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ECMA 2013 congress targets paths for growth amid fierce market competition

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ECMA 2013 congress targets paths for growth amid fierce market competition

October 02, 2013 - 22:21

BRUSSELS, Oct. 3, 2013 (PPI Europe) -Cartonboard sellers and buyers from across the world gathered in Dubrovnik, Croatia, on September 18-20 for the annual European Carton Makers Association (ECMA) congress. The event, which was held in the shadow of the ongoing European financial crisis, focused on growth opportunities for the folding carton industry, prospective new markets as well as the need to break down boundaries.

Hans van Schaik, ECMA's managing director, provided an overview of folding carton industry trends and output forecasts, with a summary of the key statistics for the sector in 2012 and the outlook for 2013.

In 2012, total folding carton output in the ECMA countries decreased by 1.3% year on year to 4.224 million tonnes, van Schaik said. Almost all 11 countries which contributed to the survey saw their carton output decline in 2012, with the exception of Austria, the Netherlands and Turkey. Total folding carton sales fell slightly, dipping by 0.8% to 8.825 million tonnes in 2012 compared to the previous year. The carton sales value in Turkey and the UK, however, recorded growth of 8.8% and 6.5% year on year in 2012, repsectively.

After a promising start to 2013, folding carton output declined in Q2. In light of this development and the general economic situation in Europe, van Schaik forecasted European carton output and sales value to grow slightly, by 0.4% and 0.7% by the end of 2013, respectively. The picture is also expected to be mixed across countries. According to van Schaik, the European carton output and sales value should continue to grow in the Netherlands and Turkey in 2013.

Overall European carton output dropped by 5% over the 2007-2012 period, reflecting the recession in 2008-2009. Prospects for 2012-2017 look brighter, according to him, with growth in carton output and cartonboard purchases forecast at 7% and 8% over the period, respectively.

The top five countries - Germany, Turkey, the Netherlands, the UK and France - are expected to account for 80% of incremental output and 75% of incremental value over the 2012-2017 period.

Rising competition on global markets: Looking at world boxboard markets, senior RISI economist Ken Waghorne also stressed that the global demand for boxboard should recover in 2013-2015, following a rather difficult year in 2012, when it stood at 53 million tonnes. Boxboard is one of the strongest growth segments of the paper and board market, with demand expected to increase at a 3.8% average annual rate from 2013-2014, Waghorne said. Asia accounted for almost 45% of global boxboard consumption last year. The region's demand growth slowed in 2012 but it should rebound in 2013-2015. Chinese demand reached 13 million tonnes last year, representing 26% of 2012 global boxboard consumption. According to Waghorne, the Chinese capacity imbalance should be concentrated in the virgin grades in the 2012-2014 period. Some 4.7 million tonnes of cartonboard are expected to come online in China in 2013, from a total of 7.3 million tonnes of additional capacity planned for 2013-2014. Most of the Chinese ivory board capacity will enter the market this year, Waghorne said. He added that this massive capacity coming into the market will have a significant impact on global trade, and that other Asian countries could provide a home for only a small portion of China's net export over the next two years. Eastern Europe, Africa and the Middle East are also considered as primary destinations for Chinese ivory board exports.

As for Europe, total boxboard demand is expected to rise by approximately 300,000 tonnes/yr in 2013-2015. Western European producers exported over 75% of folding boxboard (FBB) and more than 60% of white-lined chipboard (WLC) in 2012 and they are still expected to rely on international demand in 2013-2014. However, they will have to face rising competition globally, especially in Asia, according to Waghorne, who said that Asian ivory board is already cost competitive with European FBB. Operating rates of western European FBB suppliers should stay below 90% in 2013-2015 due to reduced production for export, he said. Capacity expansion in eastern Europe is extremely limited, so net imports are expected to supply most of the demand growth.

Visions for growth: To face this competitive environment, several keynotes highlighted the need for collaboration between supply chain partners to produce the best solutions, as well as the need to be the most creative and innovative to survive.

In addition, European folding carton manufacturers will also have to take into account various topics which are brewing in the EU and will influence one way or another their growth scenarios, according to Brussels-based consultancy Interel managing partner Kieran O'Keeffe. Brussels could influence companies' growth directly through product specific regulation - labeling, food safety, sustainability - and indirectly through the general business environment - employment law, trade policy, access to finance. Among others, O'Keeffe specifically mentioned the 2014 review of EU recycling targets, which aims to increase the ambition of legally binding targets in the Waste Framework Directive, the Landfill Directive and the Packaging and Packaging Waste Directive. Also in the pipeline according to O'Keeffe, the new Commission guidance on extended product responsibility as well as the product environmental footprint methodology.

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