The bottleneck in paper will be overcome in 2022

what is paper making?

Rising pulp prices in Europe pose a risk to the industry. According to the report of Hermes, in 2021, a loss of 7 billion dollars is expected in the operating profits of the paper producers in the sector, which are in the early stages of production. In the next year, it is predicted that price increases will slow down.


According to the paper and cardboard industry report published by Euler Hermes, global paper production is expected to increase to 416 million tons in 2022 by continuing to recover. One of the biggest winners of the pandemic was “cardboard”. Supported by booming e-commerce sales, cardboard is expected to account for two-thirds of global paper production by the end of 2022. According to the report, cardboard sales are predicted to increase by 5 percent in 2021 compared to 2020. According to the Euler Hermes report, the world’s leading credit insurance company, the Kovid-19 crisis accelerated the differentiation trend among sub-sectors, and cardboard surpassed printing and writing papers in the race. While the tissue paper subcategory (including other papers) steadily maintained its 16 percent market share in terms of production between 2015 and 2019, all kinds of cardboard category increased its market share from 53 percent in 2015 to 57 percent in 2019 with the increasing packaging demand in parallel with online orders. Raised to . On the other hand, the global market share, which was 31 percent in 2015, decreased to 26 percent in 2019 in terms of production in all types of printing and writing papers, including newspapers. The fact that the Kovid-19 crisis accelerated the transition to remote work and online classes also accelerated the downward trend in print and writing paper outputs.


According to the report, the biggest handicap for the paper industry is rising pulp prices in Europe. Despite the 5% increase in cardboard sales in 2021 compared to 2020, the industry is struggling to keep up with the increase in the European pulp price, which has increased 1.5 times since the beginning of the year. The biggest risk for the paper industry since the beginning of the year seems to be the increase in pulp prices. As of the end of September, the price of pulp in Europe increased 53 percent year on year, while the same prices in Asia increased 47 percent. Unlike the raw material players, who can reflect the increase in wood prices to their sales prices, the paper industry, which is closer to the end consumer, was badly affected by the increase in pulp prices.

Near-end paper producers, although normally more profitable as their operations involve more value-added transactions, have had a hard time maintaining their profitability levels as pulp prices spiked (as was the case in 2018). Since the demand for their products decreased, printing and writing paper segments, along with newsprint, were the segments most adversely affected by this cost increase, as they could hardly reflect the increase in pulp costs to their customers. In 2021, a loss of 7 billion dollars is expected in the operating profits of the paper manufacturers in the sector, which are in the early stages of production, especially the printing, writing and newsprint manufacturers. However, 2022 is projected to be brighter as the rise in pulp and wood prices slows.


On the other hand, the Asian Region, which will increase its production by 7 million tons in 2022 compared to 2020, is expected to surpass North America by more than compensating for the loss of production. The European region, which is expected to compensate only about 40 percent of the production loss experienced during the pandemic, will be among the lagging behind. Euler Hermes Turkey CEO Ahmet Ali Bugay said the following about the opportunities and risks in the Turkish paper industry: “With the pandemic, the need for paper raw materials has increased as well as the demand for paper around the world. However, Turkey is not at the desired level in recycling and cannot get rid of its dependence on imports in the supply of cellulose. If Turkey can reach industrial forests and increase the scrap recycling rate within the framework of a long-term plan, it has serious opportunities in terms of logistics and know-how not only in the domestic market but also in the export markets. However, in this period when the Turkish lira depreciates rapidly, companies need to focus on sustainable growth by paying attention not only to foreign currency-based raw material input prices, but also to risks such as pricing, cash flow planning, and currency risk management.”

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