The global economic crisis, the major
concern of people today, is a big issue affecting
the banking and finance system.
Will this crisis affect the paper industry ?
It might be difficult to show a direct link now,
but certainly the economical crisis has been affecting
financial systems worldwide since September
2008 causing large falls in markets that
will lead to global inflation and recession.
Most of the big industrial countries which have
already suffered over the last year will also see
reductions in their industry. Production will be
reduced and the balance between demand and
consumption will fluctuate.
For instance, newspapers which represent a
large customer to paper manufacturers will start
losing advertisers and readers to other media.
If this trend continues, paper manufacturers
will continue to see overcapacity ; requiring
more mill closures and/or more price drops, neither
of which the companies would like to face.
In the US for example, many paper producers
have already announced plant shutdowns and
capacity reductions for the next year, and despite
the planned capacity reductions, paper producers
will still produce more paper than
required in 2009, driving prices down further.
In the Middle East, market watchers believe
that the region’s economies will be affected by
this crisis and that paper supply capacity will
also outstrip demand next year. The ME economy
is also striking the alarm due to the fact
that the oil price has been fluctuating for the last
3 months. Are the paper mills in this area going
to benefit from the energy cost reduction ? (oil
price back to $50 per barrel).
On the other hand, how are we going to absorb
the wave of this crisis, and what steps can be
taken to mitigate its effects ?
The months or maybe the years to come will
provide the answers to these questions.