Paper Industry News:
Geopolitical Tensions & Mill Closures Shape Latest Paper Market Outlook

5th August 2025

The paper industry is navigating a period of significant volatility, driven by a complex interplay of geopolitical instability and persistent market pressures. As EMGE releases its latest Paper Price Forecasts and demand-supply views, the data highlights a challenging environment for mills and buyers who are focused on strategic planning and restoring profitability.

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Pulp and Paper Market Industry Snapshot July 2025

Geopolitical Instability: Geopolitical tensions and a weak US dollar are creating pricing and competition pressures for European paper mills.
Declining Graphic Paper Market: Western European graphic paper demand fell by 10% in June 2025, contributing to lower mill operating rates.
Major Paper Mill Closures: Several significant mill closures, including Kabel Premium Pulp & Paper, Heinzel’s Austrian mill at Laakirchen and UPM-Kymmene’s Kaukas mill are reducing paper capacity by over a million tonnes per annum.
Shifting Market Dynamics: The disappearance of capacity for certain grades is making buyers nervous about supply, while some mills are diversifying their production.
Digital Transformation Impact on Paper Demand: A new UK government initiative to digitise tax services signals a further move away from paper usage.

Packaging Sector Industry Snapshot July 2025

Cartonboard Outlook: Following a recovery in 2024, global cartonboard demand growth has been fluctuating between 0% and +1% since the start of this year.
Containerboard Outlook: While global operating rates have hovered in the low 80%s, the containerboard sector is seeing stark regional variations, with North America removing capacity as China continues its huge expansion plans.

Geopolitical & Economic Pressures

The paper industry continues to feel the effects of heightened global instability, particularly from geopolitical events. An uneasy truce between Iran and Israel, while stabilizing the region for a time, has not ended the conflict, and threats to oil shipments through the Straits of Hormuz remain a concern. This is in addition to ongoing damage to shipping in the Suez Canal and Red Sea, where Houthi rebels have continued to fire upon and attempt to hijack vessels.

Despite these significant conflicts and the threat to key shipping lanes, world markets and oil prices have shown a surprisingly muted reaction. For example, Western Texas Intermediate (WTI) and Brent Crude Oil prices were oscillating between US$60-70 per barrel (bbl) before this latest crisis; after peaking at around US$75/bbl at the height of the war, they quickly dropped back below US$70/bbl

“In my view, it is quite extraordinary, that the world markets and oil prices did not react that strongly to the ongoing volatility, or where they did react, the reaction was almost completely reversed just hours or days later……Nonetheless, we have noticed a slight downward correction in the latest OECD Total Composite Leading Indicators index. This will not help either mills’ cost positions or their buyers’ paper needs; sadly, much of this news will now not be found primarily in newspapers and magazines, but on digital media.”
Iwan Le Moine – Director EMGE Paper Consultants

US Dollar Effect on Paper Price Exports

The weak US dollar has created additional pain for European mills by making exports more expensive and imports more competitive. While Euro-based prices have dropped, the weak USD has caused export prices to rise, while simultaneously allowing cheaper imports to compete strongly. This has put local mills under increased price pressure, particularly in the Woodfree and Newsprint Paper markets. The impact is less severe for magazine papers (SC & LWC), as European printers do not typically buy these grades from non-European producers. At least exchange rates have now reversed a little since we last wrote, at around US$1.16 (to the Euro€) and US$1.33 (to the GB£).

Western European Graphic Paper Market in Decline

Monthly data for June 2025 reveals a continued decline in demand for Western European graphic papers, with total demand down 10% on a three-month moving average (3mma). This is coupled with low operating rates and reduced exports.

Here is a summary of the data for June 2025 (3mma):

Paper Grade	Demand Change	Operating Rate	Exports (year to date)
Newsprint	-8%	86%	-13%
SC (Supercalendered) / UM (Uncoated Mechanical) Paper	-10%	71%	-4%
Coated Mechanical/LWC	-13%	65%	-9%
Woodfree Papers (WF)	-9%	75%	-9%
Total Graphic Papers	-10%	74%	-8%

Paper Market News: Significant Paper Capacity Reductions

Amidst low operating rates, several mill closures have been announced, reshaping the market landscape. The permanent shutdown of Kabel Premium Pulp & Paper’s mill in Germany has removed around 450,000 tonnes per annum (tpa) of Coated Mechanical paper capacity. This follows the disappearance of Heinzel’s Laakirchen mill in Austria and UPM’s Ettringen mill in Germany, causing buyers of uncoated mechanical paper especially to grow nervous about supply in terms of both volume and specific printing qualities.

