now being introduced for import tariff purposes, resulting in an estimated increase in the cost of coated paper of $100-120 per tonne.
Consumption of coated board has also been increasing strongly, due to the rise in quality levels in the Russian market generally, and also to the introduction of increasing numbers of premium brands by Russian producers, particularly in the cigarette and confectionery markets. St. Petersburg Board & Polygraphic Mill is still almost the only producer, with coated LWC, and has increased capacity in 2001 by 50% to 120-130,000 tonnes/yr. Syassky is also starting production of high quality coated LWC for cigarettes, perfumes and confectionery.
Margaret Leach
SLOVAKIA
SCP WILL LOOK TO UP PRODUCTION
Severoslovenské celulózky papierne (SCP), a member of the Neusiedler Group, is the country's lone producer of coated woodfree paper grades. Still, the company's output of coated paper during 2001 was only 2,065 tonnes, 1,333 tonnes as reels and 732 tonnes as sheets. The production of single coated paper was intended for in-house (Neusiedler Group) use, while double coated paper went for offset printing. At the beginning of 2002, in collaboration with its Austrian partner, SCP decided upon a program to increase production of high quality paper grades. The consumption of coated mechanical paper increased in 2001. The main reason for this was color magazine production on LWC paper, which consumed about 5000 tonnes. Increasing consumption of coated paper will be covered by imports.
Alena Zuzankova
SLOVENIA
DOWN FROM A RECORD 2000
Production in 2001 was smaller than in the record year of 2000 because orders from traditional markets were significant- ly reduced. Weak demand most affected the Kolicevo Karton coated board mill.
Despite this, the Goricane mill has modernized its coating kitchen and stock preparation equipment at a cost of Euro 5 million. Kolicevo Karton has invested Euro 8 million in a new press, pope roll and finishing equipment. The goal is to raise capacity and quality.
The attempts to privatize the Goricane paper mill were not successful.
Janez Hocevar
SWEDEN
OPTIMIZING PRODUCTIVITY IS THE GOAL
Instead of extensive investments, the major focus in the coating sector of the Swedish forest products industry currently is on improving and upgrading existing operations to increase capacity, optimize productivity and improve profits. Following are some examples:
Stora Enso Mölndahl started up its new color kitchen at the beginning of 2002. The SEK 2.4 million investment includes a new mixer, screening equipment and distributed control system (DCS).
Since then, Klippan AB has purchased the mill. "Now we are a leading supplier of colored fine paper and we estimate synergy effects amounting to SEK 40 million," says Klippan's managing director, Bengt Ostensson. "These two companies go hand in hand. We work in the same direction and this makes it possible to move production between the three units in our company to gain more efficient production."
Iggesund Paperboard produces double-coated solid bleached board on BM 1. In early 2001, the machine underwent a SEK 210 million rebuild, the major part of which involved rebuilding the press section to include a new shoe press.
The coating facility at SCA Ortviken is to be moderized and rebuilt at a cost of SEK 158 million. The new equipment is intended to further improve the quality of the LWC paper produced at the mill while the more modern coating technology can permit an increase in capacity.
AssiDomän Frövi is investing in a new batch digester for the bleached sulfate pulp used in the coated top layers of the packaging board and liquid board produced at the mill and in the bottom layer of some products. The investment is expected to improve product quality.
AssiDomän Frövi currently belongs to Sveaskog AB, the newly organized group formed after the merger of AssiDomän and Sveaskog, the 100% state-owned administrator of the Swedish state's forest holdings. After divesting itself of most of AssiDomän's industrial holdings, the group has stated that AssiDomän Frövi could also operate well in another owner constellation.
Stora Enso closed down the 140,000 tonne/yr coating operation at the company's Nymölla Mill in Sweden this past February. The mill now specializes in the production of uncoated printing and writing grades.
M-real Husum rebuilt PM 8 for production of coating base paper and installed a new off-machine coater. The machines were started up in early 2001. Together they can produce 300,000 tonnes/yr of coated magazine paper.
