| KN21042 |
| KEY NOTE PAPER & BOARD MANUFACTURING : October 2002 |
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This report covers: paper, board, paperboard, packaging paper, cartonboard, kraft paper, multiply paper, corrugated case, test liner, fluting, virgin fibre, folding boxboard, recovered fibre, sulphite wrapping paper, graphic paper, newsprint, household tissue, sanitary tissue, labels, wallpaper, filter paper, cigarette paper, converted products,
Companies covered include: Arjo Wiggins Appleton, Inveresk, James Cropper, Jefferson Smurfit Group, Norske Skog, St Regis Paper Company, SCA Hygiene Products, Stora Enso, UPM-Kymmene Corporation, BPB PLC, David S Smith, De La Rue, Fletcher Challenge Industries, International Paper Group, Inveresk, James Cropper, Jefferson Smurfit Group, Kimberly-Clark, SCA Packaging Britain,UPM-Kymmene, BPB, Stora Enso, UPM-Kymmene Corporation,
EXECUTIVE SUMMARY
| 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 percent and the amount manufactured in the UK fell by 6.1 percent. 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, Key Note forecasts that the market will show only modest growth in 2002, after which it will pick up momentum, before levelling off in 2005 and 2006. |
TABLE OF CONTENTS
| Executive Summary | |
| 1. Market Definition | |
| REPORT COVERAGE | 2 |
| Definitions and Terminology | 2 |
| MARKET SECTORS | 3 |
| Graphics Paper | 3 |
| Newsprint | 3 |
| Case Materials | 3 |
| Fluting Medium | 3 |
| Kraftliner | 4 |
| Testliner | 4 |
| Fourdrinier Chip | 4 |
| Folding Box Board | 4 |
| Sanitary Products | 4 |
| Wrappings | 4 |
| Other Paper and Board | 4 |
| MARKET TRENDS | 5 |
| Production and Consumption | 5 |
| International Trade | 5 |
| Raw Materials Usage | 5 |
| MARKET POSITION | 6 |
| The UK | 6 |
| Table 1: UK Consumption of Paper and Paperboard by Sector (million tonnes and percent), 2001 | 6 |
| Overseas | 7 |
| Table 2: The Top Ten Paper and Paperboard Producing Nations in the World (000 tonnes), 2001 | 7 |
| 2. Market Size | 7 |
| THE TOTAL MARKET | 8 |
| By Value | 8 |
| Apparent UK Market | 8 |
| Table 3: The Apparent UK Market for Paper and Paperboard by Value (£m at msp), 1997-2001 | 8 |
| By Volume | 9 |
| Production and Consumption | 9 |
| Table 4: UK Production and Consumption of Paper and Board by Volume (million tonnes), 1997-2001 | 9 |
| BY MARKET SECTOR | 9 |
| Table 5: The Apparent UK Market for Paper and Paperboard Market by Sector by Value (£m), 1997-2001 | 9 |
| Newsprint | 11 |
| Graphics Paper, Folding Box Board, Sanitary Products and Wrappings | 11 |
| Case Materials | 12 |
| OVERSEAS TRADE | 12 |
| Table 6: UK Imports and Exports of Paper and Board by Volume (million tonnes), 1997-2001 | 12 |
| Imports | 12 |
| By Volume | 12 |
| Table 7: UK Imports of Paper and Board by Country of Origin by Volume (million tonnes and percent), 2001 By Value | 12 |
| Table 8: UK Imports of Paper and Board by Value (£m), 1997-2001 | 14 |
| Exports | 14 |
| By Volume | 15 |
| Table 9: UK Exports of Paper and Paper Board by Country of Destination by Volume (000 tonnes), 2001 By Value | 15 |
| Table 10: UK Exports of Paper and Board by Value (£m), 1997-2001 | 16 |
| 3. Industry Background | |
| RECENT HISTORY | 17 |
