PULP AND PAPER MARKET NEWS FOR EUROPE, THE MIDDLE EAST AND AFRICA

July 5, 2012 | Vol. 27, No. 26

RISI North American Forest Products Conference

October 3-5, 2012 Park Plaza Hotel, Boston, MA www.risi.com/naconf

VPK and Klingele to buy UPMs Stracel mill

Belgiums VPK Packaging and Germanys Klingele Papierwerke have teamed up and made an offer to buy the assets and part of the land of UPMs Stracel paper mill near Strasbourg, France. The cost of the deal was not revealed. Part of the Stracel site will be retained by UPM for potential future production of advanced biofuels. Following the acquisition, VPK and Klingele aim to convert Stracels sole 280,000 tonnes/yr lightweight coated (LWC) paper machine to produce some 300,000 tonnes/yr of testliner and recycled fluting in a basis weight range of 80-130 g/m2. The business partners intend to invest more than Euro 100 million ($126 million) in the project. Apart from rebuilding the 8.4 m wide unit, the jv partners will install a new recovered fiber stock preparation line. Production on the upgraded PM is expected to start by the end of 2013. The plant will employ some 140 people. The facility will be managed as a separate entity by VPK and Klingele on equal terms, a spokesperson at VPK said. The deal is subject to completion of the employee information and consultation process regarding the closure and the social plan, UPM said, adding that this is expected to be finalized during the second half of 2012. The Stracel mill currently employs some 130 people. Overcapacity concerns: Speculations regarding VPK and Klingeles plans to jointly build new paper capacity have been circulating in the market for a while now. Last year, the two parties were rumored to consider the acquisition of Norske Skogs 265,000 tonne/yr Parenco publication paper mill in Renkum, the Netherlands. Although the deal with Norske Skog was reportedly canceled in December, the partners did not drop their plans to acquire a suitable asset and jointly increase their paper capacity, industry sources said. continued on page 6

PPI Europe is now on Twitter!

Interact with our editorial team in English, German, French, Spanish, Russian and Swedish, enjoy live event coverage, get the latest on market trends and more.

@ppi_europe

Did you know...

that copying or electronic forwarding of this publication is illegal in virtually every country around the world? We rely on subscription fees to support our worldwide editorial team. Illegal copying hurts our ability to bring you the very best news - and may even subject you to a fine. For information on discounted bulk subscriptions, please e-mail copyright@risi.com. (For general subscription and other inquiries, contact info@risi.com.)

DSS completes acquisition of SCA Packaging

DS Smith (DSS) has completed the acquisition of SCAs packaging division which was first announced in January. The Euro 1.7 billion ($2.1 billion) deal includes SCAs recycled packaging division with a capacity of 3.6 million tonnes/yr, 109 corrugated packaging plants and converting facilities with a combined capacity of 1.8 million tonnes/yr and four recycled containerboard mills. These include the 380,000 tonne/yr Aschaffenburg mill and the 330,000 tonne/yr Witzenhausen mill in Germany, the 360,000 tonne/yr De Hoop mill in the Netherlands and the 420,000 tonne/yr Lucca mill in Italy. The deal does not include two kraftliner mills in Sweden - the 435,000 tonne/yr Obbola mill and the 365,000 tonne/yr Munksund mill - which DSS did not want included in the transaction, citing its commitment to remain a recycled packaging supplier. DSS will sell, however, one of its two heavy-duty packaging plants and one litho laminated corrugated packaging plant in the UK, and one of three corrugated packaging plants in northern France as part of the clearance requirements of the European Commission. The deal is a key step in our strategic plan to become the leading supplier of recycled packaging across Europe. The SCA Packaging business is very complementary to DS Smiths strengths and creates a significantly enlarged geographic footprint, said Miles Roberts, DSS CEO in a statement. Roberts added that the firms larger presence on the continent is expected to help develop further relationships between DSS and its existing customers and potentially win new customers through increased ability to supply and innovate new products as well as improve service levels. Following the acquisition, DSS market share is expected to grow to 18%, making it the second-largest paper packaging supplier in Europe after Smurfit Kappa, which controls around 22% of the market, according to market experts.

In This Issue:
Price Watch: UK Graphic Paper Focus: June SCA builds new tissue PM Packaging Focus: June CEPI slaps EoW guidance 2 3 4 5 9

PRICE WATCH 2012: UK

Prices in /tonne (1,000 kg), unless otherwise noted. Paper and board prices are free delivered, customers warehouse. Kraftliner prices are CIF. Recovered paper prices are ex-warehouse. See notes and disclaimer below. GRAPHIC PAPER Newsprint Basis weight (g/m2) 48.8-g 45-g 42.5-g 40-g 52-g 60-g 56-g 52-g 60-g 56-g 52-g 60-g 60-g 80-g 80-g 80-g 80-g 100-g 115-g July 2012 387 - 415* 420 - 450* 430 - 463* 473 - 506* 470 - 510* 480 - 510 480 - 510 505 - 535 480 - 510 480 - 510 505 - 535 570 - 600 560 - 590 700 - 740 660 - 710 650 - 690 680 - 720 590 - 640** 680 - 730** Euro1 480 - 515 521 - 558 533 - 574 587 - 628 583 - 632 595 - 632 595 - 632 626 - 663 595 - 632 595 - 632 626 - 663 707 - 744 694 - 732 868 - 918 818 - 880 806 - 856 843 - 893 732 - 794 843 - 905 June 2012 387 - 415 420 - 450 430 - 463 473 - 506 470 - 510 500 - 530 500 - 530 525 - 555 500 - 530 500 - 530 525 - 555 590 - 620 580 - 615 700 - 740 660 - 710 650 - 690 680 - 720 600 - 650 690 - 740 July 2011 392 - 424 425 - 460 425 - 474 478 - 518 na 520 - 550 520 - 550 545 - 575 505 - 540 505 - 540 530 - 565 600 - 640 595 - 630 720 - 760 690 - 730 680 - 710 710 - 740 610 - 660 710 - 750 % change 2012/20111 -2 -2 -1 -2 na -7 -7 -7 -5 -5 -5 -6 -6 -3 -4 -4 -3 -3 -3

