That was the message from the British Wood Pulp Association's (BWPA) Symposium, which was themed "Price cycles and cost cycles, will they coincide?" Martin Glass, senior partner with paper industry consultant EMGE, said that paper demand had increased by 6% in Europe on last year, but warned that the early part of 2005 would see a slowing down.

"Things will start to cool off but the market will still remain positive," he said.

Glass said that for the first time in three years, global capacity would increase by 2.4% in 2005 to 1.4bn tonnes over twice  as much as this year's 1% increase. This growth, he said, would be mainly in China, with some 6.5m tonnes of additional capacity set to come on stream in 2005.

Although the prospects for 2005 were reasonable, Glass warned that major downsides were becoming apparent in the market.

Three issues would affect industry performance over the next 12 months exchange rates, oil prices and the US deficits. "These are key structural issues and risks to the market, and will impact in the next three months," he warned.

Change is still possible, but is dependant on several factors, including the elections in Iraq, the change of leadership in Palestine, reaction to the re-election of president Bush, and a potential weakening of the euro.

"If these are positive, we will see confidence go up  and western European markets will improve," he said.

Story by Andy Scott