European folding cardboard production capacity will increase by more than one million tons per year. Will it affect the European market?
The paper and board (P & B) industry in Europe plans to invest more than 1 million tons/year of new folding cardboard (FBB) capacity in the next few years, which could lead to excess and unnecessary controversy in the European market.
The number of new capacity announcements has grown rapidly over the past two years. Last year, Finnish-based Finlin Cardboard said they would increase capacity by 200,000 tonnes/year by rebuilding the BM 1 machines at their Husum plant. The plant is currently working to increase capacity. The new capacity is expected to reach around 600,000 tonnes/year by 2025.
In January, Finlin Cardboard announced that it had begun an Environmental Impact Assessment for its new FBB plant in Kaskinen, Finland. The plant is expected to produce around 800,000 tonnes a year. The company will make an investment decision as soon as 2024. In May, AFRY announced that they had been selected by Finlin Cardboard as an engineering partner for the project.
In October last year, Stora Enso announced that they would renovate the No. 6 paper machine at the Oulu plant in Finland and plan to produce 750,000 tons/year of FBB and Coated Unbleached Kraft Paper (CUK) by 2025. The company will invest about 1 billion euros in the renovation and chose Voith to execute the project.
Global demand for base and recycled consumer paperboard is expected to grow by more than 11 million tonnes by 2030, approaching 57 million tonnes. "By investing in Oulu, we are able to continue to drive the plastic substitution trend," Stora Enso said in his 2023 Quarter 1 financial report. These new projects will bring nearly 2 million tonnes/year of additional capacity, which includes Oulu's combined FBB/CUK capacity, and assumes Kaskinen's plans can roll out as scheduled. New large volumes of FBB will soon enter the market, which has caused controversy among industry insiders.
In multiple interviews with market participants, one of the points they have made is that new and rebuilt machines may replace old machines, so eventually the net capacity change will be lower. "I wouldn't be surprised if new capacity is replacing other machines." One producer said, "New capacity could lead to small factory closures."
Stora Enso also hinted at the possibility of such a reshuffle in their 2023 Quarter 1 results report. "Products from other consumer cardboard mills can be transferred to Oulu, simplifying the product mix and increasing productivity across all sites," the company said.
On the topic of plant closures, a source pointed out that new capacity in Scandinavia could create problems for smaller producers outside the region. "Scandinavia has more cost advantages, producers in continental Europe will eventually run into difficulties, and sustainability and carbon emissions will become a growing issue. There are machines that should have stopped running a few years ago but are still running." One producer said: "Smaller players may not survive."
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