Improved (68 ISO) Uncoated mechanical SC rotogravure reels SC rotogravure reels SC rotogravure reels SC offset reels SC offset reels SC offset reels Coated mechanical LWC rotogravure reels LWC offset reels Uncoated woodfree A4 copy (B grade) A4 copy (C grade) Offset reels Offset sheets Coated woodfree Reels Sheets PACKAGING P&B4 Virgin fiber containerboard Unbleached kraftliner

White-top kraftliner Recycled containerboard Testliner 2 140-g 380 - 430*** 471 - 533 400 - 430 485 - 500 -18 Testliner 3 140-g 360 - 410*** 446 - 508 380 - 410 465 - 480 -19 Fluting 100-g+ 360 - 410*** 446 - 508 380 - 410 465 - 480 -19 Fluting 90-g 380 - 425*** 471 - 527 400 - 425 485 - 490 -17 White-top testliner 140-g 520 - 560*** 645 - 694 540 - 560 560 - 590 -6 Cartonboard Coated duplex (GC2) 270-g+ 965 - 1,065 1,197 - 1,321 965 - 1,065 965 - 1,085 -1 White-lined chipboard (GD2) 300-g+ 655 - 740 812 - 918 655 - 740 675 - 760 -3 RECOVERED PAPER5 1.02 - mixed P&B (sorted) 60 - 70 74 - 87 70 - 80 75 - 90 -21 1.05 - old corrugated containers 65 - 80 81 - 99 75 - 90 90 - 105 -26 1.11 - sorted graphic paper for deinking 100 - 110 124 - 136 100 - 110 115 - 125 -13 2.01 - newspapers 110 - 120 136 - 149 110 - 120 120 - 135 -10 2.08 - colored woodfree magazines 125 - 140 155 - 174 125 - 140 160 - 180 -22 Multigrade 110 - 130 136 - 161 120 - 140 170 - 180 -31 1: The Euro column reflects July 2012 prices in euros at the rate of 0.8064 per euro. Comparison of July 2012 prices with those of July 2011 uses the midpoint of price ranges. 2: The 42.5-g newsprint price is a mix of collected prices and prices calculated by the half-yield formula, using the 45-g grade as the base price. Prices for 52-g improved newsprint have been added to the Price Watch and those for 55-g have been removed as consumption of the former has climbed and the latter has fallen. 3: Range reflects standard double-coated grades. 4: Kraftliner prices are CIF prices for European and American imports. White-top testliner prices are for uncoated board with a brightness of ISO70. 5: Recovered paper nomenclature comes from the list of standard European qualities developed by CEPI and BIR, except for multigrade, which is a blend of coated and uncoated woodfree paper. This quality is not covered by the EN 643 standard developed by CEPI and BIR. na = not available. *Some contacts reported settling some new contracts at lower prices, but negotiations are still ongoing. **Some buyers reported bigger price decreases, while some suppliers reported stable prices. ***Sources reported that recycled containerboard prices started decreasing as of July 1. Price drops of up to 20/tonne are expected to be fully implemented in the market in the course of July. To use your free online price analysis tools, log in at www.risi.com/pricewatch. For over 20 years of historical prices, subscribe to the Global Price History Database: www.risi.com/pricehistory. DISCLAIMER: While the information contained in the price table has been obtained from sources believed to be reliable, RISI does not warrant or guarantee the accuracy and completeness of the information. Prices are generally best estimates of prices before regular volume and contract discounts and are composite prices as opposed to median or average prices. Actual transaction prices may vary.

175-g+ 150-g 125-g 140-g+

425 - 450 445 - 465 450 - 480 610 - 635

527 - 558 552 - 577 558 - 595 756 - 787

425 - 450 445 - 465 450 - 480 620 - 645

460 - 490 480 - 495 485 - 510 660 - 690

-8 -7 -7 -8

2012 RISI, Inc. All rights reserved.

PPI EUROPE/July 5, 2012

GRAPHIC PAPER FOCUS: JUNE 2012

Newsprint market readies for price dip: Discussions
about new newsprint contracts have reached various stages in Europe, and despite producers hoping prices would stay stable, buyers seem to have more success decreasing them. In the eurozone, price reductions of some Euro 10-15/tonne, sometimes Euro 20/ tonne, are being discussed, and some sources already say they have inked deals at lower prices. In the UK, sources said buyers are asking for a bigger price drop of around 6-8%, sometimes more, but negotiations are still ongoing. Newsprint buyers argue that the supply/demand balance is in their favor as consumption decreases while capacity is not being closed. To this the UK buyers add the question of currency and point out that their prices in euros are much higher than those in Germany, for example.
570

NEWSPRINT 45 G

530

490

450
France Germany UK

410

Italy

370

Jul 2010

Sep 2010

Nov 2010

Jan 2011

Mar 2011

May 2011

Jul 2011

Sep 2011

Nov 2011

Jan 2012

Mar 2012

May 2012

Mechanical paper prices to slide: Sellers of supercalendered (SC) and lightweight coated (LWC) paper are also facing the likelihood of price reductions. In June, some negotiations were still ongoing, but price drops of some Euro 10-20/tonne were discussed in the major eurozone markets, while UK players talked about cuts of some 20-30/tonne. Some contacts did not expect any price changes at all. European demand for coated mechanical paper has been down during the first five months of the year compared to the same period in 2011, while the same figure for SC paper showed a marginal plus year on year, according to EURO-GRAPH figures. Some producers complained about one seller in particular offering lower prices more easily than others, and that other companies were following this move.
650

