9 October 2020
Sergey Pondar: «Demand in the newsprint paper market will be restored by the end of this year»
Sergey Pondar, CEO of JSC Volga, told the Timber Industry what is occurring in the paper producing industry within the country and around the world as well as shared the company’s plans and development perspectives. Read the full version of the article in the magazine “Timber Industry” (№ 7-8, 2020).
The Coronavirus Pandemic influenced the development of the world’s newsprint paper markets. China was the most aggressive about implementing isolation measures of the contaminated parts of the country. That is why it became the first one to lift restrictions, which were imposed in February and March. However, while China was closed and the country’s production capacity was gravely reduced, a large number of goods, which were usually transported through China, were halted. It influenced the exporters’ logistical costs in March, April and May. Currently the Chinese newsprint paper is actively developing, the industry is working. However, it is overwhelmed with export. Due to the fact that the restrictions in other main directions of newsprint paper sales – Europe and India – are not yet lifted, the producers reoriented their export to newly opened China, which caused strong competition in this market.
Europe’s market was gravely influenced by Coronavirus in April and May. At that moment it fell to 60-70% compared to the corresponding period in 2019. However, in the late May the market has already begun to recover, as the restrictions were gradually being lifted. In June and July, the level of newsprint paper consumption reduced, compared to that of the previous year, but with regard to April and May it is a positive trend. In first two summer months the market recovered to 90% of the previous year’s level.
The newsprint paper demand recovery will be facilitated by the lifting of restrictions in Europe and India, as well as by the resumption of international traffic. We are anticipating a backlog of demand for pulp and paper industry products in general, including newsprint paper. Of course, it will not cover a shortage of commissions, which appeared in the second quarter of this year and partially affected the third quarter. But at the end of the third – at the beginning of the fourth quarter we are expecting the return to the pre-pandemic trend.
Despite the temporary difficulties, India remains one of the high-priority markets for us. We are actively working both with the customers directly and through trade companies with big publishing houses. In the future we are planning to supply more production directly to big publishing houses, which we used to work with through intermediaries.
From the logistical point of view Europe attracts us. It is a stable, close by market – we are situated in the European part of Russia and we can supply production to some regions by road. Also, we are not far away from the port of St. Petersburg, which ships goods to Europe. Currently a big number of newsprint paper producers are dropping out – capacity is becoming outdated, it is getting more difficult to compete in cost, including with Russian producers. These are the niches we intend to occupy. Even though we have difficulty competing in the high-speed press paper segment, due to the fact that we did not set our paper machine up to produce this kind of paper, we can provide ourselves with a comfortable market presence by supplying high-quality products in time, offering good service and competitive prices.
Also, the market of Africa is of a great interest to us. This market becomes more and more structured and organized. In order to promote our products in Africa we are actively working with trade representatives and the Russian Federation Chamber of Commerce and Industry.
In order to hold the leading positions in the world markets and keep up with the strong competition, Russian companies have to invest in modernization and capacity upgrades. JSC Volga is preparing a serious program on capacity optimization of the PMs. Also, we are planning to optimize thermomechanical pulp production capacity. Recently we’ve launched a new thermomechanical pulp workshop, outfitted with the latest equipment. Investment in the project amounted 1,5 billion rubles. The new workshop’s general capacity is about 50 thousand tons per year. With time it can be upgraded to 70 thousand tons per year. The project itself includes the possibility to double the performance of equipment to 140 thousand tons. The increase in production allowed us to reduce the production cost. Aside from that, now we can produce thermomechanical pulp adjusting to the needs of our clients. Nowadays in various markets the requirements for finished goods differ, although just a bit. Which is why we are starting to differentiate European market from Indian, Indian market from Chinese, Chinese market from African. More customized approach to the markets and the clients’ requirements will allow us to be more competitive.
Volga Press Centre
Based on materials from the magazine “Timber industry”
