Jul 05, 2006. /Lesprom Network/. CEPIPRINT demand and supply statistics are published annually by CEPIPRINT, the Association of European Publication Paper Producers. A combination of revised figures and generally slower growth has pulled capacity development down to an average of 2.6%/year in the 2000-2005 period. This is slightly behind the development of 2.8%/year seen in 1990-2000. Total annual growth for European mechanical publication papers stood at 2.2% last year, down from 3.4% in 2004. Total capacity for the sector came to 28.9 million tonnes, up slightly from 28.3 million tonnes in the previous year. Coated mechanical reels has grown the most in the past five years with an increase of 4.0%/year taking total capacity to 10.7 million tonnes. In the same period, the capacity of uncoated mechanical and SC magazine has increased by 3.6%/year and 2.4%/year respectively. The newsprint sector has the lowest average capacity development over the 5-year period at 1.0%/year. In 2005, a few major projects had direct impact on European capacity. Under new investments, two brand new machines started up towards the end of the year - Stora Enso’s PM 12 at Kvarnsveden in Sweden, which has a capacity of 420 000 tonnes/year of SC paper and Holmen Paper’s new PM 62 at its Madrid mill in Spain with a newsprint capacity of 300 000 tonnes/year. The startup of the two new machines led to either closure of old capacity (Stora Enso) or partial conversion of capacity to other grades (Holmen Paper). In addition, there was the ramping up of Leipa Georg Leinfelder’s 300 000 tonne/year coated mechanical PM 4 in Schwedt, Germany, which started up in August 2004, and the 180 000 tonne/year newsprint PM 6 started up by Papresa in Spain in December 2004. Both machines had significant bearing on the market in 2005. There were also some rebuilds, closures and changes in swing machine production which contributed to fluctuating capacity figures last year. The rapid rise in deliveries seen in the mechanical publication papers sector in 2003 and 2004 did not continue through 2005. From a healthy 7.0% in 2003 and 6.5% in 2004, last year saw a decline in shipments from Western European producers of -1.2%. This figure is lower than the 1.8%/year average growth seen in 2000-2005 and is well below the increase of 4.1%/year recorded in the previous decade. The only sector to show a positive trend in terms of deliveries last year was coated mechanical reels. Shipments rose by 139 000 tonnes taking the total to 9.5 million tonnes. The other three sectors all reported negative development in deliveries for 2005. Newsprint suffered the greatest contraction of -218 000 tonnes with uncoated mechanical down by -137 000 tonnes and SC magazine by -101 000 tonnes. There was, however, one major event in 2005 which can help to explain the slowdown in delivery figures – the Finnish strike and lockout. Between May and June, Finland’s entire paper and board industry took unplanned downtime due to an industrial dispute, which lasted for 7 weeks. According to the Finnish Forest Industries Federation (FFIF), this had the effect of removing some 1.9 million tonnes of annual output in Finland. Output for the year was -12% down on previous. The impact of the reduced supply was felt across all the mechanical publication grades in the middle of the year. Last year brought another increase in excess capacity, which reversed the positive trend seen in 2004. In 2005, oversupply rose to 2.8 million tonnes up from 1.8 million tonnes in the previous year. The delivery-to-capacity balance has fallen back to 90.5% against 93.6% in 2004. It is worth remembering, though, that the labour disruption in Finland made a considerable dent in the amount of tonnage available to ship in the middle of the year. CEPIPRINT estimates the consequences of the Finnish lockout in the magnitude of approximately 1.15 million tonnes or 4% of the Western European annual mechanical publication papers capacity. When correcting for this, the Western European balance for mechanical papers would have been well above 94%. An additional effect of the Finnish labour dispute was the contraction of Western European exports caused by additional capacity constraints. The result was a slump of -3.1% in 2005 that reversed the positive trend seen in 2002-2004. The newsprint sector saw the largest market contraction in tonnage terms, with a decline of -189 000 tonnes. Uncoated mechanical was the quality with the biggest drop in percentage terms with -17% or -132 000 tonnes. On the other hand, coated mechanical reels enjoyed strong growth in exports last year with an additional 193 000 tonnes being shipped overseas. North America was the main destination for the extra tonnage to make up the shortfall from a 9-month strike at UPM’s Miramichi mill in Canada. Last year may have been a weaker period for exports, but overall, average annual growth was still a respectable 9.8%/year in 2000-2005 compared to just 3.1%/year in 1990-2000.