A further chunk of LWC paper capacity is set to disappear from the European market after Burgo announced plans to convert one of its paper machines to container board.
The Italy-headquartered papermaker has confirmed that it will reconfigure the PM9 paper machine at its Verzuolo mill from the production of coated mechanical papers to container board.
The move has been greeted with surprise in the paper trade because PM9 is the second-newest LWC machine in Europe. The 9.6m-wide machine went into production in 2002 with a capacity of 400,000 tonnes per annum.
One paper merchanting source commented: “To have one of the most modern magazine paper machines in the market being taken out when that market is so tight is significant. It’s caused a big reaction because this is not a lesser machine that’s being converted to packaging.”
Burgo said that production of container board on PM9 is scheduled to begin in Q4 2019, with the converted machine having an annual capacity of 600,000tpa.
In a statement, the company said: “Approximately three months after the start-up of Avezzano mill, Burgo Group is keeping the focus on containerboard (RCCM) and continues its diversification strategy, ranging from publishing to packaging, from printing paper to paper for corrugators.”
Its Avezzano mill had made fine paper prior to being mothballed, and, following a reinvestment project agreed at the beginning of last year, has now been converted to make recycled containerboard
The firm said that Verzuolo’s coated mechanical paper clients “will continue to be served throughout 2019” but no further details were provided. It stated: “Burgo Group continues with the implementation of its strategic plan, which also includes production options to preserve its role as an important player in coated mechanical paper market.”
Although Burgo does not sell a large amount of coated mechanical paper into the UK, the switch will cause a further tightening of LWC supply across the continent, which is likely to have a knock-on effect here, according to one paper industry expert. “Burgo’s PM9 probably equates to between 15-18% of the European LWC market. At this rate there’s going to be a disparity as the pace of paper consumption decline could be overtaken by machine closures and conversions. There will be a lot of nervous people out there,” he said.
Burgo had sales of just over €2bn (£1.8bn) last year. The group has 11 plants in Italy and one in Belgium.