A further squeeze on uncoated paper supplies appears likely following a ‘major incident’ that has put one of Stora Enso’s paper machines out of action for at least six weeks.
The incident involving PM2 at Stora Enso’s Veitsiluoto mill in Finland happened earlier this month.
PrintWeek understands that one of the drying cylinders on the paper machine came off its axle.
In a letter to customers, Mikko Antsalo, senior vice-president and head of sales Stora Enso Paper said: “The paper machine had serious damage in the drying section, which requires replacement of several cylinders and other equipment as well as extensive electrical works.”
No-one was injured in the incident.
The extent of the damage and likely disruption has caused the group to declare a ‘force majeure’ situation. “It is evident that we will need to cancel, reduce or postpone orders across all Office Paper units as a consequence,” the letter stated.
Veitsiluoto has an annual capacity of 790,000 tonnes of wood-free uncoated paper.
Sources said the PM2 line mainly makes uncoated reels that are converted into office paper, or used by envelope manufacturers.
The rest of the mill is unaffected.
Stora Enso said it would strive to fulfil customer orders from its other Office Paper lines in Veitsiluoto and at Nymölla mill in Sweden.
Kevin Smith, sales and marketing manager at EBB Paper, said: “This will just compound the short supply of uncoated paper – many people were already buying on allocation even before this.”
He said the current exchange rate between the pound and the euro was also an issue. “The very low pound to euro rate means all the European mills are selling into dollar-based markets because it’s better money. It doesn’t make the UK an attractive market for them.
“We were already looking at lead times of three months or more on uncoated paper, so this incident at Veitsiluoto will no doubt result in extended lead times and higher prices,” Smith added.
Another merchanting source added: “Although there might be a bit of a buffer with excess stock in the market, some people are definitely going to have to find supplies elsewhere, and that is easier said than done.”
Smith said EBB had already received notification of further price rises for uncoated grades in September/October.
Stora Enso had not commented at the time of writing.