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Paper and Board Manufacturing Market Report 2002
Key Note Publications Ltd, Oct 2002
The paper and paperboard industry is one of the UK's key manufacturing sectors. In 2001, the UK consumed 12.6 million tonnes of paper and paperboard products, while its papermaking industry produced a total of 6.2 million tonnes of paper and board. These consumption and production figures signal the first decline in UK papermaking output and consumption in over 10 years. Between 2000 and 2001, the volume of paper consumed fell by 2.3% and the amount manufactured in the UK fell by 6.1%. In value terms, the apparent UK market was worth an estimated £5.38bn in 2001, following several years of decline.
The market can be divided into six key product sectors: graphics paper, newsprint, case materials, folding box board (FBB), sanitary products and wrappings. Case materials and wrappings are the two best-performing sectors in terms of market value, both having increased in value in 2001, while the other sectors experienced declines.
Since the late 1990s, the paper industry has had to endure extremely difficult trading conditions. A combination of factors has combined to create less than favourable market conditions, including rising production costs - many of which have resulted from EU legislation, which the UK has tended to implement more strictly and sooner than its EU counterparts - and the strength of sterling against the euro and other foreign currencies.
As a result of the difficult trading conditions and in order to achieve greater economies of scale, many companies have been involved in mergers or acquisitions and a number have been forced out of the industry altogther. Consequently, the market for paper and board manufacturing is becoming increasingly concentrated, dominated by fewer, but larger players.
Nevertheless, the UK paper and paperboard industry remains a dynamic one, and continues to set the pace when it comes to developing environmentally sustainable manufacturing practices. Various trade organisations have negotiated and influenced recent legislation - at national, European and international levels - for the benefit of the industry and the environment.
Each sector within the paper and board market targets a specific group of customers and is affected by a distinct range of issues. For example, the newsprint sector has been affected by increasing demand as a result of the wide range of lifestyle supplements that now accompany most newspapers, while the paper producers supplying the sanitary and food packaging sectors have had to face new self-regulatory standards set by the industry on paper quality and content.
Taking account of the current economic difficulties facing the industry, we forecast that the market will show only modest growth in 2002, after which it will pick up momentum, before levelling off in 2005 and 2006.
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