European paper and forest products companies - Challenges to persist in 2014 amid shrinking market demand

Preliminary financial results reported by 6 European paper and forest product companies indicate further erosion in the profitability of their European paper operations in 2013. This is according to a report by Moody’s. For the most part, this was because lower plant operating rates, declining sales volumes combined with higher energy and, in some cases, rising distribution costs outweighed savings in labour and fixed costs from capacity reductions.
Pulp prices are likely to fall in 2014. This is because substantial new capacity in Latin America (mostly in hardwood pulp) will enter production during the next three years, adding approximately 7 million tonnes to global pulp capacity.
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