How will the war in Ukraine affect the paper industry?

It is still difficult to assess what the overall impact of the war in Ukraine will be on the European paper industry, as it will depend on how the conflict develops and how long it lasts.

A first short-term effect of the war in Ukraine is that it is creating instability and unpredictability in the trade and business relations between the EU and Ukraine, but also with Russia, and to some extent Belarus. Doing business with these countries will obviously become more difficult, not only in the coming months but in the foreseeable future. This will have an economic impact, which is still very difficult to assess.

Particularly, the exclusion of Russian banks from SWIFT and the dramatic plunge of the Rouble’s exchange rates are likely to lead to far-reaching restrictions on trade between Russia and Europe. In addition, possible sanctions may lead many companies to halt business transactions with Russia and Belarus.

A couple of European companies also have assets in paper production in Ukraine and Russia which may be threatened by today’s chaotic situation.

As pulp and paper trade flows between the EU and Russia are quite large, any restrictions to the bilateral trade of goods could impact EU pulp and paper industry significantly. Finland is by far the main exporting country to Russia when it comes to paper and board, representing 54% of all EU exports to this country. Germany (16%), Poland (6%), and Sweden (6%) are also exporting paper and board to Russia, but at much lower volumes. As for pulp, close to 70% of the EU exports to Russia are originating in Finland (45%) and Sweden (25%).

In any case, neighbouring countries, including Poland and Romania, as well as their industries, are also going to feel the impact of the war in Ukraine, mainly because of the economic disturbance and overall instability it creates.

Post time: Mar-30-2022