The implementation of the closure plan by Europe's largest cardboard group may become a catalyst for the industry

Smofi Capa plans to close its cardboard factory located in Le Pont é in southern France. The company stated that the Smofi Capa France company has submitted a restructuring plan to union representatives, which envisions the closure of the Smofi Capa Alpha Avignon factory.

The company stated that due to the development of the market, Smofi Capa France has fundamentally reviewed all activities in the past few months. Smofi Capa announced that it is necessary to cope with market difficulties and maintain competitiveness, therefore restructuring measures are inevitable. The annual output of the Alpha Avignon factory is 75000 tons, producing brown recycled corrugated cardboard materials, mainly imitation kraft cardboard. The factory has about 60 employees.

Smofi Capa has numerous factories in France that produce cardboard, corrugated cardboard, corrugated packaging, other packaging paper and cardboard, as well as recycling and distribution centers. In addition to Alfa Avignon, the company also operates a juniper cellulose paper mill in the country, mainly producing white faced kraft cards, white faced imitation kraft cards, and brown kraft cards; Ressel Paper Factory mainly produces imitation kraft cards; Sailat Paper Factory mainly produces imitation kraft paper and recycled corrugated paper.

The background of this closure plan is the significant decrease in demand for corrugated cardboard and corrugated box materials throughout Europe over the past 12 months. In addition, a large amount of production capacity for recycled corrugated box materials has recently been launched on the market, and more production capacity will be put into the market in the near future. Therefore, the paper production capacity that the market can supply far exceeds the market demand.

At present, paper companies have adopted a production reduction approach in response to this market situation. However, considering that production capacity has not yet been put into the market, the market consensus is that without the closure of production capacity, it is almost impossible to achieve supply-demand balance. According to market estimates, Europe is reducing production by about 3 million tons this year to prevent further inventory increases. It is speculated that this is also the approximate level of overcapacity in the current European corrugated box material market.

Especially in France, more production capacity for recycled corrugated paper will be launched in the near future. Norske Skog announced that the start-up of the No. 1 paper machine after the reconstruction of the Gorbe factory in France will be postponed, and due to delivery delays, it will be postponed again from the second quarter of 2024 to the second half of next year. In addition, the net investment of the renovation project will increase from 265 million euros to 300 million euros, mainly due to the increase in procurement prices of goods and services and delays in equipment delivery. In July of this year, the company will postpone the start-up to the second quarter of 2024 in order to be consistent with the commissioning of the new biomass boiler. The rebuilt paper machine was originally scheduled to start in the fourth quarter of this year.

The Gorbe project aims to transform the production of No.1 paper machine from newsprint to recycled cardboard. The rebuilt paper machine capacity will reach 550000 tons per year, and Norske Skog expects the machine to reach 95% of full load operation within two to three years after startup. Machine 1 previously produced 250000 tons of newsprint per year and ceased production in the fourth quarter of 2022 to begin reconstruction.

Norske Skog explained that the paper machine renovation at his Gorbe factory was extensive and carried out during a period of high inflation and global supply chain challenges. The delivery was delayed and had related consequences, so it is necessary to modify the project schedule. The company completed its first renovation project at the Brooke factory in Austria, renovating the No. 3 paper machine to produce cardboard boxes. Production resumed in the second quarter of this year, with an annual output of 210000 tons of recycled corrugated paper and imitation kraft cardboard.

In the second quarter of this year, Belgian packaging and paper group VPK began production at the rebuilt Alizai factory, where Double A had previously produced uncoated paper without wood pulp. The paper machine production capacity will reach 500000 tons per year, most of which will be further processed within the VPK group.

There is also a renovation project at the former Fen Ouhui Chuanda Blai Chapel Factory: Fiber Excellence and Veolia plan to transform the newsprint paper factory into recycled cardboard boxes. Last year, the two companies announced that the annual production capacity of the factory would reach about 400000 tons, and it would be completed and put into operation no later than 2026.

Heinzer Lakitchengladbach (with an annual production of 500000 tons in the second quarter of 2024) and Model Ellenburg (with an annual production of 620000 tons in the second quarter of 2024) are building new production capacity for recycling corrugated cardboard materials. Modern Karton's Shawton factory in the UK is expected to start production in early 2025, with an annual production capacity of 750000 tons.

After completing the upgrade measures, Mayr Melnhof (MM) has successfully completed the renovation of its KM 3 paper machine at the Kolichevo factory in Slovenia, and cardboard production has been in operation since October 31st. The production of this machine stopped at the end of August to upgrade the drying section and rewinding machine. The spokesperson stated that due to the upgrade measures taken, the production capacity of the machine has slightly increased compared to the previous 225000 tons/year, but did not disclose further details. The production of this machine is currently proceeding as planned.

In addition, the UK's main union Unite has announced that workers from Desma Logistics, a wholly-owned subsidiary of Desma, will go on strike before Christmas, demanding payment of wages. The initial 7-day strike action will take place between November 20-27. The union added that if the dispute is not resolved, the strike action will intensify throughout December.

Drivers headquartered in Langston, Cornwall, Sittingburn, Kent, Evanmouth, Bristol, and Tuxford, Nottingham have rejected a 5% salary proposal, stating that it represents a significant reduction in actual wages.

This strike will affect Desma's customers such as Amazon, Direct Wines, Cadbury, and Hariburg. The driver also provides delivery services for British Gypsum, VPK, Cepac, Board 24, and Sinat Portbury, and collects recyclables at distribution centers in Tesco, Morrisons, Aldi, Lidl, Coop, ASOS, Biffa, and Veolia. Unite stated that a large amount of uncollected cardboard recycling and accumulation will cause serious disruptions to the operations of these companies. (Source of this article: Carton Net)

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