UK Paper Industry Decline Noted for 2006

Swindon, Wiltshire, England 31 January 2007 -- Preliminary figures from the Confederation of Paper Industries (CPI) analysis of UK mill returns show a continuing decline in domestic paper and board manufacturing, and a related decline in the usage of recovered paper.

In 2006, the UK produced just under 5.6 million metric tons of paper and board, a 7.5% reduction on the 2005 total. In terms of raw material input, UK paper and board mills used just under 4.2 million metric tons of recovered paper, a decline of 8.2% against 2005 usage.

Eight paper mills closed in the UK through 2006, representing around 600,000 metric tons of capacity, with many quoting significantly increased energy costs as a key factor in the decision to cease production.

The decline in domestic usage of recovered paper means that exports for 2006 are likely to be around the 4 million metric ton mark with around 75% of this material destined for the Far East.

The full impact of the 2006 closures has yet to be fully reflected in the yearly production total. It is expected that in 2007 this will be around 5.4 million metric tons with domestic usage of recovered paper falling to around the 4 million metric ton mark.

Martin Oldman, director general of CPI, commented, "2006 was another extremely difficult year for the paper industry with high energy prices causing severe pressure on our competitiveness. After sustained lobbying by CPI, we hope the situation has now stabilized and that UK mills can compete on a more level playing field."

He added, "In the UK, great strides have been made in increasing the tonnage of recovered paper being retrieved from the waste stream. Currently there is a buoyant global market for this material. However, it is vital that the UK retains a strong paper manufacturing industry to ensure that there is a reliable internal market for recovered paper when the inevitable eventual downturn in export market demand arises."