Macro trends driving change in the European paper and cardboard market – what do they mean for recyclers?

The European paper and cardboard market is undergoing structural changes as people read less newspapers and buy more goods online using cardboard packaging.

But how has this affected the European paper and cardboard market, and is more recycled content being used?

In 1991, according to the Confederation of European Paper Industries (CEPI), there were 1,570 paper mills in European countries. But by the time of its most recent statistics for 2021, this had almost halved to 886 mills.

Yet crucially, overall production of paper and cardboard had increased from 73,280,000 tonnes in 1991 to 100,567,000 tonnes in 2021 (however it had peaked at 103,714,000 tonnes in 2010).

Importantly, mills are also working at a higher operation rate, ensuring they are used more efficiently. In 2020, the operating rate was 84.7% (it had fallen due to COVID) but was back up to 90.1% in 2021 compared to 88.8% in 1991.

What about recycling?

According to CEPI’s Monitoring Report 2021, the paper and board recycling rate in 2021 was 71.4%. Although this had decreased from 73.3% in 2020, CEPI said this was due to growing consumption of paper and board in Europe and other countries, which had grown faster than the capacity for recycling of paper and board.

This is backed up by the amount of paper for recycling increasing in 2021 to 52.4 million tonnes, up 5.7% on the year before, due to new investments in new recycling capacity across Europe. 

How is production changing?

As the chart below from CEPI shows, there is a significant change in the manufacture of paper and cardboard following demand for these products.

Since 1991, the total amount of packaging paper and board produced has grown significantly from around 65 million tonnes to 90 million tonnes by 2021. With the growth of online shopping, and more requirement for cardboard packaging, this is a trend that is expected to continue to grow.

Additionally, the ban on Chinese recycled paper imports in 2021 meant changing market fundamentals. While Chinese mill groups have opened new mills in South East Asian countries such as Vietnam, Malaysia and Thailand, this has not replaced the volume that used to go there from Europe. As a result, mill groups in Turkey, India and of course Europe have seen an opportunity to increase the amount of recycled content they buy from European countries.

Indeed, CEPI notes that exports of paper for recycling have fallen by 28.1% from 2010’s 9.6 million tonnes to 6.9 million tonnes in 2021. 

While there has also been some growth in sanitary and household papers, production of graphic papers and newsprint has declined.

Converting newsprint mills to packaging mills

The decline in newsprint production has seen mill groups across Europe invest in converting mills from newsprint to packaging in response to the trend of more use of paper and cardboard packaging.

Mills being converted include:

• UPM’s newsprint mill in Shotton, UK was bought by Turkey’s Eren Group in 2021 and it is currently in the process of converting it to a 1 million tonne per year capacity packaging and tissue mill – it is expected to be complete in 2024

• UPM has also sold its Austrian newsprint mill, with new owner Heinzel investigating containerboard conversion
• Model Group is expected to convert a former Stora Enso newsprint mill in Germany to containerboard taking 310,000 tonnes of newsprint production out of the market
• Norske Skog is to become a containerboard manufacturer by converting its newsprint Golbey mill in France and Bruck mill in Austria to create 765,000 tonnes of recycled containerboard capacity
• Stora Enso has begun a study into converting its Langerbrugge mill in Belgium from newsprint to a mill that would have 700,000 tonnes of testliner and recycled spines capacity – in March 2021, Stora Enso announced its divestment of four of its five production sites leaving Langerbrugge as its only remaining mill. 

What next for the European recycled market?

Clearly, the conversion of newsprint mills to containerboard is likely to lead for more demand for recycled content.

Many of the mills listed above for conversion have outlined plans to use all or mostly recycled fibre. 

This is likely to lead to more demand for grades such as OCC and mixed paper. But newsprint is in continued decline, although it remains in demand for remaining newspaper and magazine production mills as well as some tissue manufacturers. 

Over the next few years, the demand for recycled fibre for cardboard mills is likely to get stronger leading to a more competitive market across Europe. 

Although exports of paper for recycling from Europe are falling, there is a risk that despite this additional capacity, global competition is lost if the EU introduces its proposed revised EU Waste Shipment Regulations that would make it very hard to export fibre from Europe.

But for now, certainly, the future looks bright for the cardboard market, stable for the tissue market, but more challenging for graphic papers and newsprint.