Europe's Corrugators Vary Widely in Asset Quality and Cost-Efficiency, Finds New Study

BOSTON, Sept. 26, 2018 /PRNewswire/ -- European containerboard demand and prices have been rising in recent quarters. This upward pressure on key raw material pricing is forcing corrugators to find cost savings throughout the supply chain, including the corrugating process itself. The comparative efficiency of assets that perform this essential task is explored by European Corrugators: A Comprehensive View, a new report from RISI, the leading information provider for the global forest products industry.

"Containerboard buyers all over Europe have found themselves in a very uncomfortable position, where negotiating was largely about volumes and not prices. Converter margins declined significantly last year due to the rapid rise in containerboard prices and an inability to adequately pass those increases on to box buyers," explained Ville Henttonen, RISI Senior Product Manager for Mill Intelligence and lead author of the new study, along with European Paper Packaging Economist Gleb Sinavskis and Mill Intelligence Analyst Tero Eerikäinen.

"Although box price hikes are being implemented across Europe in 2018, we expect corrugating margins to remain under pressure as the increases will still not fully offset the rise in containerboard prices."

European Corrugators: A Comprehensive View, the first study of its kind, researches cost drivers and compares competitive metrics for 882 corrugators in 38 European countries across 12 regions. Its analysis supports useful comparisons of individual corrugating assets, as well as enabling broader insights into the relative strengths of various European countries and regions.

"Delivery is an essential cost component in the corrugating business, and the shortest average distances between a corrugator and the nearest containerboard mill can be found in Italy, Turkey and Benelux, while the Nordic and Baltic region has the longest distance, followed by the UK and Ireland," said Henttonen.

Integration of corrugators at the corporate level also varies greatly. "For example, in France every identified corrugator is owned by a containerboard producing company or group, while in certain parts of Eastern Europe only about every fourth corrugator has such integration," Henttonen said. "Across all of Europe, about 62% of corrugators and 70% of total corrugating capacity is at least partially integrated to containerboard within the same company or group."

Other key cost drivers explored by European Corrugators: A Comprehensive View include corrugator widths, capacities and "technical age." Raw materials costs in each region also influence competitiveness, in some cases strengthening the position of corrugators who may fall short according to other metrics. Each of these indicators factored into the analysis of Henttonen and his team, who also produced average, low and high cash cost benchmarks for all 38 researched countries.

For more information, visit www.risi.com/eurocorrugator.

About RISI (www.risi.com)
RISI is the leading information provider for the global forest products industry. The company works with clients in the pulp and paper, packaging, wood products, timber, biomass, tissue and nonwovens industries to help them make better decisions. Headquartered in Boston, MA, RISI operates additional offices throughout North and South America, Europe and Asia and is a subsidiary of Euromoney Institutional Investor PLC, a global business-to-business price reporting & information group (www.euromoneyplc.com).

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SOURCE RISI

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