SC ROTOGRAVURE REELS 56 G

630

610

590
France Germany UK

570

Italy

550

Jul 2010

Sep 2010

Nov 2010

Jan 2011

Mar 2011

May 2011

Jul 2011

Sep 2011

Nov 2011

Jan 2012

Mar 2012

May 2012

UWF prices stabilizing: Following the increases in continental Europe in May, uncoated woodfree (UWF) paper prices largely leveled out in June. In France, some market contacts reported price increases for copy paper. All in all, prices for UWF offset reels and sheets rose by approximately Euro 10/tonne in continental Europe in the second quarter, while the levels for copy paper were lifted by up to Euro 20/tonne. In the UK, where prices did not rise in May due to the strength of the pound sterling, levels remained unchanged in June, too. Now market players are speculating about what course the European UWF market might take over the summer vacation period. Several contacts said they expected order books, which stood at around three to four weeks in June, to become thinner in the months ahead and expressed their concern that some suppliers might resort to summer rebates in order to boost sales.

UNCOATED WOODFREE 80 G - A4 (B GRADE) - SHEETS

920

890

860

830

France Italy

Germany UK

800

Jul 2010

Sep 2010

Nov 2010

Jan 2011

Mar 2011

May 2011

Jul 2011

Sep 2011

Nov 2011

Jan 2012

Mar 2012

May 2012

COATED WOODFREE 100 G - OFFSET REELS

CWF producers push for increase: Coated woodfree

(CWF) paper producers announced a price increase of 6-8% due to rising costs for various dates in June and were fighting to implement it during the past month. In June, most sources still said prices remained stable as many contracts lasted until the end of the month and as demand did not support a price increase. A few sellers said they had successfully raised some prices by Euro 20-30/tonne already in June. Buyers protested the price hikes and said they would try to keep prices stable during the rest of the summer. Sellers said they would continue their quest to raise prices in July, consolidating a small increase at least for indent sheets business, with some of them adding that stock business and reels might not see any increase before September.
PPI EUROPE/July 5, 2012

830

780

730

680

France Italy

Germany UK

630

Jul 2010

Sep 2010

Nov 2010

Jan 2011

Mar 2011

May 2011

Jul 2011

Sep 2011

Nov 2011

Jan 2012

Mar 2012

May 2012

Prices (euro/tonne) are based on average monthly values.

2012 RISI, Inc. All rights reserved.

SCA breaks ground for new tissue PM in Russia

SCA has started the construction of a new tissue production line at its Sovetsk mill in the Tula region of western Russia. The Euro 130 million ($164 million) investment includes a new 60,000 tonne/ yr tissue PM as well as several converting lines and warehouses. SCA will also build an international distribution center at the site, for which the firm allocated additional Euro 15 million. The 5.4 m wide PM, which is scheduled to come online in 2014, will be supplied by A Celli. The new tissue unit will use virgin fiber as raw material. Its output will be converted into tissue products under the Tork and Zewa brands on two new converting lines supplied by PCMC. The mill also intends to launch manufacturing of Tork products used in the business and institutional environment, such as Matic hand towels and two-ply jumbo toilet paper rolls. Most of the production will be sold to the Russian market, with the rest going to the CIS markets. The investment is aimed at strengthening the firms position on the Russian market. SCAs tissue plant in Sovetsk currently houses one paper machine, which produces 30,000 tonnes/yr of recycled fiber based tissue. SCA also operates a tissue plant in Svetogorsk, in the Leningrad region, which manufactures some 43,000 tonnes/ yr, and a personal care plant in Veniov, in the Tula region, which produces Libero and TENA products.

Miquel y Costas to invest Euro 60 million

The Spanish specialty paper producer Miquel y Costas is set for growth. The firm based in Barcelona has revealed plans to invest Euro 60 million ($76 million) from 2013 to 2015. According to Miquel y Costas, about two thirds of the planned investments will be destined for the continued improvement of its products and services as well as the competitive position of its facilities. The remainder will be spent on research and development and measures to improve the energy efficiency and sustainability of the firms production processes. Moreover, Miquel y Costas plans to start its new paper mill, Terranova Papers near Barcelona, later this year. The new mill is located in La Pobla de Claramunt, close to the existing mill of MB Papeles Especiales, another member of the Miquel y Costas group. According to the firm, civil works are almost finished and it has just started to install the main production equipment and to select and hire the staff for the mill. Terranova Papers was founded for the Euro 45 million investment in 2010. The startup will mark our entry and ensuing consolidation of our position on the market for paper for the food industry, Miquel y Costas said in a statement.
CME GROUP NBSK PULP FUTURES ($) July 2012 August 2012 September 2012 October 2012 November 2012 December 2012 July 3 850.00 850.00 850.00 850.00 850.00 850.00 June 27 850.00 850.00 850.00 850.00 850.00 850.00

New firm registered for Slovenias Radece Papir

The public utility company of the municipality of Radece in eastern Slovenia has registered a new company under the name of Papirnica Radece, which could lease equipment from the bankrupt Radece Papir if the municipality restarts production on one of the sites PMs. The new firm has a share capital of Euro 7,500 ($9,400). Radece Papir began a debt restructuring process in December last year, but halted it and filed for bankruptcy in April. The factory can manufacture some 36,000 tonnes/ yr of uncoated woodfree paper on PM 4 and some 8,000 tonnes/yr of banknote paper on PM 5. Production has been down since early March. An unnamed foreign investor is interested in taking over the banknote paper machine while the municipality is ready to step in to restart production on PM 4. Senior adviser for projects and investments at the municipality of Radece, Matja uteri, said it was still impossible to predict when production at the site might restart. He added that it would at least not be possible before July 22, due to all the procedures taking place right now. According to reports in Slovenian media, the potential investor is the French security technology firm Oberthur Technologies, but the company has not commented on this. Radece Papirs official receiver Borut Sokoli published a call for bids for the entire company on June 1 with a deadline one month later. The liquidation value of the companys real estate was put at Euro 8.5 million while the liquidation value of other assets was estimated at Euro 6.5 million, according to Slovenian media reports. uteri said a court would look at any bids handed in on July 6. Some 200 of Radece Papirs workers were let go in April when the firm filed for bankruptcy. The remaining 60 employees were on a half-time schedule until the end of May, which was later prolonged until the end of June. Their contracts still need to be extended again this month.

