Amid ongoing economic difficulties, the European paper industry experienced a consumption downturn in 2023 related to large-scale destocking, resulting in a decline in annual turnover for many pulp and paper companies. However, record annual recycling rates demonstrated the industry's self-sufficiency and recycling capabilities.
Affected by weak demand, paper and paperboard production in the European Paper Industry Federation member countries fell by 13% in 2023, a decline that even exceeded the 4.7% during the pandemic in 2020. This trend is not only seen in Europe, but the global economy is also affected by rising production costs, especially energy costs. Against the backdrop of high living costs, monetary tightening and weakening external demand, the European economy as a whole has lost its growth momentum.
According to the specific statistics, the number of paper mills in 2023 decreased by 8 compared with the previous year, of which 3 produced pulp and 5 produced paper or board. This means that by the end of 2023, there will be 140 pulp mills and 716 paper mills and board mills in the 18 member states of the European Paper Industry Federation. The number of paper machines in use decreased by 27 to a total of 1,173.
Turnover fell by 15.8% from EUR 118 billion to EUR 100 billion. However, the continued decline in pulp and paper capacity, the accelerated decline in output and the decline in operating rates indicate the need for further consolidation and reshaping. Pulp capacity fell by 4.8%, output fell by 9.1% and operating rates fell by 3.8% due to mill closures. The industry needs higher operating rates, so more capacity losses can be expected.
The same was true for total paper production. Capacity fell just 1.7% to 96 million tonnes, while full-year production was 73.9 million tonnes and operating rate was 76.7%, down 9.9%. The industry is targeting an operating rate of over 90% to achieve peak efficiency. Consumption and production fell for all paper types. Newsprint production fell 19.3% to 2.8 million tonnes, while consumption fell 20.6% to 2.6 million tonnes. Uncoated mechanical paper production fell 22.9% to 2.9 million tonnes, and consumption fell 24% to 2.6 million tonnes. Coated mechanical paper production fell 24.6% to 2.7 million tonnes, and consumption was 2 million tonnes, down 25.7%.
The production of the main printing paper grades, offset and coated paper, both fell sharply. The former fell by 23.4% to 5.6 million tons, and the latter fell by 31% to 2.7 million tons. Consumption also fell, but not much: offset consumption fell by 25.6% to 4.6 million tons across Europe, and coated consumption fell by 20% to 1.7 million tons. Exports made up the difference, with exports far exceeding imports.
Paper production and consumption also fell, but the decline in printing paper was not as severe. Containerboard and corrugated paper is undoubtedly the largest industry, with production of 30.8 million tons and consumption of 27.8 million tons in 2023. This is a decrease of 4.9% and 7.6% respectively. Cartonboard production fell by 18.6% to 7.8 million tons and consumption decreased by 5.2% to 5.2 million tons, while packaging paper consumption fell by 23.2% to 2.1 million tons, with production of 3.6 million tons, a decrease of 16.5%.
Despite the challenges, the pulp and paper industry showed signs of robustness in 2023. The recycling rate reached 79.3%, with a three-year rolling average of 71.4%. The industry is increasingly "Made in Europe", with 91% of the fiber originating from within the EU. In addition, for the first time since the European Paper Industry Federation began collecting data, the market trade in pulp, which is mainly destined for market sales rather than on-site use, achieved a positive balance.
The paper industry’s overall trade balance remains high, ranking among the best in the European manufacturing sector. Nevertheless, a second consecutive year of decline could signal a decline in the global competitiveness of the European pulp and paper industry. In another highly efficient area of the industrial sector, the decoupling of pulp and paper production from CO2 emissions remains stable and is expected to fall by 5.8% by 2023. Since 2005, the industry has reduced its carbon emissions by more than 46%.
Amid ongoing economic challenges, investment rates in the European paper industry remain high despite the difficulties. These investments will need to accelerate further in the coming years in order to meet the EU’s decarbonization targets. An early sample of company data forecasts a rebound in output and profitability in the European pulp and paper industry by 2024. However, there is still a significant gap compared to the industry’s position before the pandemic and the war in Ukraine.
Jory Lingemann, director general of the European Paper Industry Federation, was equally optimistic, with a sampling of early company data points pointing to a rebound in production and profitability across all sectors. He said: “Given this backdrop, Europe’s pulp and paper industry can be proud of its achievements on climate action and circularity. In a more supportive and predictable regulatory environment, our outlook could be very positive and our contribution to the EU Green Deal would be further enhanced.”
In addition, India, Indonesia and Turkey have become major importers of waste paper in Europe. In 2023, the waste paper industry has undergone significant changes. Due to high energy costs and rising interest rates, the demand for finished products has decreased, and the mills have faced a double blow. The positive demand for waste paper in the early stage has been replaced by lower orders. 2023 has been challenging from the beginning, and this challenge has continued throughout the year, testing the adaptability and resilience of the waste paper industry.
On the commercial side, waste paper collection volumes are under pressure, with demand from mill customers falling short of many traders’ expectations. Even though U.S. OCC and mixed paper prices have trended higher through much of 2023, the main driver has not been increased mill demand but rather buyers’ nervousness about fiber availability.
Countries such as India and Indonesia have become key Asian markets for European exports, but even this stable business suffered a shock in late 2023 due to attacks on merchant ships in the Red Sea. Many Asian buyers were forced to cancel their import purchases, while suppliers in Europe and the United States faced ship diversions, longer transit times and higher freight rates, not to mention the risk of canceled orders and vessel bookings.
Two sessions at the 2023 BIR Congress highlighted not only this, but also how international flows have changed, not least because China has changed its import rules. In 2018, more than 50% of waste paper exports went to China, while in 2022, India, Thailand and Indonesia became the largest overseas buyers. China has been replaced by Indonesia, India and Turkey as the main buyers of waste paper in Europe. The total volume shipped from Europe to Asia in 2022 actually increased by 12%.
India’s domestic mill capacity is set to surge from 14 million tonnes today to more than 20 million tonnes by the end of the decade, driven mainly by waste paper. Three-quarters of Indian producers currently rely on waste paper, with the country’s imports already reaching around 12 million tonnes per year. In terms of flows, Southeast Asia remains a strong magnet for the waste paper surplus generated elsewhere in the world. The Middle East, with annual recycled paperboard production of 4 million tonnes, continues to see a large amount of recycled containerboard from the region being shipped to Southeast Asia, as demand for high-quality fibre continues to grow.
