Latest data collected by the Confederation of Paper Industries (CPI) and HM Revenue & Customs have confirmed that the UK recovered paper sector is fast approaching a watershed in its history.
The statistics reveal that some 7.7 million tonnes of paper was recovered last year, an increase of more than 8% compared with 2004. With just over 4.5 million tonnes consumed by domestic mills, this means that more than 3.2 million tonnes — or 42% of the recovered paper collected in the UK last year — went for export. This compares with a 2004 total of 2.587 million tonnes which was equivalent to 36% of the collected volumes.
“This represents a staggering 577% change since 2000 and, by current trends, exports may well overtake UK usage through 2006,” commented the CPI.
drop in UK usage of recovered fibre illustrated “the
difficulties UK reprocessors are experiencing following a number of UK mill closures”.
Right on cue, St Regis Paper announced a proposal to close its Sudbrook semi-chemical fluting mill in south Wales, which consumes around 1,300 tonnes of OCC per week. According to the company: “The rapid and significant rise in energy prices has dramatically affected the mill’s cost base and therefore its profitability.”
Furthermore, demand for the mill’s speciality product has continued to fall as customers switch to alternative, lower-cost types of paper.
According to a UK packaging sector spokesman, domestic producers are being “crippled” by energy cost increases that are “well above anything they can hope to recover in product price rises”. The CPI has estimated that recent energy price inflation has cost the paper industry a minimum of £80m.
The higher cost of energy in the UK is also having an impact on domestic producers’ competitiveness on the international stage. German paper manufacturers are upset at a 30% annual jump in energy costs, whereas their UK counterparts have sustained a 100% increase over a two-year period. It has been calculated that energy accounts for 8-12% of paper and board manufacturing costs in Germany compared with an average of 25% in the UK.
The soaring cost of energy is also a major issue for the UK newsprint and tissue-making sectors. The former is currently suffering year-on-year consumption growth of between zero and —1%, thanks in large part to lower levels of business advertising and the emergence of electronically-based news media. By contrast, tissue manufacturers are continuing to see decent demand from the away-from-home sector as well as a continued recovery in sales of facial tissues.
Recent developments in the UK recovered paper market confirm the ever-strengthening emphasis on export business. A leading merchant processor observed this week: “China and the Far East are continuing to vacuum up tonnage. They have interest across the broad spectrum of grades we produce.”
India, too, has been generating substantial demand, notably for mixed. In a bid to eliminate quality problems, the country’s import authorities ar