Tariffs affecting newsprint and wood-based products

Well, this year is certainly moving fast, as talk of tariffs fly around following the new US administration threatening – and in some cases, implementing – all matter of trade duties on neighbours and non-neighbours alike, with Canada, Mexico, China and Europe being the first in the firing line and targeted with tariffs on a range of products, charged up to 25% in some cases; but whilst some of these tariffs have been delayed, others are still being announced on a worryingly regular basis, and very pertinently for our industry, on wood-based products, particularly Newsprint, which our Canadian colleagues are extremely concerned about right now.

Western Europe & North America Graphic Paper Statistics

In terms of the latest W. European & N. American statistics in 2024 demand (vs 2023), we have the following (monthly and YTD):

W. European Graphic Paper Demand:

	Dec 2024	FY 2024	FY 2025	Avge 23/24
Graphic Papers	-3%	+0%	+23%	+11%

N. American Graphic Paper Demand:

	Dec 2024	FY 2024	FY 2025	Avge 23/24
Graphic Papers	-3%	+4%	-26%	+11%

Note that we’ve additionally added a column for (Full Year) 2023 growth (vs 2022), to provide some context as to how bad things were in that year, in case some observers might’ve considered 2024 growth in isolation, and may wrongly have concluded that the latest annual data showed a decent growth rate, or at least a reasonable rebound following a “poor” year ; it didn’t.

Effect of Price-Demand Elasticity

It was more of a “dead cat bounce” following one of the worst single-year figures for graphic papers, all driven by a simple macro-economic phenomenon: price-demand elasticity, which is effectively how demand reacts when prices go up; especially in an industry that has a growing alternative: digital. And when prices go up significantly – as they did in 2021-22 – then demand will react significantly too… and it did!

Visit here for more information on paper price trends.

Drop in commercial paper printing

The latest news from France highlights the issue of large retailers ditching their paper offering, causing a sudden drop in commercial printing, as Supermarket chain Carrefour announced that it will stop distributing advertising catalogues in France as of 31st March this year, nearly one year earlier than previously planned.

The firm said that, between the start of 2022 and the end of 2024, it had reduced printed catalogues in France by 80% or some 45,000 tonnes of paper, for its French operations. The company has also announced that it will stop printing catalogues completely in France by 2026. This follows in the tracks of other large retailers and cataloguers across Europe, such as Ikea, Argos, Freemans, Monoprix and Otto, although one or two have travelled in the other direction, e.g. Screwfix, although in a more limited capacity.

Given the lack of a global (financial) event in 2023, such as there was in recent years, e.g. in 1997-98 (Asian crisis), 2001 (dot com bubble), 2008-09 (Lehman Brothers/Banking crash) and 2020 (Covid), it’s extraordinary to see the drop which occurred in that year (2023), based purely on price-demand fundamentals, making it one of the, if not, the worst single year for demand growth on record for a year not impacted directly by a global crisis, even if the price spike came as a consequence of challenges due to both post-Covid and the war in Ukraine/energy crisis.

Graphic Paper Growth in 2024

Despite slightly positive numbers in 2024, in West Europe and North America – which is always extremely welcome for our industry in a difficult environment dominated by structural decline – the average Graphic Paper growth over the past two years was approx. -11%pa in both regions. This is worse than recent average demand trends, clearly demonstrating that 2024 did not grow as much as it should have, to get back on trend; either that or the declines have hit a new, lower trend line than previously.

In either scenario, it’s not great news. Factor in the general over-supply for most grades, especially for coated papers, and we have a situation which needs some very real and very difficult strategic decisions, both in terms of supply management and pricing position.

Paper Mills News & Ownership Changes

But the fact that many costs have risen, some sharply, since Q4 2021 (post-Covid), in the most recent years, combined with additional rising variable costs at many mills due to more machine hybrid operations and shorter work schedules, makes the latter (high pricing) situation difficult to negotiate, without some mills falling into unprofitable territory, e.g. Kabel Premium Pulp & paper (receivership) and UPM Ettringen (machine closure), both this week, in the LWC/MWC and UM/Newsprint sectors respectively.

And one mill in this sector which is currently undergoing ownership changes, is the Boyer mill in Tasmania, Australia, where more structural changes may follow, given that this mill currently operates in two of the areas we’ve just been describing above, within the graphic paper sector.

Norske Skog has announced the sale of its Newsprint & LWC Boyer Mill to local company Boyer Capital, led by investor David Marriner. The mill which has a production capacity of around 135,000t of LWC and 150,000t of mainly Newsprint on two machines, was sold for approx. $17m, and the transaction is due to be completed by the end of this quarter.

It is important to note that expectations are for the mill to continue operations as they are for now, with the new owners talking about “diversification options that can leverage the site”, its location and fibre capabilities and of course, the workforce, whose ‘knowledge and commitment to the business’ were recognised by Mr Marriner in the sale announcement.

Details can be found in the links below.

Sale of Norske Skog Boyer | Norske Skog

‘A New Chapter’ for Mil

It will be interesting to see how this mill continues in its current form, given the glut of global publication paper capacity, especially with China converting as much of its own newsprint and coated paper capacity out of these sectors as quickly as it can, in recent times, and with the newspaper and magazine sectors showing such structural declines globally, with the possible exception of India. But even this latter exception is arguable.

But on the other hand, there are still many newspapers and magazines left in the region, and with Boyer being the last mill offering these grades, in an area difficult to reach for many suppliers around the world, this mill may well continue to be the “last man standing” for these qualities, in this part of the world.

A sensible solution moving forward would surely be for the mill management to secure its medium-term future by forming long term agreements and relationships with local buyers and publishers, as it once had for newsprint some decades ago. But such agreements achieved during volatile and turbulent times for our industry, between partners in often precarious financial situations, are a tough call by any measure. In addition to which, the mill will need to keep both of these relatively small machines running, as the loss of one would not bode well for its future, given a potentially new prohibitive variable cost base.

Certainly, if running publication paper machines is a challenge in 2025, even in hard-to-reach Australia, a conversion to packaging seems an even less likely option, given the millions of tonnes that are starting up around the region, not least in China and in Australia, which is itself a massive containerboard net exporter.

Time will surely tell, but we certainly wish the new mill owners well for the future, hoping they can keep those machines running for as long as the markets will accept them.

New Reports from EMGE

Note that EMGE will be publishing its own packaging (Containerboard & Coated/Cartonboard) forecasts in the coming months for the first time, so please look out for this, should this be of interest too. You can sign up to our newsletter to receive this information and other paper industry news straight to your inbox. And contact us about our range of paper industry consultancy services today!