European Paper Market Outlook: UPM–SAPPI Joint Venture, Chinese Competition and 2027 Demand Risk
Written by Iwan Le Moine
Summary: Demand for graphic paper in Europe has fallen since 2008, and mills are closing machines or converting them to packaging. We expect more closures and see a risk of weaker demand and certainly price consequences in 2027 .
“It was a pleasure to present EMGE’s Paper Market Overview to the Paper & Board Association in London recently. We always enjoy exchanging ideas and opinions with the industry, and this article draws out the main themes from the talk and its slides.”
Key Takeaways
- UPM–SAPPI Joint Venture: The plan was announced in December 2025 and the European Commission is due to say more in November 2026, with both sides reported to be trying to resolve issues without making too many concessions.
- Capacity Closures: In our view, mill closures will come whether or not the joint venture is approved, because there is still too much capacity in Europe.
- Packaging Conversions: Palm plans to convert its 400,000 tonne King’s Lynn newsprint mill to recycled containerboard, with potentially 600,000 to 700,000 tonnes of new packaging capacity starting in March 2027. This will add to Eren’s similar plans at Shotton in the same year.
- Chinese Competition: European mills face tougher competition from China in export markets and a growing import threat, whilst new Chinese machine start-ups are adding around 20 million tonnes of P&B from 2025.
- 2027 Demand: We see a risk of a further large fall in apparent consumption in 2027 and a potential price correction later in 2027, unless UPM and SAPPI move quickly on capacity management.
Paper Industry Trends: Why Is Graphic Paper Demand Falling?
In the 1990s and early 2000s, the industry expected average growth of 4% to 5% a year for coated papers in Western Europe. Uncoated woodfree (UWF) trailed, but still added around 2% a year on average. We used to forecast UWF A4 demand by tagging it to real GDP growth, which was then around 2.5% a year.
For the past 15 to 20 years, machines have generally been shut, often sold to India as second hand machines or converted to packaging.
Graphic paper demand in Western Europe averaged growth of 3.1% a year from 1980 to 2008, then fell by an average of 6.3% a year from 2008 to 2025. In North America it averaged growth of 1.0% a year from 1980 to 2008, then fell by an average of 7.1% a year from 2008 to 2025.
In Western Europe, A4 cutsize demand correlated closely with EU GDP growth up to around 2005. After that GDP growth continued upwards whilst A4 demand started towards long term structural decline.
Why Are Paper Mills Closing? Machine Closures and Conversions
Announced machine closures in Europe and North America from 2025 onwards total nearly 5 million tonnes:
| Category | Announced closures, Millions of tonnes |
| Woodfree (WFs) | -1.3 |
| Newsprint | -1.4 |
| Mech. | -0.9 |
| Other | -1.1 |
| Total | -4.7 million tonnes |
Palm announced in July that it would convert its 400,000 tonne newsprint mill at King’s Lynn to recycled containerboard. That is potentially 600,000 to 700,000 tonnes of new packaging starting in March 2027. Around half the volume produced there is currently hi-bright grades rather than standard newsprint, so the change also affects paper buyers from the retail sector.
Palm and the former UPM Shotton mill, converted by Eren, each need around another million tonnes of wastepaper, and together add around potentially 1.5 million tonnes of containerboard for the UK market, so export markets are likely to matter.
Keep up with all the latest news with our monthly newsprint newsletter and containerboard monitor.
How Is China Changing the European Paper Market?
European mills face a triple squeeze:
- More aggressive Chinese competition in traditional export markets
- Falling domestic demand for many paper grades
- Slower demand for some packaging grades
Machine start-ups in China, from 2025:
| Category | New tonnage, Millions of tonnes |
| Containerboard | 7.4 |
| Cartonboard | 6.3 |
| Graphic | 4.5 |
| Tissue | 2.0 |
| Total | 20.2 million tonnes |
Current operating rates in many sectors across the world point to questionable over-investment, particularly in packaging and UWF, with exceptions in coated papers in North America and standard newsprint in the west. China’s smaller coated woodfree (CWF) and newsprint markets matured some years ago, so capacity there is also being taken out or converted to UWF or packaging.
In our view, domestic consumption cannot absorb all this new output, so some will end up in exports.
There are no magazine paper imports to speak of at present and newsprint imports to Europe are generally only from Canada, as China only has four newsprint & magazine paper mills remaining. But Western Europe imported 1.4 million tonnes of graphic paper in 2025, of which UWF was 0.9 million tonnes; and this is growing. So, many European mills are lobbying the EU for more protection, especially in woodfree and packaging.
European mills tell us that modern Chinese cutsize from producers such as Sun Paper, Shandong, APRIL and Nine Dragons is of good quality, and certainly good enough for some local printers. In their view, loyalty and distribution are what is protecting some European mills from lost sales today.
UPM–SAPPI Joint Venture: Will It Close European Paper Mills?
