Nordic Paper Mill Closures Accelerate as Covid Decimates Demand

Nordic forestry companies are shuttering paper machines at an unprecedented pace as the Covid-19 pandemic accelerates a long-running decline in demand.

Eight machines across the regions 19 paper mills will close by the end of the year, resulting in the loss of almost 2,000 jobs, amid a slump in physical paper advertising and newspaper purchases.

The closures follow a 29% decline in second-quarter sales for the Nordic paper industry, according to analysis by Danske Bank, and worse may be yet to come.

“If weak demand for paper persists, further cuts of supply are needed to balance the market,” Axel Persson, an analyst at Pareto Securities, said in emailed comments. “More paper mills will need to be shut, sold or converted to make other products.”

Decade of Declines

Western European printing & writing paper demand has fallen steadily

Source: Pulp and Paper Products Council via Bloomberg

2020 data through August

Svenska Cellulosa AB is shutting the last three paper machines at its Ortviken mill in Sweden. Demand is unlikely to return to levels seen before the virus outbreak, Chief Executive Officer Ulf Larsson said. Thats led him to invest 1.45 billion kronor ($165 million) in chemically pre-treated pulp manufacturing.

Over in Finland, UPM-Kymmene Oyj will permanently shut its paper machine in Kaipola, having already closed, sold or converted 17 paper machines since 2013.

Stora Enso Oyj meanwhile is reducing its paper-making capacity by about 25% this year having decided to permanently stop or convert machines in Oulu in Finland and Hylte in Sweden.

Stora Enso will report third-quarter earnings on Tuesday. UPM and SCA will release quarterly results on Oct. 27 and Oct. 30, respectively.