FSC, PEFC ‘conflict timber’ decision another hit for paper

A decision by paper accreditation authorities, FSC and PEFC, to declare timber or wood products from Ukraine or Russia to be ‘conflict timber’ and therefore unable to be milled could result in a 20 to 25 per cent reduction in an already under pressure paper supply chain, The Real Media Collective CEO Kellie Northwood said.

The cost of paper and its availability, particularly in the lightweight commercial (LWC) range used for catalogues and magazines, has been challenged for the past year due to rising energy costs in Europe, substantial sea freight cost increases and paper mills either closing down or swapping to cardboard production to deal with booming demand for packaging.

The other issue has been a long-running worker strike at UPM in Finland which has also hit production capability.

“Paper is, like all other supply chains across the world, experiencing significant challenges across supply into Australia and New Zealand. Energy prices from European mills are increasing rapidly and this is heightened by the Russia/Ukraine conflict,” Northwood said.

“In addition, FSC and PEFC have declared last week any timber or wood product from Russia or Ukraine is deemed ‘conflict timber’ which cannot be certified and mills in the region are looking to other supply avenues, this could impact 20-25% of supply for paper production.

“Ukraine is also a large exporter of products needed to make paper, such as starch and clay among others and further, UPM remains locked in industrial dispute until 1 April which reducing production substantially. Therefore, across all paper ranges we are experiencing challenges.”

But Northwood says it is important to reiterate that not all paper grades are experiencing the same supply issues as LWC.

“It is critical that we do not muddy the paper requirements into one basket and assess each paper channel individually,” Northwood said.

“Newsprint and Copy paper supplies are currently relatively stable in supply from local manufacturing supply and import options remaining available, albeit at allocated volumes, there remains low inventory however some supply stability.

“Catalogue and Magazine ranges are in very short supply as local manufacture has been reduced dramatically and allocation from overseas mills, mainly Europe, is carrying a 12-26 week lead time. Sheet-fed paper ranges are more readily available as there is strong SE Asian supply which the Paper Distributors are managing quite well, despite the obvious difficulties.”

Paper pricing is also under enormous pressure, due to these impacts.

Northwood said the Australasian Paper Industry Association (APIA) are working directly with publishers, catalogue producers and retailers to help navigate these difficulties.

“Pricing pressure is reflected in all these impacts – energy prices in Europe, Russia/Ukraine conflict, shipping and freight delays still impacted from COVID, UPM industrial disputes continuing and paper pricing volatility. The publishers, catalogue producers and retailers are working directly with APIA (the Australasian Paper Industry Association) and their mill relationships which will continue as well as TRMC is providing a firm briefing into government on local and import matters in this regard,” Northwood said.

“Commercial printers should work closely with your distributor partners, they are also being provided ongoing briefing through APIA also. As we emerge from an incredibly difficult chapter from the pandemic, there remains ongoing challenges and we are mindful of this and working with government, suppliers and members to facilitate as smoot a passage as we can, if anyone has additional areas they would like us to explore or investigate please contact our offices and we will work with you in that regard.”

Last week, Europe’s printing association, Intergraf, warned that the shortage of paper is causing chaos among printers and their customers, with severe repercussions in the supply of print products for all economic markets expected.

“While the European printing industry acknowledges that we all have little influence on several of these factors, there are some concrete actions that can be taken by involved economic operators and authorities,” Intergraf said.

We therefore call for:

  • an immediate stop or a significant reduction of exports of pulp and paper to third countries to safeguard the autonomy of Europe’s printing and publishing industries.
  • in the short term, that both sides involved in ongoing strike in Nordic paper mills find a common path towards a solution to guarantee the availability of necessary paper and board on the European market.
  • in the longer term, securing of a European autonomy on wood, pulp and paper supplies for all economic sectors, by ensuring a sufficient supply of raw material and production capacity in Europe.”

For more information, The Real Media Collective has updated its Paper Planes white paper on supply issues. You can read it here.

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