Opportunities Ahead for Paper and Board Markets in Central and Eastern Europe Despite Slowdown
03 February 2010
Leatherhead, UK, 3 February 2010. Actual paper and board consumption in central and eastern Europe reached 16 million tonnes and was valued at over US $30 billion in 2008, according to a new study by Pira International. Russia accounted for nearly one-third of this total volume, followed by Turkey at 20%, and Poland with 17%.
Based on primary research and expert analysis, The Future of Paper and Board in Central and Eastern Europe quantifies the central and eastern European market sizes for paper and board by grade, end-use application and country, with five-year forecasts projected till 2014 under best and worst case scenarios. A definitive guide to business planning for suppliers, equipment manufacturers, and paper and board converters, the report analyzes the key drivers and trends influencing the market. It also provides an up-to-date summary of the opportunities and threats anticipated for the region over the next five years.
The majority of countries in central and eastern Europe are expected to see GDP growth in future, albeit at a slower pace due to the current economic slowdown. This is expected to boost the market. According to the study, other drivers impacting the region include increasing consumer affluence, a greater proportion of ageing population and a boom in the building and construction industry. Rising costs of energy, labour, transport, raw materials and environmental improvements are putting pressure on margins. In search of low-cost production alternatives, many manufacturers are shifting base from the West into eastern Europe, especially into countries like Romania and Bulgaria.
The study examines the competitive landscape and shows that despite the fragmented nature of the paper and board market in central and eastern Europe, Mondi was way ahead of its rivals with nearly 20% volume share. The top ten producers constituted over 45% of the total, with the next ten making up a further 13%. Four of the top five producers in the region operate exclusively in Russia.
Printing and writing paper consumption aggregated over 8 million tonnes in the region in 2008, and this was worth almost US $20 billion. Actual consumption of paper and board for packaging applications in central and eastern Europe in 2008 was slightly less than 8 million tonnes, with a value close to US $11 billion. For both these above segments, Russia, Turkey and Poland were the main markets.
Analysing the market by end-use application, the study shows more than 50% of the total volume consumption as printing and writing paper applications. Newspapers alone comprise 13% of the total and unprinted applications, consisting primarily of cut papers, make up almost 17%. Corrugated and microflute packaging applications constitute more than a third of the total market by volume, consuming almost 5.5 million tonnes of material.
Making forecasts under a best case scenario, Pira International predicts that the paper and board industry in central and eastern Europe will show a slight decline in consumption during 2009 due to the effects of the recession, after which there will be a slow recovery towards the high growth levels seen over the past few years. Averaging just over 3% CAGR per annum, Ukraine and Hungary are expected to bear the brunt of the recession in the short run, with Hungary witnessing the slowest recovery during the 2009-14 period. Under this scenario, incremental demand for a further 2.6 million tonnes of paper and board will also be generated by 2014.
In contrast, the worst case scenario paints a somewhat bleaker picture, with a 2% fall in consumption in the short term, and static to slightly negative growth prospects for the medium term. If this scenario plays out, paper and board consumption will reduce by over a quarter of a million tonnes in 2009 alone, with volumes declining by over 600,000 tonnes per year by 2014. Hungary and Russia will again be expected to fare the worst over the medium term.
The study identifies a number of key opportunities for the paper and board market in central and eastern Europe. These include an overall volume growth in the region irrespective of the economic slowdown as well as upgrades for printing equipment, logistics and warehousing. Further opportunities include the introduction of automated systems and expansion of production capacity, as well as good growth potential visualized for printing and writing papers and promising packaging applications like corrugated and microflute, folding cartons and Kraft paper.
Aside from the global economic crisis, threats which could possibly influence the market in future include competition from other materials like bulk, semi-handling systems and plastic packs. Overcapacity in the printing and writing paper market, cost increases, multinational acquisitions, and outdated technology are also potential factors. Despite any short term effects of the recession on growth prospects, Pira International is hopeful that the fundamental drivers behind the region's previously high growth rates are still in place and will re-emerge as the recovery process gets underway. Suppliers already active in this region should batten down and weather the short-term difficulties, while those yet to involve themselves should seriously consider the opportunities presented by the region in the longer term.
The Future of Paper and Board in Central and Eastern Europe is available now for £3,500. For more information, please contact Stephen Hill on +44 (0) 1372 802025, or via e-mail on stephen.hill@pira-international.com
Press contact: For editorial queries, details of the report or an expanded article please contact: Rebecca Leigh +44(0)1372 802207 rebecca.leigh@pira-international.com
Pira International
Pira International - the worldwide authority on packaging, paper and print industry supply chains
Established in 1930, Pira provides strategic and technical consulting, testing, intelligence and events to help clients gain market insights, identify opportunities, evaluate product performance and manage compliance.