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BD2104Q
MBD PAPER AND BOARD MANUFACTURING MARKET DEVELOPMENT : July 2003
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This report covers: Paper and Board Manufacturing, market size, market value, leading companies, turnover, market share, statistics, marketing, trends, research, industry, business intelligence,

Companies covered include: James Cropper, Inveresk, SCA Packaging, Shotton Paper Company, DS Smith, Smurfit UK, St Regis Paper Company, Tullis Russell Group,

All MBD reports are updated every quarter to ensure that you receive the latest information. You can either choose to buy just the latest quarterly update, or you can elect to receive the latest report and the next three quarterly updates for £95 more - ask us for the annual update service.

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TABLE OF CONTENTS

No.

Title

Page
1 EXECUTIVE SUMMARY 1
2 INTRODUCTION 4
2.1 Definitions 5
2.2 Abbreviations 6
2.3 Market Positioning 6
2.4 UK Economy 7
2.5 Market Factors 11
3 MARKET SIZE AND TRENDS 14
3.1 Chapter Summary 15
3.2 Market Size 15
3.3 Market Segmentation 17
3.4 Market Trends 21
3.4.1 Price Stability 21
3.4.2 Distribution 22
3.4.3 Recycling 23
4 SUPPLY SOURCES 26
4.1 Chapter Summary 27
4.2 Production 28
4.2.1 Overview 28
4.2.2 Segmentation 30
4.3 Imports 31
4.3.1 Overview 31
4.3.2 Segmentation 33
4.4 Exports 34
4.4.1 Overview 34
4.4.2 Segmentation 35
4.5 Trade Deficit 36
5 DEMAND STRUCTURE 37
5.1 Chapter Summary 38
5.2 Printing & Publishing 39
5.3 Direct Mail 41
5.4 Paper & Board Packaging 42
6 INDUSTRY STRUCTURE 46
6.1 Chapter Summary 47
6.2 Industry Development 47
6.3 Structure by Capacity 50
6.4 Structure by Region 51
6.5 Structure by Turnover 52
6.6 Structure by Employment 52
6.7 Company Profiles 53
6.7.1 James Cropper 53
6.7.2 Inveresk 54
6.7.3 SCA Packaging 55
6.7.4 Shotton Paper Company 56
6.7.5 DS Smith 57
6.7.6 Smurfit (UK) 59
6.7.7 St Regis Paper Co 60
6.7.8 Tullis Russell Group 62
7 FORECAST 63
7.1 Chapter Summary 64
7.2 Market Size 65
7.3 Market Segmentation 65
7.4 Production 67
7.5 Imports 67
7.6 Industry 68
8 FURTHER SOURCES & CONTACTS 70
8.1 Trade Associations 71
8.2 Trade Magazines 73
8.3 Trade Exhibitions 74

List of Tables

No.

