Unpacked growth from e-commerce flows


1200bn USD


MEDIUM RISK for entreprises

  • Fragmentation

  • Internationalization

  • Capital Intensity

  • Profitability

  • Growing needs for (cardboard) packaging, in line with manufacturing and skyrocketing e-commerce activities
  • New market outlets stemming from rising middle class in emerging markets
  • Rising demand for hygiene products
  • High sensitivity to upstream pulp price
  • Ability to cope with high investment costs to ensure better production efficiencies
  • Plastics in competition against cardboard in the packaging outlet

What to Watch?

  • European pulp buyers squeezed by EUR input costs vs USD end-product prices
  • Impact of high power prices in energy-intensive parts of the value chain
  • Market shares in function of USD, EUR and Scandinavian currency fluctuations
  • Importance of recycling in the paper and board industry in light of the global energy transition

Estimated at 416 million tons (+1%) at the beginning of 2019, global paper and board production hardly grew in volume last year. It is actually the upstream pulp subsector that got away with the difficult background that the whole paper sector has had to deal with for the last few years because of disrupting digitalization. In a nutshell, till last fall, pulp producers cashed in on rising prices that saw them re-inflate their profit margins as far as possible. 

The 2019 outlook for the paper industry shouldn’t be as robust as in 2018, when it benefited from higher prices that were driven by constrained supply, too. However, despite moderate to lower price expectations, papermakers’ earnings may remain at a good enough level. Pulp prices look likely to end the first half of 2019 with the tail-end of a correction but shouldn’t be really changed over the entire year. Printing and writing paper may fare a little better despite the ongoing share loss to digital media as better prices related to capacity cuts have carried into 2019.

Global pulp prices should stay favorable in 2019 despite a larger than expected correction that emerged in China at the end of last year and started spreading worldwide. The drop is being spurred by weak fundamentals in China – by far the first outlet in the sector - as papermakers proceed with cutting output, liquidating too high inventories and scaling back buying pulp commodity. Whereas price downturns have been smaller in the US and Europe than in China, more erosion is expected by the end of H1 2019. However, Chinese papermakers cannot help but restock and we should see this occurring from next summer. So we expect paper prices in 2019 to stay between 3% and 5% more than their prior four-year averages - fortunately - above production costs depending on region. 

Newsprint and printing papers: Digitalization has been eating away at this range of papers

Corrugated papers: Dependency on the packaging outlet, which in turn depends on growing e-commerce flows

Tissue papers: Market niche of high value-added paper products enjoying resilient profit margins

Key players

Country Role Sector risk

#1 producer

#1 consumer


Sensitive risk

United States

#2 producer


Medium risk


#3 producer


Medium risk


Contact Euler Hermes

Economic Research Team

Risk Analyst


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