<img alt="" src="https://secure.item0self.com/192027.png" style="display:none;"> Top Stories

Prices of energy and raw materials continue to push EU paper prices higher

April 6, 2022

1 mins read

Paper production costs have become a real problem for EU paper producers, following the latest spike in wholesale gas prices coupled with uncertainty due to the Russia-Ukraine geopolitical conflict. Paper and board production is an energy-intensive process, and energy accounts for 15-30% of paper production costs. Approximately 60% of the energy used by the paper industry is derived from biomass, and the rest comes from natural gas. The unprecedented high prices for energy, transportation bottlenecks and reduced supply of fibre and other raw materials have caused several EU paper mills to halt their production. As a result, paper prices across all segments reached record-high levels; the EU paper blend (cartonboard GC2 and GD2, kraftliner 175g, fluting semi-chemical, testliner 2) price increased by 6% since the beginning of this year and by 39% year-on-year, at EUR 1,275/MT in March 2022.

In addition to high energy prices, EU market participants are facing supply bottlenecks due to a shortage of HGV drivers. According to Germany’s road toll data, transport fleets from Eastern Europe represent a significant proportion of lorry traffic in Germany. In the current situation, the majority of these drivers are unavailable. Poland employs approximately 100,000 Ukrainian drivers; many of them had to flee to Ukraine to help to evacuate their families. Market participants report that it is almost impossible to compensate for such a dramatic workforce exodus in the short term. There are also huge delays in the shipping routes, especially from South America to Europe.

Looking ahead, the prospect of prices softening, which recently seemed possible due to abundant supply, has once again evaporated. Moreover, some paper manufacturers are scheduled to take spring maintenance downtime, which will also have an impact on the supply-demand balance in the paper market.

 

Zanna Aleksahhina
Zanna Aleksahhina

/You May Also Like

Featured Image
In the recent North-Western European Potato Growers (NEPG) January...
Featured Image
Norway is the dominant player in the global farmed salmon industry,...
PLATFORM

Mintec Analytics

The spend intelligence you need, about the food products you buy, all in one place. 

FREE TRIAL