No contracts were traded in the period June 27 - July 3. Total Open Interest for the complex stands at 260 contracts.

FOEX INDICES
PIX NBSK Benchmark ($) July 3 820.36 June 26 831.20 PIX NBSK Benchmark (Euro) July 3 651.60 June 26 662.89 PIX BHKP Benchmark ($) July 3 781.13 June 26 784.38 PIX BHKP Benchmark (Euro) July 3 620.44 June 26 625.55

Billerud signs up ABB for new drive systems

ABB will supply new drive systems for PM 6 at Billeruds Gruvn facility in Sweden in order to secure paper machine availability and ensure that the drives do not limit any future production increase, ABB said. The PM will also go from using DC to AC technology and the voltage level will rise from 500V to 690V. The order includes ACS800 multidrives, the replacement of DC motors by AC motors, ECO Dry transformers and emergency stop systems. The price tag was not revealed. The rebuild will be carried out in two steps, with the replacement of the components in the wire and press sections taking place in autumn this year and the work in the drying section and reel-up in spring 2014. PM 6 can produce some 270,000 tonnes/ yr of semichemical fluting. The Gruvn mill operates four other machines producing kraft and sack paper, kraftliner and liquid packaging board.
2012 RISI, Inc. All rights reserved.

PPI EUROPE/July 5, 2012

PACKAGING FOCUS: JUNE 2012

Brown kraftliner rises: Brown kraftliner prices rose in June
in continental Europe by up to Euro 20/tonne. In the UK, price increases were more modest, with levels edging up by some 10-15/tonne between May and June. Some buyers said, however, that they did not see any increases on the unbleached kraftliner side this year, assigning the stability of prices to a large supplier base coupled with their strong resistance to accept higher levels. On the white-top kraftliner side, prices were largely stable in June across Europe. Some contacts saw marginal increases, while others reported that producers started reducing their price levels amid decreasing prices on the white-top testliner side. Semi-chemical fluting prices were also said to have started weakening in June here and there, with more drops to follow in Q3.
700

UNBLEACHED KRAFTLINER 175 G

650

600

550

500
France Germany UK

450

Italy

400

Jul 2010

Sep 2010

Nov 2010

Jan 2011

Mar 2011

May 2011

Jul 2011

Sep 2011

Nov 2011

Jan 2012

Mar 2012

May 2012

Recycled containerboard weak: Recycled containerboard prices continued falling in June on the continent, following Euro 20-25/tonne decreases in May. Germany and Italy showed the largest price drops of up to Euro 30/tonne, with spot tonnage being offered at prices that were Euro 40/tonne lower than in May. In France, prices fell by Euro 25/tonne last month. According to sources, declining recovered paper prices, high mill inventories and weak demand across Europe continued to weigh on paper prices in June. They added that further price erosion of some Euro 25/tonne is expected in July. White-top testliner prices also eroded in June, falling by Euro 20-25/tonne. In the UK, prices for the brown grades as well as white-top testliner started weakening in the last week of June. The 20/ tonne decreases are expected to be implemented overall in the market in the beginning of July.
600 550 500 450 400 350 300

TESTLINER 2 - 140 G

France Italy

Germany UK

Jul 2010

Sep 2010

Nov 2010

Jan 2011

Mar 2011

May 2011

Jul 2011

Sep 2011

Nov 2011

Jan 2012

Mar 2012

May 2012

CARTONBOARD - COATED DUPLEX (GC2)

FBB prices even: The cartonboard market followed a quiet

path in June and little change could be seen on the folding boxboard (FBB) side in comparison to May. Most contacts still considered demand as weak, but some suppliers said they were rather satisfied with their order intake. Delivery times amounted to four to six weeks on average. Contract prices were largely stable in spite of continuing pressure from converters, and price concessions on specific businesses were still being offered by European and non-European suppliers, according to contacts. Most price negotiations for the second half of the year are reportedly closed, and market participants generally expect prices to remain stable in the coming months.

1,300 1,250 1,200 1,150 1,100 1,050 1,000

France Italy Germany UK

Jul 2010

Sep 2010

Nov 2010

Jan 2011

Mar 2011

May 2011

Jul 2011

Sep 2011

Nov 2011

Jan 2012

Mar 2012

May 2012

WLC prices largely stable: Prices for white-lined chipboard (WLC) remained mainly flat in June, as sluggish demand, good availability of board order backlogs generally amounted to two to three weeks and some recent declines in production costs largely prevented several suppliers plans to raise prices. The majority of price negotiations between suppliers and buyers have been postponed until the autumn, and no major price movement is expected during the summer months. Many sources believe that manufacturers will take extended downtime at their mills in July and August in order to rebalance the market. However, no official announcement has been made yet. General market prospects are uncertain and rather glum for the coming months. Suppliers have managed to keep their machines running but [the market] is fragile and patchy and we do not really know from one week to another if demand is going to improve or not, said a major recycled board manufacturer.
PPI EUROPE/July 5, 2012

CARTONBOARD - WHITE-LINED CHIPBOARD (GD2)

900
France Germany UK

850 800 750 700 650 600

Italy

Jul 2010

Sep 2010

Nov 2010

Jan 2011

Mar 2011

May 2011

Jul 2011

Sep 2011

Nov 2011

Jan 2012

Mar 2012

May 2012

Prices (euro/tonne) are based on average monthly values.