M-real closed its Silverdalen mill after negotiations to sell the 120,000 tonne/yr coated fine paper mill to Klippan AB failed.
David Wold
SWITZERLAND
SIHL REBUILDS PAPER MACHINE
Total deliveries rose by 8% in 2001 compared with 2000. But this increase is somewhat misleading because it can be tracked back to the startup of a new paper machine at Perlen Papier, producing mechanical coated papers (LWC for roto offset). The paper machine is a so-called swing machine and can be used both for newsprint and mechanical coated papers, something the company could profit from because the newsprint market was better than the mechanical paper market. The lion's share of the new production goes to export markets.
In the coated woodfree papers sector, there was a drop in deliveries and consumption, the first time this has happened in quite a while. This reflects the cut in advertising.
Of the three companies producing woodfree coated papers in Switzerland, M-real Biberist reports a rather prosperous year 2001. Although the production had to be curtailed (utilization of capacity was about 85%) the company came out well financially. The first two months of 2002 saw a good order inflow again.
Sihl produces highly specialized papers for inkjet printing, graphic arts, transparent papers and dielectric papers. The demand for these products very much depend on the promotional activities of companies and here, as noted previously, the situation was not good. Sihl's paper machine has been rebuilt and improved for online coating. The company also recently sold its daughter company Landqart (uncoated woodfree papers, banknote papers) to Mercer International.
Cham Paper belongs to the Industrieholding Cham and produces flexible packaging papers and composite papers (cigarette industry, food industry), wallpapers and technical papers for labels (both wet labels and self-adhesives) plus inkjet papers. The company reports a rather weak market in the year 2001. Orders for 2002 have picked up substantially in the two first months. It is estimated that the label market will continue to grow; the flexible packaging market most probably will stagnate and the wallpaper market is still recovering from a major slow-down several years ago. The inkjet paper market is believed to be a growing market.
Karton Deisswil has been left as the only remaining producer of coated cartonboard after the buyout of Kartonfabrik Christ and its subsequent closure by end 2001. At the beginning of 2002, Deisswil's orders were again increasing.
Martin Haberli
TAIWAN
TAIWAN ENTERS THE WTO
In 2001, total paper and board production in Taiwan reached 4.18 million tonnes, down 7% compared with 2000, while coated woodfree production was 230,700 tonnes (a drop of 10%). LWC production was 50,500 tonnes (+24%), pigmented fine paper was 40,000 tonnes (-13%), and coated board production was 541,000 tonnes (-4%).
The numbers show that coated woodfree is strongly influenced by imported coated woodfree paper, especially from APP China, while APP Dagang mill finished the installation and smooth start up of its new No. 2 coater in September 2001. For coated board, this confirmed the trend that more and more production units have moved to China, and they are now buying more local Chinese products.
The big news from the Taiwanese paper industry in 2001 was that both Taiwan and China finally entered the WTO. The direct effect will be that both sides will have to open their markets year by year. For Taiwan, import duties on almost all grades will be down to zero % by 2004, while China will keep duties of 5-8.5% in 2004.
After successfully moving and installing the BM 4 in Yuan mill at end of 2000, Shihlin Paper started to rebuild BM 3 in mid-2001. The capacity will be kept the same at 80 tonnes/day. The project is an effort to improve quality.
In the 4th quarter, Long Chen announced plans to shut down its Touliu mill in July 2002, which produces 350 tonnes/day coated woodfree. The plan is to change production line from coated woodfree to corrugating medium, which is the core business for Long Chen.
It has been reported that TPPC is talking about installing a second hand coated woodfree line from Japan, but this has not yet been finalized. Capacity is unknown. Coated board faced a very difficult time in 2001. Sales fell because of the weak economy and exports prices were also hurt. They fell to $350/tonne, mainly due to competition from Korean paper companies.