Title

Page
1 The UK Market for Paper & Board, 1998-2002 16
2 The UK Market Value for Paper & Board, 1998-2002 17
3 The UK Market for Paper & Board, by Type, 1998-2002 18
4 Proportional Importance of the UK Market for Paper & Board, by Type, 1998-2002 19
5 Changes in the UK Market for Paper and Board, by Type, 1998-2002 20
6 UK Production of Paper & Board, 1998-2002 29
7 UK Production Value of Paper & Board, 1998-2002 30
8 Segmentation of the UK Production of Paper & Board, by Type, 1998-2002 30
9 UK Imports of Paper & Board, 1998-2002 32
10 UK Import Value of Paper & Board, 1998-2002 32
11 Segmentation of UK Imports of Paper & Board, by Type, 1998-2002 33
12 UK Exports of Paper & Board, 1998-2002 34
13 UK Export Value of Paper & Board, 1998-2002 35
14 Segmentation of UK Exports of Paper & Board Products, by Type, 1998-2002 35
15 New Book Title Output from UK Publishers, 1998-2002 40
16 Publishers' Sales of Books in the UK, 1998-2002 41
17 Value of the Direct Mail Promotions Market in the UK, 1998-2002 42
18 Segmentation of the UK Market for Paper & Board Packaging, by Type, 1998-2002 43
19 Development of the UK Market for Paper & Board Packaging, by Type, 1998-2002 44
20 Analysis of the Changes in the Structure of the UK and International Paper & Board Industry, 1965-2001 48
21 Analysis of the Changes in the Structure of the Pulp, Paper and Paper ProductsIndustry, 1998-2002 50
22 Analysis of the Capacity Structure of the UK Paper & Board Mill Industry, 2001 51
23 Regional Analysis of the UK Paper & Board Mill Industry, 2001 51
24 Analysis of the Financial Structure of the Pulp, Paper & Paper Products Industry2001 and 2002 52
25 Analysis of the Employment Structure of the Pulp, Paper & Paper ProductsIndustry, 2001 and 2002 52
26 Financial Analysis of James Cropper, 1998-2002 53
27 Key Financial James Cropper, 2001-2002 54
28 Financial Analysis of Inveresk, 1997-2001 54
29 Key Financial Inveresk, 2000-2001 55
30 Financial Analysis of SCA Packaging, 1996-2000 55
31 Key Financial Ratios for SCA Packaging, 1999-2000 56
32 Financial Analysis of Shotton Paper Company, 1997-2001 56
33 Key Financial Shotton Paper Company, 2000-2001 57
34 Financial Analysis of DS Smith, 1998-2002 57
35 Key Financial Ratios for DS Smith, 2001-2002 58
36 Financial Analysis of DS Smith (UK), 1997-2001 58
37 Key Financial Ratios for DS Smith (UK), 2000-2001 59
38 Financial Analysis of Smurfit UK, 1997-2001 59
39 Key Financial Ratios for Smurfit UK, 2000-2001 60
40 Financial Analysis of St Regis Paper Company, 1997-2001 60
41 St Regis Paper Company Turnover Analysis, by Destination, 1997-2001 61
42 Key Financial St Regis Paper Co, 2000-2001 61
43 Financial Analysis of Tullis Russell Group, 1998-2002 62
44 Key Financial Tullis Russell, 2001-2002 62
45 Forecast UK Market for Paper & Board, 2003-2007 65
46 Forecast UK Market for Paper & Board, by Type, 2003-2007 65
47 Forecast UK Production of Paper & Board, 2003-2007 67
48 Forecast UK Imports of Paper & Board, 2003-2007 68

List of Diagrams

No.

Title

Page
1 Segmentation of Paper & Board Consumption in the UK, by Sector, 1998-2002 21
2 UK Trade Deficit in Paper & Board, 1996-2002 36
3 Development of the UK Market for Paper & Board Packaging, by Type, 1998-2002 45