2012 RISI, Inc. All rights reserved.

IP starts construction of new plant in Spain

International Paper (IP) has kicked off the construction of a greenfield corrugated packaging plant in Villalbilla, near Madrid, Spain. The new facility, which will house a 2.8 m wide corrugator and several converting lines, will replace the firms existing Alcala box plant, which is leased. The new plant will occupy a 60,000 m site. It is expected to come online in summer 2013. The cost of the investment was not disclosed. IP declined to comment on the plants capacity, but said it will be sufficient to take over the volumes from Alcala. The facility will also be equipped with case making machinery as well as rotary and flat-bed die-cutting equipment. The plants focus will be on flexo printing, according to IP. The investment is aimed to strengthen IPs position in central Spain and improve the firms efficiency in responding to growing customer requirements.

Some 40% of Stracel output to be sold on open market

continued from page 1
Industry players expressed concerns regarding the ability of the western European market to absorb extra capacity on the recycled containerboard side. Market observers reckoned that the two peers rather should have invested in rebuilding an inefficient containerboard mill, thus adding less new capacity to the market. They added that the Stracel mill will be an additional factor leading some smaller recycled containerboard mills in France, Germany and Italy to bankruptcy amid already tough market conditions. While commenting on the industry concerns, VPK CFO Erik Peeters told PPI Europe that he did not see any major threat that the 300,000 tonne/yr unit might pose to the containerboard supply situation in western Europe since the PM will come online only by the end of 2013, by which time he expects the market conditions to improve. According to Peeters, at least 40% of the paper output at Stracel will be sold to the open market, mainly in France, Germany and Italy. Peeters said that the main driver behind the decision to convert a PM to produce lightweight containerboard was VPKs long-term strategy to improve the groups balance between paper production and consumption. It is a challenging project in a challenging [market] context, but we have to balance our own supply/demand situation, Peeters said. Jan Klingele, managing partner of Klingele Papierwerke, also expressed confidence in the improvement of the European economic situation in the years to come, leading to demand growth for corrugated packaging as well as containerboard. Klingele added that over the next decade, the firm sees potential for highquality lightweight fluting, especially in the width of 2.8 m. This is what our clients with modern corrugator installations are asking for. The paper machine in Strasbourg will be excellently positioned to serve those needs, Klingele told PPI Europe. Already today we have requests from our external paper customers for paper grades, including high-performance lightweight fluting, that we cannot produce well on our existing machines. It is our intention to offer a complete product range to our paper clients in the future, Klingele said.
PPI EUROPE/July 5, 2012

PaperlinX closes sale of Polyedra in Italy to Lecta

The global paper merchant PaperlinX has wrapped up the sale of its Italian arm Polyedra to Lecta. The deal was announced in March and was approved by the European Commission on June 6. Lecta will pay Euro 45 million ($57 million) for Polyedra, a merchant active in the print, office, packaging and signs & display sectors. Polyedra employs some 365 people and has about 15,000 customers to which it distributes over 200,000 tonnes/yr of paper. It generates annual sales of some Euro 260 million. Lecta is the largest coated woodfree paper producer in southern Europe, operating seven mills in France, Italy and Spain, with a total capacity of almost 1.4 million tonnes/yr of coated woodfree and some 120,000 tonnes/yr of specialty paper. It already has merchanting businesses in Spain, Portugal, France and Argentina. The acquisition of Polyedra will ensure that more than 60% of Lectas volumes are distributed through a network it controls completely, Lecta CFO Andrea Minguzzi revealed during a presentation of the firms financial results earlier this year. Minguzzi also said that Lecta will probably be able to achieve annual synergies of Euro 10 million or more in due time. In its announcement on July 3, PaperlinX also confirmed that the sale of its US operations Spicers USA and Kelly Paper to Central National-Gottesman was completed. These sales are part of PaperlinX plans to reduce costs, strengthen its financial position and create a sustainably profitable business.

World Bank blacklists Pyry subsidiary

The World Bank has placed Pyry Management Consulting Oy Finland on its list of non-responsible vendors for submitting false invoices and providing improper benefits to the banks staff. This was done on June 20 and will apply for three years. Vendors listed as non-responsible cannot be awarded World Bank contracts or bid on its solicitations during the time they remain on the list, according to the banks website. They are also excluded from conducting business with the bank as agents or representatives of other vendors and are precluded from having discussions with the bank concerning the awarding of contracts. Pyrys executive vice president for legal and commercial affairs and general counsel, Anne Viitala, underlined that the bank placed one of the groups subsidiaries on the list, not the entire group. She said the move was linked to a single project, defined by the banks procurement agreement conditions. According to the bank, Pyrys subsidiary is in breach of contract. This is not a question of unlawful activities. The company has helped the bank to resolve this, Viitala said, adding: Pyry is committed to an ethical and responsible conduct in all its business operations. Viitala did not wish to comment further on the World Banks motivations for the move, referring to an agreement between the firm and the bank. The bank has the right to act in this manner and in this case has done so. Of course, if there is anything we can do to improve our operations so that the bank will consider all our subsidiaries good partners, then certainly we will try to do so, she said. According to Viitala, Pyry does not think this will have any direct material effect on its business and she considered it difficult to evaluate at this stage what kind of consequence it might have for the groups reputation. Pyry Management Consulting Oy Finland provides consulting and advisory services for the forest and chemical industries as well as for the energy sector.
2012 RISI, Inc. All rights reserved.

