These opinions were voiced at the 12th Global Outlook conference, "Finally the recovery... Now what lies ahead?" held on 14-16 November at the Roosevelt Hotel in New York.

Industry analyst and RISI senior vice president Rod Young said the strong performance of the world economy in the first half of 2004 had slipped in the second half of the year.

This was due to rising interest rates and increasing commodity prices, especially oil, which in some cases was more than 50% higher than the same period last year.

Problems were exacerbated by currency fluctuations, with a weak US dollar and a strong euro affecting all manufacturing exports.

Young said China was the biggest risk to industry at present, both in terms of planned capacity increases, and new investment plans set to come to fruition over the next two years.

As opportunities for mergers and acquisitions in Europe diminish, manufacturers will focus their attention on emerging markets.

Pyrabelisk managing director Margaret Leach said that the addition of new  countries to the EU, such as Bulgaria and Croatia, would alter the face of the European pulp and paper industry, and lead to fewer but bigger production plants.

Analyst Leach added that extra demand for printings and writings grades of some 442,000 tonnes would be generated by the growth of the Russian market.

She concluded that demand would continue to rise for coated printing papers and cartonboards, along with the need for higher quality products.

Local and export demand will justify at least five new paper and board machines within the next five years, a fact that some European manufacturers had already started to take note of.

Story by Andy Scott in New York