Summary:
The end of newsprint production at Stora Enso's Varkaus and Maxau mills reduces European overcapacity by about half a million tonnes. So, even after these closures there is still another half a million tonnes of overcapacity left. Juha Vanhainen, head of Stora Enso's Publication Paper Business Area, says that the company's decision in Maxau and consolidation discussions held in the spring have nothing to do with each other. "Bad, unprofitable capacity has to be resolved one way or another anyway. Like we have said many times, we are open to and interested in all types of consolidation that creates value for shareholders. But we do not think that consolidation would solve problems," Vanhainen says.

Europe has about 12-13 million tonnes of newsprint capacity. Demand in Europe fell 15% between 2008 and 2009 and is still 10-12% below 2008 levels. Vanhainen assumes newsprint is not a growth market in Europe but that it will not dramatically shrink in the coming years.

The new level may be here to stay. Though, looking at the trend in North America, one should prepare for a fall in demand, Vanhainen says. Stora Enso's newsprint and book paper operating profit has been in the red the first two quarters of this year, and one could assume there will be losses in the second half of the year too, as wood and recycled fibre prices have gone up.

 Newsprint prices fell about 20% at the beginning of this year. Vanhainen says last year's prices need to come back. Stora Enso is Europe's biggest newsprint manufacturer. UPM is second, and it does not announce key figures for its newsprint business. One can, however, draw conclusions from the fact that its entire paper business was 4% in the red in Q2. Norske Skog is in the most difficult situation, as two thirds of its production is newsprint. The company's operating profit has not been positive since early 2008. The company has a great deal of debt and has had to sell assets.

Kauppalehti.fi  -  FINLANDIA - 8 setiembre 2010