Mets eyes biofuel production at Kemi pulp mill

Mets Group will carry out a feasibility study on increasing the use and production of renewable energy sources at its Kemi pulp mill in northern Finland, operated by its subsidiary Mets Fibre. One of the technologies under review is a gasification plant that would produce biofuel which could replace the oil used in the lime kiln. The feasibility study will focus on the technical concepts and business model of the investment options and should be finalized by the end of the year. The introduction of new production technology would increase the Kemi mills use of wood-based fuels obtained from external supplies, Mets Group said. The mill currently produces more energy than it needs and has an electrical energy self-sufficiency rate of some 141%. The Kemi mill has a capacity of some 270,000 tonnes/yr of bleached softwood kraft (BSK) pulp. Mets Fibre will start up a similar gasification plant at its 650,000 tonne/yr Joutseno BSK pulp mill in southeastern Finland this summer. Plans for biodiesel plant canceled: Elsewhere, Mets Group has decided not to invest in a biodiesel plant on the island Ajos in Kemi, northern Finland. Together with Vapo, the group has conducted a feasibility study for the construction of a biodiesel plant at four possible locations in Finland, Sweden and Estonia since spring 2009. Last year, the two firms zeroed in on Ajos as the most probable alternative. The two firms have now concluded the feasibility study and Mets Group found there are insufficient profitability prerequisites for executing the project and ended the review process on its behalf. As a whole, and particularly in regard to the scale of the investment, the project profitability doesnt reach a level where investing in this plan would be financially justified for Mets Group. There was no single reason for our decision. Instead, this is expressly an overall review, said Mets Group executive vice president for strategy, Hannu Anttila. The plant under consideration would be able to produce some 100,000 tonnes/ yr of high-quality biodiesel also suitable for winter use or use in arctic conditions. It would have cost approximately Euro 500 million ($631 million) to build and would employ some 100 people at the factory and another 400 in the raw material chain, said project director Mikko Kara. Vapo will continue the project and look for another partner, he added. The project is one of the proposals for the European Union New Entrants Reserve NER300 funding that the Finnish Ministry of Employment and the Economy has submitted to the European Commission (EC). If it receives funding, Kara said they could start more detailed planning early next year and make an investment decision in early 2014. If the project does not get the funding, Vapo and any other partners will have to evaluate how to proceed, he added.

IKF divests majority share in PKarton

The investment company IKF has divested its majority share in the Italian recycled board manufacturer PKarton, according to a report from the shareholders extraordinary general meeting. IKFs shares were sold to an Italian investment firm, Special Situation, for Euro 1 ($1.26). Production at the mill has been halted for two months now because of the high raw material costs, said Special Situations owner Roberto Chiodelli. He added that his objective is now to form a joint venture with a prospective investor by September in order to allow PKarton to resume production. PKartons Roccavione mill used to produce approximately 150,000 tonnes/ yr of coated and uncoated recycled board.

Viken Skog finalizes purchase of Follum mill

The forest owner cooperative Viken Skog has wrapped up the acquisition of Norske Skogs shuttered Follum publication paper mill, located in southern Norway. The purchase was finalized on June 29. Norske Skog stopped production at the Follum mill at the end of March. The factory could churn out some 145,000 tonnes/ yr of improved newsprint and book paper and some 145,000 tonnes/yr of machinefinished coated paper on two PMs. The mill also houses the 130,000 tonne/ yr newsprint PM 2, which was closed in 2008, as well as three thermomechanical pulp (TMP) lines. Norske Skogs corporate assembly voted for a definitive closure of the Follum mill on December 8 last year, despite a bid from Viken Skog to buy the factory. Before the closure, however, it was announced that Viken Skog would buy the factory for NOK 60 million ($10 million). Viken Skog is buying the mill as well as the three paper machines and two of the sites TMP lines. These will be dismantled and probably sold in pieces or scrapped. Norske Skog will use parts of the sites third TMP line in a NOK 220 million revamp of the pulp facility at its Saugbrugs paper mill, also in Norway. Viken Skog wants to establish a forestcluster of fiber-based industry at the Follum site in the future. In the short term, production of wood chips will continue at the site, and there is interest in electricity and district heat generation. Viken Skog has so far hired 28 former Follum employees to work at the site.

Korsns taps ABB for new drives at Gvle mill

Korsns has signed up ABB to supply new drives for the 365,000 tonne/yr liquid packaging board PM 5 at its Gvle mill in Sweden, according to an ABB press release. The value of the project was not revealed. Korsns has invested in a new smoothing press and ABB will supply some new drives for that press and some intermediate calenders, and rebuild some drives with modern converters. It will also supply a new steering system which will enable future capacity increases. Korsns expects the revamp to improve product quality and ensure increased PM availability and operation security, ABB said. The Gvle mill houses two other machines with a combined capacity of some 335,000 tonnes/yr of kraft and sack paper and white-top kraftliner.

Gmund sets up sales office in Switzerland

Germanys Bttenpapierfabrik Gmund plans to strengthen its presence on the Swiss market. The specialty fine paper producer that produces some 5,000 tonnes/yr on two machines at its mill in southern Germany recently set up a sales office in Zug and appointed Martin Schneiter managing director of Gmund Schweiz. Schneiter was most recently responsible for market dePPI EUROPE/July 5, 2012

velopment and sales promotion at Papyrus Switzerland. We are present with a team of our own in Switzerland now in order to increase the brand awareness of Gmund and to boost sales. Gmund Schweiz will intensify our advisory service for end customers, agents, printers and converters, thus supporting the wholesale, the firm said in a statement.
2012 RISI, Inc. All rights reserved.