And UPM have just announced another coated mechanical paper machine closure, this one at Kaukas (Finland), following the closure of Kabel’s coated paper production in Germany earlier this year.

Here’s a redacted statement from UPM on the issue:

“Driven by structural overcapacity in the graphic paper markets and the need to ensure long-term competitiveness of its operations, UPM Communication Papers plans to end paper production at UPM Kaukas paper mill, reducing the annual production capacity of coated mechanical paper by 300,000 tonnes. The shutdown of the PM 1 is planned for the end of 2025. UPM’s pulp, sawn timber and biofuels production and R&D activities at UPM Kaukas integrate will continue as before. Should the plans be implemented the number of employees affected at UPM Kaukas paper mill is estimated at 220. With the plan to shift UPM’s coated mechanical paper production in Finland from Kaukas to our Rauma mill, we are striving to optimize the asset structure and improve cost efficiency, particularly in our production and logistics processes”.

The LWC capacity outage in Finland at the end of the year represents a significant reduction of approximately 17% of total Western European production capacity (1.8mt).

Based on the latest three months data in the table above, this closure would theoretically raise LWC operating rates from 65% to around 82%. However, demand will most probably fall further (that is our forecast, at least!) before the end of 2025, the actual operating rate at the start of 2026 is likely to remain below 80% without additional capacity management in the region.

The worry is then that, as the year progresses, the over-capacity worsens, which combined with the SC magazine situation – as well as in other publication papers – makes the situation continually precarious for mills; effectively caught between a rock (falling demand/low operating rates) and a hard place (often high or rising costs).

Paper Mill Closures

In other mill news, SAPPI (Kirkniemi – Finland) and Norske Skog (Skogn – Norway) have begun producing Uncoated Mechanical (UM) Book paper grades to diversify their offerings and mitigate against falling production in traditional paper grades.

More details on specific paper demand drivers, such as European Printer Shipments, Magazines, Books, the Mail sector, Retail marketing, etc…, please see our latest European Woodfree Paper Market Forecast and/or our Global Monthly Paper Market Monitor.

Cartonboard Industry Outlook

In the packaging sector, global cartonboard demand has been fluctuating in the 0% to +1% range since the start of this year. This follows a period of recovery in 2024, which came after a very weak, destocking-led market in 2023. For a detailed forecast on what to expect for the rest of this year and beyond, see EMGE’s Cartonboard Market Outlook 2030 forecast report for a unique scenario.

Containerboard Industry Outlook

In the global Containerboard sector, mill operating rates have been hovering in the low 80%s for the past 2+ years, but the regional variations are stark. While North American mills battle to keep supply tight through the permanent removal of over 2 millions tonnes of capacity this year, China continues its huge expansion plans. But what does the future hold for Containerboard supply and demand in the coming years? EMGE’s Containerboard Market Outlook 2030 forecast may offer some possible answers.

Digital Transformation Effecting the Paper Sector in the UK

The UK’s government tax department, HMRC (His Majesty’s Revenue and Customs), has launched a new “Transformation Roadmap” for its PAYE (Pay As You Earn) service, transitioning towards digital and AI and away from paper. This initiative is expected to affect mills, agents, and printers in the printing and writing paper sector, as it covers approximately 35 million taxpayers.

Its own estimates are for a £50m saving and it also states that 90% of current interactions are already digital. HMRC said that paper post provision will remain “for critical correspondence and for the digitally excluded”. Another blow for paper…

Pulp and Paper Price Instability Ahead?

When we talk about continuing uncertainty for pulp and paper market in the months and years ahead, we have to place that in the context of massive global instability worldwide. One guide to economic uncertainty is the price of gold (/ounce); following the 2008-09 financial crisis, the price of gold rose from below US$500/oz to nearly US$2000/oz (2011-2013).

After several years oscillating between $1,200-1,300/oz, it started rising just before Covid (2019) and peaked below $2,000/oz between August 2020 and November 2023.

Since the last conflict erupted in the Middle East, the price has rapidly climbed to nearly US$3,500 in recent weeks!

Latest EMGE Paper Consultant Reports

This article gives an overview of the paper, pulp and package market sectors. Comprehensive pricing details and forecasts can be found in the following reports.

https://www.emge.com/world-containerboard-market-forecast

https://www.emge.com/world-cartonboard-market-forecast

https://www.emge.com/reports/forecast-reports/european-woodfree-forecast