| NUMBER OF COMPANIES | 17 |
| Table 11: Size Analysis of UK VAT-Based Enterprises Engaged in the Manufacture of Paper and Paperboard by Turnover (£000) 2002 | 17 |
| EMPLOYMENT | 18 |
| Table 12: Number of VAT-Based Local Units Engaged in the Manufacture of Paper and Paperboardby Employment Sizeband 2002 | 19 |
| REGIONAL VARIATIONS IN THE MARKETPLACE | 20 |
| DISTRIBUTION | 20 |
| HOW ROBUST IS THE MARKET? | 21 |
| LEGISLATION | 21 |
| KEY TRADE ASSOCIATIONS | 22 |
| The Paper Federation of Great Britain | |
| The Confederation of Paper Industries | 22 |
| The Confederation of European Paper Industries | 22 |
| The British Printing Industries Federation | 23 |
| 4. Competitor Analysis | |
| THE MARKETPLACE | 24 |
| MARKET LEADERS | 24 |
| DS Smith PLC | 25 |
| Inveresk PLC | 25 |
| James Cropper PLC | 25 |
| Jefferson Smurfit Group PLC | 26 |
| Norske Skog | 26 |
| St Regis Paper Company Ltd | 27 |
| SCA Hygiene Products UK Ltd | 28 |
| Stora Enso | 28 |
| UPM-Kymmene Corporation | 29 |
| OTHER COMPANIES | 30 |
| BPB PLC | 30 |
| OUTSIDE SUPPLIERS | 31 |
| Pulp & Recovered Paper | 31 |
| Chemicals | 31 |
| Water | 32 |
| Energy | 32 |
| Machinery | 32 |
| ADVERTISING AND PROMOTION | 33 |
| Exhibitions and Trade Shows | 33 |
| 5. Strengths, Weaknesses, Opportunities and Threats | |
| STRENGTHS | 34 |
| WEAKNESSES | 35 |
| OPPORTUNITIES | 35 |
| THREATS | 35 |
| 6. Buying Behaviour | |
| CUSTOMER PROFILE | 36 |
| Graphics Paper | 36 |
| Newsprint | 36 |
| Packaging Materials | 37 |
| Sanitary Products | 37 |
| 7. Current Issues | 37 |
| CORPORATE ACTIVITY | 38 |
| LEGISLATION | 38 |
| Packaging and Packaging Waste | 39 |
| Food Contact | 39 |
| Waste Sludge | 39 |
| POLITICAL DIMENSIONS | 40 |
| Scotland’s Forest Strategy | 40 |
| Effective Recycling | 40 |
| Energy Costs | 40 |
| Starch Pricing | |
| Paper Tariffs | |
| E-COMMERCE | 41 |
| CONSUMER DEMAND | 41 |
| PRODUCT DEVELOPMENT | 42 |
| HEALTH & SAFETY | 43 |
| THE ENVIRONMENT | 43 |
| 8. The Global Market | |
| TOTAL MARKET SIZE | 44 |
| MAJOR TRENDS | 44 |
| The Impact of the Euro | 44 |
| Deregulation | |
| Safeguarding the Environment | 45 |
| Corporate Activity | 45 |
| Table 13: The Top Ten Paper and Paperboard Producers in Western Europe by Volume (000 tonnes), 2000 | 45 |
| CONSUMER DEMAND | 46 |
| FUTURE TRENDS | 46 |
| 9. Forecasts | |
| THE ECONOMY | 47 |
| FUTURE TRENDS | 47 |
| The Benefits of the Eurozone | 47 |
| Product Development | 47 |
| Changes in Recycling Methods | 48 |
| E-Commerce | 48 |
| Competitor Forecasts | 48 |
| FORECASTS 2002 TO 2006 | 49 |
| Table 14: The Forecast Apparent UK Market for Paper and Paperboard by Value at Constant 2002 Prices (£m at msp), 2002-2006 | 50 |
| 10. Company Profiles | |
| DS Smith PLC | 52 |
| Inveresk PLC | 53 |
| James Cropper PLC | 55 |
| SCA Hygiene Products UK Ltd | 57 |
| Smurfit UK Ltd | 59 |
| St Regis Paper Company Ltd | 61 |
| UPM-Kymmene (UK) Ltd | 63 |
| 11. Further Sources | |
| Associations | 65 |
| Periodicals | 67 |
| Directories | 68 |
| General Sources | 68 |
| Bonnier Information Sources | 69 |
| Government Publications | 70 |
| Other Sources | 71 |
Text © 2002 Key Note
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Last updated by Amanda Porteous February 2004