The two companies announced the joint venture in December 2025. We wrote at the time that a go-ahead would probably take 12 months.
Ten months in, both the companies and the European Commission are reported to be fighting concessions. That could prolong the stalemate or even cancel the project, although cancellation seems less likely. We expect more from the Commission in November 2026.
Suppliers are waiting to learn which UPM and SAPPI mills will close. Buyers worry about future supply and a potential price shock if closures come too quickly and push operating rates up, although for coated papers they would need to rise a long way. Meanwhile demand keeps sliding, which undermines the same closures almost before they happen.
Find out more with our Publication Paper Price Forecasts.
Graphic capacity by grade, UPM–SAPPI joint venture:
| Company | CWF | UWF | CM | UM | News | Total graphic |
| UPM | 0.6 | 0.9 | 1.5 | 0.5 | 0.35 | 3.9 |
| SAPPI | 1.05 | 0.1 | 0.6 | 0 | 0 | 1.7 |
| Total | 1.7 | 1.0 | 2.1 | 0.5 | 0.35 | 5.6 |
| Share of total | 30% | 18% | 36% | 10% | 6% | 100% |
In our view, closures will come either way. The Commission will no doubt insist that some mills are sold to avoid too large a market share in sectors such as LWC, but who would buy a standalone LWC mill in this climate? We expect machine closures, possibly as early as Q1 2027 but perhaps later, definitely in LWC and CWF and maybe even in UWF. We do not expect conversion to packaging, given the pressure in those sectors today and the cash the new venture is likely to need. The details of which mills close, when, and how closures are funded are not yet fully clear.
Outlook for 2027: Paper Prices, Demand and Energy Costs
Why would demand be weak in 2027? High energy costs have fuelled inflation and hit consumers, who drive demand for newspapers, magazines, books and packaged goods alike, and many mills in Western Europe have suffered or faced bankruptcy because of those costs over the past five years. Advertising follows consumer spending, so paper and print lose out too. In our view, consumers tightening their belts through a tough winter combined with publishers and advertisers on limited budgets, will lead to a drop in demand next year.
We do not expect the 2027 demand falls to be as heavy as those of 2023, but we expect a rough ride, even before any closures under the joint venture. Falling demand, overcapacity, cheaper imports and lower operating rates could lead to a large price correction by summer or the second half of 2027 at the latest, unless UPM and SAPPI get approval and act quickly. For the full picture, see our Paper and Pulp Industry Outlook 2027.
Paper Industry Timeline, 2020 to 2027
Our closing timeline:
- 2020: the COVID-19 pandemic
- 2022: the Ukraine war and commodity price hikes
- 2023: massive destocking
- 2024: recovery across all paper and board sectors
- 2026: a poor economic climate with plenty of uncertainty
- 2027: a possible demand shock
Our advice is not to be complacent about any potential industry growth, stable supply or stable prices, but to talk openly with industry partners, as well as to plan well ahead for the next new machine or the next mill closure of a long-standing supplier, as this could completely disrupt your current and finely tuned logistical setup.
Frequently Asked Questions
What are the main paper industry trends?
The main paper industry trends are falling graphic paper demand, machine closures and conversions, and new capacity in China. Western European graphic paper demand has fallen by an average of 6.3% a year between 2008 and 2025. Read our 2027 Paper and Pulp Industry Outlook for the wider picture.
What is the outlook for paper prices?
The outlook for paper prices is a potential correction by summer or the second half of 2027 at the latest, in our view, unless UPM and SAPPI get approval and act quickly on capacity. Prices have risen this year, in spring for woodfree papers and in Q3 for publication papers.
Why are paper mills closing in Europe?
Paper mills are closing in Europe because, in our view, there is too much capacity. Export difficulties, import threats and a potential further fall in domestic apparent consumption in 2027 add to the pressure on operating rates.
What is the UPM–SAPPI joint venture?
The UPM–SAPPI joint venture is a proposed joint venture between the two companies, announced in December 2025. The European Commission is due to say more in November 2026.
How is China affecting the European paper market?
China is affecting the European paper market through more aggressive competition in traditional European export markets as well as a growing import threat. New Chinese machine start-ups total over 20 million tonnes from 2025 to date.
What paper market reports and consulting does EMGE offer?
EMGE offers forecast reports, monthly monitor reports including market data, and consultancy including client projects, feasibility studies, image surveys and market research. Contact EMGE to find out more.
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Glossary
- UWF: uncoated woodfree paper
- CWF: coated woodfree paper
- LWC: lightweight coated magazine paper
- SC: supercalendered magazine paper
- CM: coated mechanical paper
- UM: uncoated mechanical paper
- A4 and cutsize: A4 is the standard 210 by 297mm sheet used in offices and printers. Cutsize is sold as cut sheets, such as A4 and A3, rather than in reels format.
- Operating rate: the ratio of production to available capacity at mills.