Unaudited

Markets and deliveries

Demand for cartonboard increased by 2.1% in Western Europe and continued to grow strongly in Eastern Europe, reaching 3.7% growth in 2017. Demand for cartonboard in North America increased slightly by 0.6% and demand growth in Asia Pacific continued but with slightly lower pace, reaching still 2.8% in 2017.

Containerboard demand was healthy in 2017. The annual average growth rate increased to over 3% due to overall positive economic development. Demand growth of corrugated board was strong; the annual average growth rate in our European focus countries and China was over 4% in 2017.

World chemical market pulp demand rose approximately 2.3% during 2017. Softwood pulp demand was up 2.1%, and hardwood pulp by 2.7% compared to 2016. Global demand increased in all regions in 2017 except for Latin America and Europe, where the demand was flat or slightly contracting. The global increase in supply was concentrated on the hardwood pulp grade.

Global market pulp capacity rose approximately 3.2%, equivalent to 2.1 million tonnes in 2017. Hardwood capacity increased by 4.7%, mainly in Asia and Latin America. Softwood capacity increased by 1.5%, mainly in Western Europe. The overall demand-capacity balance stood at 91%, 1% down from 2016.

Strong pulp markets were further supported by low inventories and numerous unexpected disruptions on the supply side over the year, especially in the hardwood pulp grade.

Softwood sawn demand remained on good level in 2017, with slight increase in Europe and steady increase in North America. Overall market demand was favourable in all major markets except those in the Middle East and North Africa, where governments in countries like Egypt and Algeria dealt with financing issues for importers. Australian sawn wood market remained active with increased prices during the year. Japanese housing market was stable with eroding prices due to weaker yen and overstocking in some products. There was a slight increase in European sawn softwood production, driven by growing consumption in sub region and increasing overseas exports.

Structural erosion of paper demand continued in Europe and North America during 2017. European paper demand in 2017 was 3% weaker than in 2016. However, European supply and demand was more balanced especially in newsprint and uncoated magazine grades as result of substantial capacity closures and increased exports outside Europe. In North America demand declined by 6% compared to 2016. In Asia demand remained stable. Global paper consumption was 2% lower in 2017 than 2016. However, variation between paper grades is wide. Uncoated fine paper global demand was stable whereas newsprint declined by 7%.

Deliveries and production
2017 2016 Change % 2017–2016
Consumer board deliveries, 1 000 tonnes 2 816 2 507 12.3%
Consumer board production, 1 000 tonnes 2 871 2 554 12.4%
Containerboard external deliveries, 1 000 tonnes 1 023 869 17.7%
Containerboard production, 1 000 tonnes 1 333 1 221 9.2%
Corrugated packaging deliveries, million m2 1 103 1 082 1.9%
Market pulp external deliveries, 1 000 tonnes 2 135 2 068 3.2%
Wood product deliveries, 1 000 m3 5 097 4 814 5.9%
Paper deliveries, 1 000 tonnes 4 713 5 141 -8.3%
Paper production, 1 000 tonnes 4 672 5 155 -9.4%

Estimated consumption of board, pulp, sawn softwood, and paper in 2017
Tonnes, million Europe North America Asia and Oceania
Consumer board 11.0 9.2 27.9
Containerboard 32.4 31.7 80.6
Corrugated board (billion m2)1 10.0 n/a 75.9
Chemical market pulp 17.9 7.9 31.1
Sawn softwood (million m3) 94.4 97.8 n/a
Newsprint 6.0 3.0 10.3
Uncoated magazine paper 3.2 1.4 0.2
Coated magazine paper 4.7 2.5 3.1
Coated fine paper 5.1 3.7 11.7
Uncoated fine paper 7.5 7.5 20.5
1 European focus markets (Baltics, FI, PL, RU, SE) and China.
Source: Pöyry, ICCA, RISI, Numera, Euro-Graph, PPPC, Stora Enso, UNECE

The Group’s consumer board deliveries totalled 2 816 000 tonnes in 2017, which is 309 000 tonnes or 12% higher compared to a year ago mainly due to the ramp-up of the Beihai consumer board mill. Containerboard deliveries increased from 869 000 tonnes to 1 023 000 tonnes, +18%, mainly due to the ramp-up of Varkaus kraftliner mill and higher external deliveries from Heinola fluting mill. Corrugated board deliveries increased slightly to 1 103 000 m2. Market pulp deliveries increased by 67 000 tonnes or 3% to 2 135 000 tonnes due to increased deliveries in standalone pulp mills driven by Montes del Plata pulp mill. Wood products deliveries increased by 283 000 m3 or 6% to 5 097 000 m3. Paper deliveries totalled 4 713 000 tonnes, down 428 000 tonnes or -8% from 2016 mainly due to the divestments of Kabel Mill, Arapoti Mill and Suzhou Mill site.

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