“The problems currently faced by the Russian pulp and paper sector are a result of a systemic crisis in this sector in many countries,” the Analytical Center's expert Aleksey Grigoriev is quoted as saying by RBC.
The period of extensive development in the Northern pulp and paper industry is over
RBC goes on to conclude that pulling the country’s pulp and paper industry out of the crisis it is currently in will require a major technological modernization and new market niches. Market players cite several reasons for the current difficulties the industry is struggling with. A key factor is that pulp and paper production in Russia consumes huge amounts of energy.
The technological problems faced by Russian pulp and paper factories are exacerbated by the gradual changes in the structure of demand in the global paper markets. “The period of extensive development in the Northern pulp and paper industry is over,” Mr. Grigoriev says, “and now paper production is slowly but surely moving to Latin America.”
According to the data the Analytical Center got hold of, dozens of pulp and paper factories have closed up shop in North America and Europe in the past several years alone. One typical example is Scandinavian forestry companies StoraEnso and UPM-Kymmene that have been closing down factories in Finland and Sweden while opening new ones in Latin America.
Furthermore, as digital media are gaining momentum and traditional newspapers are seeing their circulation shrink, demand for newsprint, the main product of Russian pulp and paper companies, is collapsing as well. Thus, the digital revolution has undermined the positions of paper manufactures all over the world, and that includes Russia.