Larry Lai
UK
STRONG POUND CREATES PROBLEMS
The UK's GDP rose by 2.7% in 2001, which was better than any of the other main economies. However, the growth came from the services sector, while national manufacturing output actually declined. The GDP growth rate contracted in each successive quarter of 2001, thus throwing doubt on the UK's continuing ability to stay aloof from world trends in 2002, which in turn are tainted by uncertainty. The Economist's forecasters are estimating 2002 GDP growth at 1.9%.
National production of coated grades, other than mechanicals, has suffered badly from the strength of sterling, which has been the main cause of several mill closures. Thus, in coated woodfrees, apparent consumption has increased over the last decade, while national production has fallen, reducing the level of self-sufficiency from about 40% to 30%. In coated boards, national production has been reduced to essentially one single mill (Holmen's Workington).
Among last year's examples of these trends, Donside failed to find a buyer or an MBO backer to pull it out of receivership. In carbonless copy papers, Sappi Fine Paper Europe closed its 25,000 tonne/yr Transcript mill in Scotland. In the same sector, Appleton Papers in the US used an employee stock ownership plan to withdraw from the Arjo Wiggins Appleton triumvirate.
The sterling will have to weaken against the euro if the UK is to join Euroland. Engineering some sterling weakness would presumably have been implemented a few years ago had a route forward, without stirring inflation, been discerned. The matter is creating a twospeed division in government, between those responsible for a sound transition and those with a mainly totemic interest. Meanwhile, the euro's recent physical availability could help push a future referendum result toward joining.
Roger Grant
US
BRACING FOR ANOTHER TOUGH YEAR
The pace of mergers and acquisitions in the US coated paper and board industry came to an abrupt halt in 2001 as producers turned their attention to a disastrous market. The worst decline in advertising markets since the great depression led to a drastic reduction in paper use at magazines. In addition, mills had to contend with the additional negative impacts on paper demand resulting from: the US economic recession; a move to electronic distribution of annual reports; higher postal rates; bioterrorism in the mail; and the September 11th terrorist attacks. Total coated paper and board demand dropped 6% in 2001.
The largest decline in demand occurred in the upper end of the market. The very top echelon of papers saw demand drop by 16%, while commodity woodfree papers dropped by 13%. In addition to the loss of annual report business, paper producers were faced with a complete reversal of historical trends as the financial crunch at the end-user level caused many major downgrades in paper substrate.
The prospects for 2002 are not good. At best, demand is expected to stabilize, and there is little likelihood that prices will rise from their abysmal levels. Carry-over effects from the recession and bio-terrorism on both magazines and catalogues will combine with further postal rate hikes to squelch any chance of a recovery. Producers can only hope that the forecasts for significant improvement in 2003 will hold true.
The US coated board sector was relatively immune to some of the drastic factors that hit paper, but it has its own longer term issues to deal with. Since coated board is dependent on the relatively stable food end uses, demand declined "only" 2.7% in 2001.
However, the longer term issues of market share loss to plastics and the competitive threat of a strong dollar will not go away.
Exports are very important to U.S. coated board producers, accounting for 21% of production, and the strong dollar is making it increasingly difficult to compete in overseas markets. With many overseas markets expected to be weak in 2002, there is little likelihood of a significant recovery in exports, even if the dollar manages to retreat from its lofty level.
The poor conditions in 2002 will keep machine/mill closures at the forefront of the news. US producers permanently shuttered 710,000 tonnes of coated paper and board capacity in 2001, with most occurring in the coated woodfree sector. Some further closures have already been announced for 2002, and more will surely follow.
John Maine and Ken Waghorne
YUGOSLAVIA
ONE COATED BOARD MACHINE
Just one of three machines for coated paper and board production in Yugoslavia is currently operational. Located in the Umka board mill, it has a capacity of 60,000 tonnes/yr. In 2001, it produced 46,000 tonnes of single coated board. Sremska Mitrovica in Matroz has paper machines with online coaters for both single coated and double coated paper. Each of these two machines has a capacity of 6,000 tonnes/yr, however, neither has been in operation since 1992.
In 2001, coated paper imports reached a value of $12.5 million and coated board imports reached $4.5 million. Exports of coated board were $7.56 million.
Milos Kuzminac
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