Growing demand for packaging and hygiene papers while COVID 19 impacts overall paper and board consumption

Despite the slowing down of the European economy and the sanitary restrictions, most of the mills ran without disruptions in 2020; even if some operated at reduced speed because of lower levels of demand.

According to preliminary figures, the demand for packaging paper and board continued to grow in 2020 especially materials used for transport packaging and corrugated boxes, as they benefited from the e-commerce boom related to the sanitary crisis.

The production of packaging grades is estimated to have increased by 2.1% compared to 2019. They are essential to transport and deliver supplies, such as medicines or food. The output of carton board plus other packaging board – mainly used for retail packaging - and the production of wrapping grades – used for paper bag production – remained unchanged.

Domestic demand for hygiene papers has been relatively positive in 2020, despite the COVID-19 restrictions affecting the ‘away-from-home’ markets. Tissue and hygiene products are of vital importance to citizens and offer the safest option, particularly to implement the recommendations issued by national governments and the World Health Organization (WHO). Sanitary and household paper manufacturers’ output increased by 1.9% compared to 2019.  

“The European pulp and paper industry’s priority in 2020 has been to ensure that EU citizens can access the products they need for hygiene, health and food purposes. We have been relentlessly working with other industries along the value chain to guarantee security of supply to citizens. Our industry data now shows that crisis and the periodical lockdowns have accelerated consumption patterns change and will have a long-lasting impact on markets,” commented Jori Ringman, Cepi Director General.

The overall paper and board consumption was impacted by the economic recession and decreased by 6.6%. The European GDP declined by7.4% in 2020, after +1.6% in 2019. Cepi member countries’ paper and board production decreased by 5.0% in 2020, compared to the previous year, mainly due to COVID-19 pandemic impacting global demand.

The pandemic has also accelerated the structural decline of graphic grades. The overall production of graphic grades fell by more than 18.0%. Newsprint and printing & writing papers decreased by 20.5% and 18.4% respectively. Demand from publishers, offices and commercial printing has declined dramatically. Permanent mill closures or machines conversions have been announced, to adjust to the situation.

The utilisation of paper for recycling by paper companies in the Cepi area decreased by 2.1% compared to the 2019 level. The pandemic impacted the availability and quality of paper for recycling throughout 2020. 96% of European paper for recycling utilisation is supplied domestically. Exports went down by 8.4% according to preliminary statistics.

Preliminary Stats 2020

Cepi member countries’ paper and board production decreased by 5.0% in 2020, compared to the previous year, according to preliminary figures. Total production in 2020 reached 85.1 million tonnes. Despite the slowing down of the European economy and the sanitary restrictions, most of the mills ran; some at a reduced operating rate because of lower levels of demand. This downward trend was observed in most countries in the world. China, the US, Japan, India, Korea and Canada recorded paper production decline ranging between -2% and -17%. As a result, global paper and board production went down by around 5.0% as well in 2020, according to first estimates. The European pulp and paper industry’s priority has been to ensure that EU citizens can access the products they need for hygiene, health and food purposes. It has been relentlessly working with other industries along the value chain to guarantee security of supply to citizens.

SLIGHT INCREASE IN SANITARY PRODUCTS AND HYGIENE - SHARP DECREASE IN GRAPHICS 

The growing demand for packaging grades continued in 2020, reinforced by the sanitary crisis. The production of packaging grades is estimated to have increased by 2.1% compared to 2019. Within the packaging grades, case materials – mainly used for transport packaging and corrugated boxes – recorded an increase of 3.3%. The output of carton board plus other packaging board – mainly used for retail packaging – and the production of wrapping grades – used for paper bag production – remained unchanged.

The share of packaging grades accounted for 58.2% (54.1% in 2019) of the total paper and board production, with graphic grades accounting for 27.9% (32.7% in 2019). Output of all other grades of paper and board – mainly for industrial and special purposes – decreased by 3.7%, with a share of 4.6% of total paper and board production. Sanitary and household paper manufacturers’ output increased by about 1.9% compared to 2019 and accounted for 9.3% of total paper and board production.

The structural divergence in the production trends for graphic grades and packaging grades continued in 2020, reinforced by the sanitary crisis. The overall production of graphic grades fell by more than 18.0%. Newsprint and printing & writing papers decreased by 20.5% and 18.4% respectively. The pandemic has accelerated this already well established structural decline. Permanent mill closures or machines conversions have been announced, to adjust to the situation. The production of printing & writing papers – used for magazines and catalogues, direct mail, directories, etc. –decreased with different trends from one grade to another. Output of coated mechanical paper and uncoated mechanical paper fell by 24.2% and 14.9% respectively. Uncoated woodfree grades - copy paper - have decreased by 11.4%. Overall, this means that production of coated and uncoated graphic papers decreased by 25.2% and 12.7% respectively. Production of woodfree graphics showed a decrease of 17.4% whilst output of mechanical graphic papers fell by nearly 20%.

The overall consumption of paper and board in Cepi countries in 2020 decreased by around 6.6% compared to 2019, based on the latest data available. It was directly impacted by the recession of the European economy - 7.4% in 2020, after +1.6% in 2019 - and the less favourable global economic environment. This crisis and the periodical confinements have accelerating consumption patterns change and will have a long-lasting impact. Demand for graphic paper has been very negatively impacted because demand from publishers, offices and commercial printing has declined dramatically. Domestic demand for hygiene papers (tissue, toilet paper, etc.) has been relatively well oriented in 2020, despite the difficulties observed in the ‘away-from-home’ markets. Tissue and hygiene products are of vital importance to citizens and offer the safest option, particularly to implement the recommendations issued by national governments and the World Health Organization (WHO). Packaging paper and board has benefited from e-commerce growth. It is also essential to transport and deliver all types of food and pharmaceutical supplies, such as medicines, in protective packaging. EU GDP is expected to record a relatively limited recovery in 2021 - between +3.0% and +4.0% - according to recent forecasts.

Paper for recycling utilisation was down by 2.1%

The utilisation of paper for recycling by paper companies in the Cepi area decreased by around 2.1% compared to the 2019 level, reaching 47.8 million tonnes. 96% of European paper for recycling utilisation is supplied domestically. The pandemic impacted the availability and quality of paper for recycling throughout 2020. Exports went down by close to 8.4% according to preliminary statistics.