Paper industry on the upswing again

The German pulp and paper industry is on the upswing again. The partly significant declines in production and sales of last year could be cushioned again in many areas in the first half of 2021. At the same time, high energy and raw material prices as well as supply bottlenecks are burdening the industry.

Both production (+6.3 %) and total sales (+6.8 %) recorded a noticeable increase across all varieties compared to the same period last year. Incoming orders rose by 15.8 % in the first half of 2021 compared to the previous year. The situation varies for the individual grades.

The production of paper, cardboard and paperboard for packaging purposes increased by 7.4 % across all grades compared to the same period of the previous year. In the second quarter, however, the revival of consumption and services in particular led to significantly increased demand and production.

After sharp declines last year, the production volume of graphic papers increased again from January to June 2021 compared to 2020 (+5.6 %). Noticeable declines were still recorded here in the first three months of the current year. However, as capacities for graphic papers have been declining throughout Europe for years, this has led to supply bottlenecks in some cases.

Technical and speciality papers developed very dynamically in the first half-year (12.5 %). Production of tissue papers was reduced compared to the previous year (-4.8%). Stocks in the trade and in private households probably played a role here after the panic buying last year.

Against the backdrop of growing demand, rising prices for energy and raw materials as well as supply bottlenecks for raw and auxiliary materials are causing problems for the industry. Electricity and gas prices are significantly higher than before the Corona crisis.

In the case of recovered paper, the lockdown has led to a visibly lower volume from trade and commerce, which could not be offset by the increased consumption of packaging in e-commerce with private households. Accordingly, prices remain at a persistently high level. The same applies to pulp, where prices are driven up primarily by strong demand from China and the postponed realisation of additional production capacities in Central and South America.

The shortage of raw materials is fuelled by the global problems in maritime transport and the associated shortage of containers as well as massively rising freight rates. Road transport, which is by far the most important mode of transport for the paper industry, has also become visibly more expensive due to the CO2 pricing of fuel. The current delays due to road closures in the flooded areas are also problematic for the transport of goods.