UPM to sell Kajaani sawmill in Finland to Plkky

UPM has signed a deal to sell its Kajaani sawmill in central Finland to the wood processing company Plkky, which will continue operations at the site. The Kajaani sawmill can produce some 210,000 m/yr of sawn pine and spruce timber. It employs 83 people who will continue working for Plkky as permanent employees. Plkky is the largest private wood processing company in northern Finland and has a capacity of some 450,000 m/yr of sawn timber products, of which about 40% is further processed and 70% is exported. The company is headquartered in Kuusamo and has production facilities there as well as in Taivalkoski and Oulu. The sale of the Kajaani sawmill comes as a result of UPMs decision to restructure its sawn timber and further processing operations in Finland and renew its business strategy. Two closures by the end of the year: As a part of this strategy, UPM will focus on wood sourcing to its mill integrates. It will continue its timber operations at locations close to its pulp and paper mills in Pietarsaari, Pori, Juupajoki and Lappeenranta. The company will close its Aureskoski and Heinola further processing mills by the end of the year. The Aureskoski plant employs some 53 people and has a capacity of some 130,000 m/yr of interior panels and floorings. The Heinola factory has a headcount of 46 workers and can produce some 20,000 m/yr of laminated wood panels. Some 97 employees will be permanently laid off. UPMs timber business will relocate its common sales and management staff functions from Lahti to Tampere and to mill locations in Finland. This will lead to another 42 job cuts. Under its timber division, UPM operates seven sawmills in Finland, Austria and Russia, with a total capacity of some 2.3 million m/yr of pine and spruce timber. UPM redeems power plant: UPM has redeemed the Myllykoski power plant from Vamy, an affiliate company of the energy firm Vattenfall, in accordance with a previous commitment. The redemption is included in the reserves made in connection with the Myllykoski paper mill restructuring plans, UPM said in a statement. Vamys power plant, located in Myllykoski, southern Finland, is a combined heat and power (CHP) plant. It has been producing energy mainly for UPMs Myllykoski mill using mostly biofuels and some peat and natural gas as raw materials. The power plants main boiler has a capacity of 88 MW. UPM bought the Myllykoski mill last year when acquiring Myllykoski and Rhein Papier and stopped production at the factory late the same year. UPM is looking for new owners for the factory. What will happen to the power plant depends on who will take the site over and what it will be used for, according to Sami Latva, general counsel for UPMs paper business group. Vattenfall inaugurated the CHP plant in Myllykoski in 2001, following an energy partnership agreement between the company and Myllykoski Paper in 1999. The deal saw Vattenfall buy and modernize the paper mills power plant and supply the factory with heat and electricity under long-term contracts.

RDM to transfer Ovaro plant to new subsidiary

Italian recycled board manufacturer Reno De Medici (RDM)s board of directors has approved the transfer of the firms Ovaro plant, based near Udine, to its wholly-owned subsidiary RDM Ovaro. The transaction, which will result in a capital increase, will allow the entrance of Friulia, a holding company owned by the Friuli Venezia Giulia region, in the share capital of the new legal entity. According to a spokesperson from RDM, Friulia will hold a stake of 20% in RDM Ovaro. The planned deal, which is valued at Euro 10 million ($12.6 million), includes the Ovaro production facilities, commercial credits and debts, liabilities relative to the production of the plant, employee labor contracts and employee funds. The move will enable RDM to strengthen its presence in the area. The company is also planning a major investment program. RDMs Ovaro mill manufactures approximately 110,000 tonnes/yr of recycled cartonboard.

Melitta starts trial runs at Neuklln mill

Melitta has finished the revamp of its specialty paper mill in Berlin, Germany. The firm recently started the production of twoply wallpaper base at the Neuklln Spezialpapier site. Melitta announced the rebuild of its Berlin mill in a bid to raise its wallpaper base capacity in late February. The firm invested some Euro 20 million ($25 million) in the revamp, which saw about one third of the existing paper machine being dissembled and renewed. Amongst others, the machines wire section was revamped, Melitta said. The Neuklln mill now has a capacity of approximately 25,000 tonnes/yr. The production of wallpaper base will be officially launched this autumn, after the trial runs have been concluded. However, Melitta will continue producing filter paper at the site too. According to a spokesperson, filter paper will account for around 70% of production at first and then be reduced by 10% each year to the benefit of wallpaper base. Melitta operates two more specialty paper mills in Germany. The firms Neu Kaliss Spezialpapier site in MecklenburgWestern Pomerania churns out some 15,000 tonnes/yr of wallpaper base, while its Melitta Haushaltsprodukte mill in Minden, in the northeast of North Rhine-Westphalia, produces around 25,000 tonnes/yr of filter paper.
PPI EUROPE/July 5, 2012

Staga Sweden buys bankrupt Swecoat Timr

Staga Sweden, active in the building sector, has bought the bankrupt packaging materials producer Swecoat Timr, based in Srker outside of Sundsvall on the east coast of Sweden. The purchase price was not revealed. Staga Sweden described the acquisition as a natural step to enforce its position on the market with the goal of creating a strong actor within development and production of technical paper and nonwoven products. Founded in 2004, Swecoat Timr has been active in the extrusion and packaging industry with customers in Sweden as well as in the UK, Poland, the Czech Republic and Switzerland. Its product range includes transport packaging mainly for the corrugated industry but also for the solid board and food industry as well as consumer packaging and industrial wrapping. Staga Sweden will continue the operations in Timr, for the moment under the name of Swecoat. It will strengthen the companys range of products through investments in machinery and the production facility, it said in a statement. Several previous employees at Swecoat Timr will be offered new jobs. Staga Sweden is headquartered in Linkping, southern Sweden, and is part of the company portfolio of Agathon Capital. It makes products used in construction, such as various membranes and protections made from paper as well as other raw materials. The firm said it has had a good cooperation with Swecoat Timr in the past, which it expects to facilitate the integration.
2012 RISI, Inc. All rights reserved.

