European Coated Paper Closures of 2.7 - 3.5 Million Metric tpy Expected by 2015

Western European demand for coated papers has matured and the post recession rebound in demand is over. According to RISI's new European Coated Papers Risk of Closure Study, overcapacity of both coated wood free and coated mechanical papers has reached 1.2 million metric tons, lowering prices and affecting producer profitability in Europe. With coated wood free capacity in China forecast to exceed domestic demand by the end of 2011 and new capacity in Russia, export prospects of Western European coated paper producers are threatened and capacity closures of 2.7 - 3.5 million metric tpy are expected by 2015.

"Coated paper mills are currently operating at a loss in Europe. To maintain profitability, prices will have to rise and capacity needs to be balanced, through closures," said Sampo Timonen, director of European Graphic Papers at RISI, and author of the study.

Timonen analyzed 90 paper machines and 20 producers for this study and created a methodology that compares company and machine risk against the industry average using a range of criteria—financials, long-term cost position, and the strategies of coated wood free and coated mechanical producers in Europe—to evaluate the machines most likely to close on a permanent basis. The study analyzes machine risk of closure by company, indicating machines likely to face proactive closure, potential divestments, and closures due to bankruptcy. More information is available online.

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