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EXECUTIVE SUMMARY

1 The volume trends in the overall UK paper and board market are not fully reflected in the value analysis partly as a reflection of price changes, but also as a reflection of changes in the product mix. Moreover, price changes have been affected by the highly competitive nature of the market as well as supply capacity.
2 Although the proportional segmentation of the UK market for paper and board has varied little during the review period, there have been significant fluctuations in demand for individual paper and board sectors. Much of this has been attributable to the price volatility which has encouraged stocking and de-stocking by both end users and distributors, and naturally the different end use applications of the various product sectors.
3 The printings and writings sector has been particularly affected by volatile prices. Rising supply, including production from non-traditional suppliers, resulted in inventory fluctuations an exacerbated volatility of the price in the market. Between 1998 and 2002 volume growth of just 2 percent was recorded, although the development was erratic. The printings and writings sector remains by far the most important single element of the UK paper and board market, accounting for some 36 percent of total volume demand.
4 The case materials sector declined overall between 1998 and 2002 by more than 7 percent, including a reduction of almost 3 percent in the latter year. In 2002 sales declined to 2 354 000 tonnes, equivalent to 19 percent of total demand. During the latter part of the period the sector declined to the third most important element of the UK market.
5 The newsprint market has demonstrated year-on-year growth for much of the review period. In 2002 newsprint accounted for the second most important single sector within the UK paper and board market. In total, between 1998 and 2002 demand increased by 7 percent.
6 Consumption of cartonboard has been somewhat erratic over the review period, and in total between 1998 and 2002 demand has fallen by almost 7 percent. In 2002 demand was increased to 1 192 000 tonnes. The majority of demand is used to produce folding cartons, with the balance of consumption from non-packaging sectors including graphics and display uses. The major factors affecting the UK market for cartonboard have been the implementation of the EU Packaging and Packaging Waste Directive and consumer perceptions of cartons as a modern and environmentally friendly packaging medium.
7 Demand for sanitary and household tissues has demonstrated consistent growth within the review period. In total, demand increased by almost 13 percent during the review period, taking sales to 1 052 000 tonnes.
8 Demand for wrappings has come under intense pressure in recent years particularly from plastics, although the EU Packaging and Packaging Waste Directive has tended to encourage the use of paper, while reducing the overall demand for wrappings. Overall, this sector declined by almost 27 percent in nominal terms during the period under review, taking demand to 327 000 tonnes in the latter year.
9 In the remainder of the market demand has been somewhat erratic with the peak year of sales being 1999 when sales reached 455 000 tonnes. However, subsequent year-on-year decline since then reduced demand to 386 000 tonnes.
10 The UK market for printing and writing paper is expected to demonstrate year-on-year growth throughout the forecast period. Demand is expected to increase by 2 percent in real terms between 2003 and 2007 to a level of 4 599 000 tonnes in the latter year. However, the sector is likely to face a degree of unpredictability due to the growth of electronic methods of providing information. Although the initial promise of a so-called “paperless office” has proved unfounded, and indeed many electronic developments have increased paper consumption, continued pressure is likely in the sector. The merger and acquisition activity of many publishing companies has been directed at ensuring greater electronic resource capabilities, providing a clear indication of the direction that is anticipated. Moves such as government encouragement of the use of electronic media in teaching resources in schools present further threats. However, MBD believe that paper companies can, and should, take a more proactive approach to this environmental change rather than passively accepting this as an inevitability. Paper-based media offer a number of advantages over electronic media and there is believed to be sufficient opportunity to promote this to sustain moderate growth, at least in the medium term.
11 Demand for case materials is also expected to sustain moderate annual growth, with growth oscillating around 1 percent in real terms between 2003 and 2007, although a marginal decline is forecast for the latter year. Again, market demand is partly determined by the ability of paper and board suppliers promoting their materials effectively in competition with other materials, notably plastics, particularly with regard to the environmental benefits of the material.
12 In contrast, demand for newsprint is forecast to decline between 2003 and 2007, reflecting the strong and uncertain competition from electronic media. However, there is little evidence that electronic versions of newspapers have had a significant impact to date on demand. Indeed, much of the decline is likely to reflect lower demand for newspaper-based advertising due to the use of electronic media as an alternative medium, claiming an increasing proportion of advertising spend. This is likely to reduce the size of newspapers, and some evidence of this has already been seen in the national press, particularly the Sunday papers, where page counts have fallen from a peak in the late 1990s. In the short term, the most buoyant sectors are likely to be local press, with national press demand continuing to fall gradually.
13 Demand for cartonboard is anticipated to increase by 4 percent in real terms during the forecast period, reaching an estimated level of 1 235 000 tonnes by 2007. As with all sectors of the market, much depends on the ability of producers to promote their materials more effectively, particularly in aspects such as environmental qualities.
14 The sanitary and household tissue market is one of the most critical for the industry as the increased production capacity in the UK and indeed in Europe as a whole is largely dependant on the continued growth of the sector. Strong volume growth of 9 percent is anticipated during the forecast period, largely due to an increase in weight per item, and this is likely to be one of the strongest areas of performance. However, the ability of suppliers to achieve commensurate returns from this is likely to be affected by over capacity, placing pressure on prices in the short term.
15 Demand for wrappings is expected to be generally upward, although this sector marginally declined in the latter two years of the period. However MBD believe that the underlying drivers of demand are positive, allowing volume growth during the forecast period.
16 Demand for “other” paper and board has proved the most erratic in recent years and is therefore amongst the most difficult to forecast. However, strong growth can be anticipated in the middle of the forecast period.

Text © 2003 MBD - Market & Business Development

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Last updated by Amanda Porteous September 2003