Europe and MENA Pulp Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The wood pulp market is expected to witness a CAGR of 3.78% during the forecast period (2021 - 2026). With the focus now shifting towards eco-friendly and sustainability, paper packaging is expected to gain traction with many countries pushing for paper packaging products over plastic packaging, which poses a significant threat to the environment. Higher recycling demand will drive the use of paper as packaging material further, with consumers and businesses looking for solutions which helps in cost reduction as well as helps in keeping the environment safe while keeping government regulations intact.

Key Highlights

• In MENA, changes in lifestyle and improvement in living standards, and an increase in consumer preference toward packaged and fresh food, is expected to boost the demand for paper packaging, thus raising the growth opportunities for the pulp market in the region. For instance, According to the BMI Risk/Reward Index report, the import net of re-exports was around AED 43 billion, with a domestic consumption size of AED 112 billion. 62% of the domestic food and beverage needs are derived from the local manufacturing industry that accounts for AED 69 billion. And so, the food and beverage sector is by far one of the most critical areas in terms of packaging, leading to increased growth of the pulp industry in the region.
• Due to the existence of established industries, like the pharmaceutical, food, and beverage Germany is the largest market in the region, owing to its dominance in the packaging industry. But due to the spread of COVID-19, as several European countries limit travel to stop the spread of coronavirus, the most significant paper pulp makers in the region stated transportation logjams are delaying shipments of the raw material. Germany and Spain shut their borders to non-essential travel in March, resulting in a shortage of pulp, which is used in products such as tissue paper and diapers and increased cost due to delays in raw material shipments causing machines to stop. This might increase prices and impact the market negatively.
• Many countries in Europe and Middle East & Africa have shut down in efforts to contain the spread of COVID-19. With reduced packaging demands comes reduced demand for pulp to make those products. But at the same time, toilet paper has witnessed radical shifts in supply and demand. However, mills working with recycled material are using deinking grades, which is a white waste paper with ink that must be removed are now in short supply. Therefore though, the manufacturers in the industry are still operating, even after faced by significant supply chain problems.

Key Market Trends

Bleached Chemical Pulp to Have Significant Impact on The Growth

• The pulp and paper industry heavily relies on natural resources and hence, the efficient utilization of raw materials, energy, and chemical processing, drive sustainability in the industry while producing high-quality products. For instance, pulp produced in Europe comes from sustainably managed forests, for example, through programs, like PEFC (Programme for Endorsement of Forest Certification) and FSC (Forest Stewardship Council), and is increasingly used in various value chains.
• The rising demand, along with consumption, for tissue paper, which is essentially used in kitchen, toilets, and household, is expected to drive the bleached chemical pulp market’s growth over the forecast period. Technological advancements in the paper and pulp industry enhance plant performance, which enables higher quality improvement and lower cost, and simultaneously environmentally friendly plant operation and thus have
• However, Cepi announced that according to preliminary figures, the European paper and board production decreased by 3.0% in 2019 compared to the previous year. The slowing down of the EU's economy in 2019, from 1.9% in 2018 to 1.1% in 2019 combined with global instability and trade tensions, impacted the European paper and board consumption, which recorded a 4% decline. This will directly impact the bleached chemical pulp market in the region.
• According to the Environmental Paper Network, the entire continent of Africa accounts for just 2% of global paper uses. This is due to the presence of heavily populated forest regions. More than half of the paper used is then chemically bleached to be used for packaging (carton board and containerboard), and this area has been increasing consistently in recent years.

Rising Consumer Demand for Tissue will Drive the Market Growth

• The Middle East & Africa have a production capacity of 4 million metric ton of pulp, paper, and packaging products and, thus, prove to be a major driver for the growth of the tissue paper industry in the region. Similarly, rising income levels, the presence of a relatively young population, and economic activity are driving the MEA Tissue paper market. Changing consumer lifestyle and government focus on environment-friendly packaging solutions has spurred up the demand for tissue papers and paper packaging products.
• In Europe, total pulp production (integrated pulp, plus market pulp) increased by 0.8% in 2019, the majority of which is used for various types of tissue paper production. It was over-performed by market pulp production, which jumped by 6.1%, as a result of recent massive investments in new capacities. This growth in production is driven by the export market demand. Similarly, exports of market pulp jumped by close to 40% in 2019.
• There is a sudden spike in demand for tissue papers due to the ongoing spread of the COVID-19 pandemic. The manufacturers of these tissues are producing 20% more than the normal levels, which might strain the supply chain.

Competitive Landscape

The Europe and MENA pulp market is partially consolidated, with the top five players having a significant position in the market and is expected to rise at a moderate rate, due to the well-performing industries starting from printing, consumer packaging, pharmaceutical, and construction, etc.

• In March 2020, Stora Enso launched a sustainable premium cardboard packaging box for pellets. With this new packaging, Stora Enso plays a pioneering role in the pellets industry and places sustainability, innovation, and customer orientation at the center of its developments.
• In August 2019, UPM made an investment decision to construct a 2.1 million ton greenfield eucalyptus pulp mill near Paso de Los Toros in central Uruguay. The highly competitive mill investment of USD 2.7 billion will grow UPM’s current pulp capacity by more than 50%, resulting in a step-change in the scale of UPM’s pulp business as well as in UPM’s future earnings. Additionally, UPM will invest USD 350 million in port operations in Montevideo and local facilities in Paso de Los Toros. The mill is scheduled to start-up in the second half of 2022.

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• The market estimate (ME) sheet in Excel format
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