CEPI opposes EU Waste Directive guidance

The Confederation of European Paper Industries (CEPI) has voiced concerns over the European Commissions guidance on the new waste directive and end-of-waste (EoW) measures, which, according to the paper industry body, might cause problems for the sector. The Commissions Guidance on the interpretation of key provisions of Directive 2008/98/EC on waste was published in June. It is intended to assist both national authorities and economic operators with the so-called Waste Framework Directive (WFD) and is linked to a second batch of EoW measures applied to paper, copper and glass likely to be adopted by a European Union regulatory committee on July 9. CEPI warns that the Commissions guidance poses a serious risk to advancing a recycling society in Europe. The industry body strongly opposes the guidelines definition as to when waste, subject to a recovery operation, ceases to be waste. According to the guideline, the moment when a material or substance reaches EoW is simultaneous with the completion of the recovery and recycling process. CEPI, however, argues that, for paper, the guidance document should not describe compliance with EoW criteria as being equivalent to recycling. For waste management companies and waste traders the scenario will be frightening, CEPI said in a statement. With the new interpretation they would become recyclers, without receiving any significant benefit. In return, however, they would be legally responsible for the output material as producers. This includes liability issues in the quality of waste material and its contamination, it added. According to CEPI, the full implications of the change in interpretation are not clear. Requiring such responsibility from waste management companies might just add to the growing list of badly implemented environmental EU measures [], CEPI argued. Moreover, the industry body warned that considering EoW equal to recycling would also effectively break the information flow for public authorities, which might have serious consequences for environmental inspections and enforceability as well as the generation of reliable data and statistics. CEPI also said that for the industries that reprocess the material in this case paper mills the Commissions approach will increase the risk of receiving low-quality recyclates from collectors, which runs contrary to the original objective of EoW.
PPI EUROPE/July 5, 2012

Swedish paper union sues Holmens Hallsta mill

The Swedish paper workers union Pappers is taking Holmens Hallsta publication paper mill in Sweden to the Labour Court over the dismissal in March of a worker accused of trying to run another employee over. The Pappers member was loading paper rolls on a boat in the harbor using a forklift when his foreman opened the door of the cabin and yelled at him for placing the rolls at the wrong spot, according to Aleksandar Srndovic, president of the local Pappers chapter. Afterwards, Srndovic said, the operator began backing up the forklift, moving it approximately 30 cm, with the door to the cabin still open. The foreman jumped up on the lowest step of the forklift and the employee stopped the machine. The foreman argued that the employee deliberately backed towards him, risking him being hit by the door, while the forklift operator said he had no intention to do so and stopped as soon as he noticed the foreman, Srndovic said. The foreman reported the incident to the police, who later abandoned its investigation. Holmen dismissed the worker shortly after the incident, Hallsta HR manager Carina Lundberg confirmed. We considered this a serious enough event, she said. The case has been discussed both locally and centrally. Locally, Holmen offered the worker the equivalent of six months of pay and centrally of 15 months, but he declined both offers, according to Srndovic. He could not detail what Pappers is demanding in the law suit. Lundberg did not wish to comment further since the case is ongoing and added that Holmen would follow the legal procedures. Hallsta and Pappers settle case: In March last year, Pappers sued the Hallsta mill for failing to follow seniority when hiring former employees to fill a temporary position. The firm needed a substitute to help in production for a few months as one of the regular workers was recovering from an illness and required an assistant. This was discussed together with the local union chapter, which proposed two workers based on seniority, but the company opted for the third person in line, Srndovic then explained. Following discussions, Pappers took the firm to the Labour Court and asked for damages of SEK 50,000 ($7,000) per person for the two people who missed the job opportunity and compensation for lost wages. Some months later, however, the Hallsta mill asked for new local negotiations which the union accepted. The two parties agreed that the mill would pay the two workers SEK 20,000 each for lost wages, which they were satisfied with, and the case was dropped before going to court, Srndovic said. HR manager Lundberg was not able to comment on this case. Holmen has a capacity of some 685,000 tonnes/yr of supercalendered paper and uncoated mechanical paper on three machines at its Hallsta mill.

Copyright 2012 by RISI, Inc. All rights reserved. Reproduction in any form whatsoever is forbidden without express permission of the copyright owner. Editorial Staff Steven Sachoff, Editor (market pulp) ........................................................................ ssachoff@risi.com; 32.2.536.0736 Daniela Wortmann, Deputy Editor (recovered paper, uncoated woodfrees) .......... dwortmann@risi.com; 32.2.536.0737 Irina Van den Neste, News Editor (containerboard) ......................................... ivandenneste@risi.com; 32.2.536.0763 Eva Nyman, News Editor (mechanical papers, coated woodfrees)........................... enyman@risi.com; 32.2.536.0756 Anne Grimbert, Associate News Editor (cartonboard, sack kraft) ...........................agrimbert@risi.com, 32.2.536.0767 Editorial office RISI, 326, Avenue Louise, Box 22, B-1050 Brussels, Belgium; tel 32.2.538.6040; fax 32.2.537.5626; web www.risi.com Subscriptions and customer service Call 32.2.536.0748 (Belgium) or 866.271.8525 (U.S.); visit www.risi.com/catalog (new subscriptions) or www.risi.com/cs (online customer service); email info@risi.com; fax 32.2.537.5626, or mail to PPI EUROPE, 326, Avenue Louise, Box 22, B-1050 Brussels, Belgium. Published 48 times per year on a weekly basis. Advertising PPI EUROPE accepts advertising. For information on pricing and availability, contact Remy Poos at +32.2.536.0735, email rpoos@risi.com. Executives Mike Coffey ....................................................................................................... President and Chief Executive Officer Matt Graves ..................................................................................... Senior Vice President, Pulp & Paper Information Todd Petracek ......................................................................... Vice President, Pulp & Paper News, Markets & Prices

2012 RISI, Inc. All rights reserved.

The leading exhibition for technology to publish news on tablets, mobile, in print and online.

www.wan-ifra.org/ worldpublishingexpo2012