RISI Forecasts Reduction in European Coated Paper Production

According to a report recently released by RISI, an information provider for the global forest products industry, Western European demand for coated papers has matured and the post recession rebound in demand is over, with overcapacity of both coated woodfree and coated mechanical papers reaching 1.2 million metric tons.

RISI’s report, titled The European Coated Papers Risk of Closure Study, notes that the overcapacity is lowering finished product prices in Europe and affecting producer profitability in Europe. With coated woodfree capacity in China forecast to exceed domestic demand by the end of 2011, as well as new capacity coming on line in Russia, export prospects of Western European coated paper producers are threatened and capacity closures of between 2.7-3.5 million metric tons are expected by 2015.

“Coated paper mills are currently operating at a loss in Europe. To maintain profitability, prices will have to rise and capacity needs to be balanced, through closures,” says Sampo Timonen, director of European graphic papers at RISI and author of the study.

Timonen analyzed 90 paper machines and 20 producers for the study and created a methodology comparing company and machine risk against the industry average using a range of criteria, including financials, long-term cost position and the strategies of coated woodfree and coated mechanical producers in Europe, to evaluate the machines most likely to close on a permanent basis.

The study analyzed machine risk of closure by company, indicating machines likely to face proactive closure, potential divestments and closures due to bankruptcy.

More information about the study can be found at www.risi.com/eurisk.