Europe's Paper & Ink Costs Tighten as Sappi Raises Prices, Burgo Sells Verzuolo, Metsä Board Expands Husum

Sappi Europe has notified the market that, from September 1, 2021, it will implement an 8%–12% price increase across all paperboard and containerboard grades, as well as its Transjet, Basejet and inkjet paper lines.

The company blamed the move on exceptional and sustained cost inflation in raw materials—particularly pulp, chemicals and energy—together with exceptionally high freight rates, saying the adjustment could not be avoided. Sappi's sales team will engage customers directly to explain the details and assist with implementation.

Inks are under similar pressure. Tony Lord, President of Flint Group's Commercial, Publication and Sheetfed Inks (CPS) division, said the raw-material supply crisis facing ink manufacturers appears to have no clear end. He flagged rising costs and shrinking raw-material availability as ongoing concerns for the company.

In a statement, Flint CPS recalled that during the first half of 2021 it worked closely with customers to navigate difficult market conditions, hoping that some stability would return by the end of 2021. However, the company said it has seen no improvement in raw-material supply, while global transport and logistics pressures continue to push costs higher on multiple fronts.

Tony Lord added that Flint CPS's operations and procurement teams are working relentlessly to offset the multiple increases affecting the business and to keep its cost base as efficient as possible. Even so, he said, with costs at current levels, the business cannot fully absorb them.

At the same time, another development stunned the European market: a paper mill with 600,000 tonnes of annual containerboard output was sold by its parent group.

The Verzuolo mill, with 600,000 tonnes per year of containerboard capacity, belongs to the Burgo Group. The buyer is Smurfit Kappa, a European heavyweight in containerboard and corrugated packaging. Burgo's Avezzano mill said it is not affected by the transaction.

The market reaction reflected the timing: only in early 2020 had Burgo completed the conversion of the mill's PM9 from LWC paper to recycled containerboard. The group has now agreed to sell the site to Smurfit Kappa for €360 million, with the deal expected to close in the fourth quarter of this year.

SKG currently runs the Ania paper mill in Italy's Lucca province, where two machines produce recycled containerboard with a combined 200,000-tonne capacity. According to Smurfit Kappa CEO Saviero Mayer, acquiring Verzuolo will strengthen the group's customer service because the mill is highly complementary to SKG's existing operations and strategically located to serve Southern Europe and other markets.

Burgo Group said it will continue its containerboard operations through the Avezzano mill. The conversion of Avezzano in 2018 marked Burgo's entry into the containerboard segment. Formerly an offset paper site, the rebuilt mill can produce 230,000 tonnes of recycled containerboard per year.

Burgo intends to keep pursuing its strategic plan to broaden its product portfolio. The company said future investment will focus on high-value-added products for packaging and plastic replacement applications, and that a leaner financial structure will support this goal. With QuattroR joining Marchi holding group as an investor, the transaction will help accelerate the industrial restructuring launched in 2020. The two companies established a joint venture and acquired a 91% majority stake in Burgo Group.

Separately, Metsä Board, part of Metsä Group, has decided to invest €210 million to expand cartonboard capacity at its Husum mill in Sweden.

The investment responds to growing demand for sustainably produced packaging materials that support the circular economy, and is expected to reinforce Metsä Board's position as Europe's leading cartonboard producer.

According to the company, the Husum integrated mill's annual cartonboard capacity will rise by 200,000 tonnes. BM1 currently has 400,000 tonnes of annual cartonboard capacity, which will increase to 600,000 tonnes after the investment. The additional capacity is scheduled to reach the market during 2024–2025. Construction preparations will start in October 2021 to fit with the planned annual maintenance shutdown at the Husum integrated mill. Ramp-up is expected to begin in autumn 2023, with full production anticipated by the end of 2025.

The investment is projected to lift Metsä Board's annual sales by about €200 million and deliver an approximately €50 million positive effect on annual comparable EBITDA. The sales growth and EBITDA improvement are expected to be fully realized in 2026. The new capacity will primarily target North American and European markets, where demand for Metsä Board's premium lightweight cartonboard is expected to keep growing. Its cartonboard is mainly used for food, pharmaceutical and cosmetics packaging, as well as food service packaging.

Source: China Packaging Network (pack.cn); original link: http://news.pack.cn/show-377902.html