Sustainability, energy concerns and further innovation – these are among key trends surging in the global pulp, paper and cardboard industry as we kick off 2025.
Tomas Anderson, head of key accounts at RISE Research Institutes of Sweden, notes that there’s still a focus on energy reduction in processing where possible and continued R&D into plastics replacement. Both these trends will continue to be driven by consumer demand and regulatory reform.
“The effort to replace plastics with waterproof fibre-based packaging that is relatively easy to recycle or is compostable is really pushing this industry to the brink,” he says. “It’s fairly easy to create water-resistant packaging, but it’s a very difficult thing to create a finished waterproof product that is recyclable or compostable. There are lots of new materials being created that are technically compostable or recyclable, but not easily, and when you look at how to recycle them or what it takes to get them to compost, there are already ten other materials that have been created. We are in a boom for this, and we’ll see what comes out of it.”
Sanna Sosa, senior principal at AFRY Management Consulting.
Sanna Sosa, senior principal at AFRY Management Consulting, agrees that innovative packaging materials and sustainability are continuing trends.
“Progress to decarbonize packaging, and the pulp, paper and packaging sector overall will continue,” she says. “This has been gaining momentum for several years, and companies across the global pulp and paper industry sectors are working on their decarbonization strategies. The carbon credit markets are developing, carbon capture and sequestration technologies are developing, and biomass has great potential as a platform for new products and sustainable solutions for reducing carbon emissions in pulp and paper.”
Sosa also notes that new markets and demand for biomass are developing particularly fast – for example, numerous projects to develop sustainable aviation fuels (SAF) such as Simply Blue in Nova Scotia and Pathway Energy in the U.S. working with the U.K.-based pellet manufacturer Drax Group to use biomass pellets in jet fuel production. Sosa believes that the North American pulp and paper sector could take an even more progressive approach in exploring valorization opportunities within by-product streams and biomass processing capabilities.
M&A activity
Pulp, paper and packaging sector mergers and acquisitions (M&A) was another big trend in 2024, and Sosa notes that this may continue into 2025, although on a much-reduced scale. In any case, the 2024 developments will have lasting impacts on the sector.
“We have never seen mergers of the scale we saw last year,” Sosa explains.
In April 2024, International Paper announced a merger with DS Smith, and in July 2024, Smurfit Kappa completed its merger with Westrock, creating two mega-corporations that will compete in the global sustainable packaging solutions market.
In December 2024, Jackson Wijaya, owner of Domtar (acquired by Paper Excellence in 2021), announced that he would take over ownership of Asia Pulp and Paper from his father, but that the companies would remain independent and not merge. Another development in 2024 was the purchase by Brazil-based Suzano (the world’s largest pulp producer) of Pactiv Evergreen’s pulp integrated cartonboard mill in Arkansas and coating operation in North Carolina. The Pine Bluff mill in Arkansas manufactures liquid packaging board and cupstock, and will add about 420,000 metric tonnes of integrated paperboard to Suzano’s annual production capacity. This will make Suzano a major North American supplier of papers used to produce liquid packaging board.
Sosa explains that the first step after M&A is the chase to deliver the aimed synergies, which often includes keen focus on driving costs savings across the organization and operations.
“In addition, M&A in general may initiate further strategic reviews,” she says. “This may cause further developments in terms of spinning off parts of the merged businesses. It may also spur other mergers and acquisition with expectations of steadier price levels overall, or create positive market structures and dynamics that may attract further activity.”
Energy concerns
Returning to Europe, Anderson notes that energy continues to be a large concern for the pulp and paper industry.
“The Ukraine conflict has put a lot of emphasis on energy consumption and securing natural gas and electricity,” he says. “It’s a daily worry. Looking ahead, not only is the energy supply not fixed, the electrification of society itself is stumbling in Europe, specifically. On national levels, the readiness varies significantly as all countries have unique potentials – just look at the difference in available biomaterial supply between the Nordics and the south of Europe creating legislative headaches. Add the new taxes soon to be imposed on CO2 emissions in production processes, and something will need to happen for all players and industries concerned. Fortunately, the boom mentioned, and new accelerative R&D practices coupled with the use of AI will enable a faster development up the technology readiness level ladder, if the public finding and risk capital continues its focus on the greener side.”
Efforts to reduce energy consumption in pulp and paper production in Europe (but also in North America) will continue, in Anderson’s view, in order to control costs but also address ever-stricter regulations.
He also expects to see more innovative community initiatives to use waste heat from pulp and paper plants. One successful venture that has received a lot of recent attention is located in Frövi, a small town in central Sweden, where a new greenhouse the size of 40 football fields is producing tomatoes using heat from warm water piped from the adjacent papermill. The water returns to the mill for re-heating. The greenhouse employs over 100 people and expects to produce 8,000 tonnes of tomatoes per year, 10 per cent of Sweden’s total demand.
Markets and supply
Anderson and Sosa predict that global market growth for the pulp and paper industry will remain soft in 2025, and pulp and paper prices will be stable. “We are already in an economic downturn,” says Anderson, “with many political uncertainties ahead and the populations of many countries that are not growing. Inflation has put a big dent in purchasing power as well.”
Sosa notes that there were high hopes for the market in 2024, and demand did turn slightly positive last year, but not as much as was hoped.
“The de-stocking has continued to be a trend longer than expected,” she says. “Companies want to preserve cash flow and are running lower inventories. Consumer spending in the U.S. has been surprisingly good but the manufacturing activity index has been low all year.”
One area with strong growth in North America is molded fibre products, which can substitute, for example, EPS foam and plastics in food service and take-out packaging, among other applications. Sosa notes that several U.S. states have banned traditional EPS plastics in food service packaging.
“We estimate about one-third of the North American population being covered by EPS foam bans today, and we expect that to grow to 50 per cent by 2030,” she says. “So, there’s a lot of investment activity in molded fiber space, as well as in lightweight paper packaging and bags providing solutions for plastic substitution.”
Anderson also expects the Chinese market to remain strong and robust partially due to their efforts to replace plastics with fibre products and recycling fibre products, but also because China ships so many goods.
“This is despite the fact that China has a looming population crisis,” he says. “But how the tariffs under President Trump will play out is yet to be seen and there are many other levers that could affect the industry in China. But I think it’s safe to say overall that the industry will stay robust and they will continue on their sustainability journey. They are large, and it takes time for them to change, but they are changing.”
Looking at pulp supply, Anderson predicts that the long-term global trend towards using short fibres will continue in 2025, with some big mills in the Nordic countries continuing to use softwood.
Changes in Canada
There were some mill developments in Canada in 2024, for example, Paper Excellence “indefinitely” shutting down paper production at its Catalyst Crofton mill in B.C. in January, but keeping the pulp side of the mill in operation, supporting 400 workers. In the first quarter of 2025, Paper Excellence is expected to present a feasibility study of building a new $1.4-billion mill in Liverpool, N.S., the location of the Bowater Mill that was shuttered in 2012.
In Anderson’s mind, Canada’s pulp and paper industry should focus on the best use of materials.
“You still have trees being destroyed by the Mountain Pine Beetle and we have a similar beetle here that is moving northward,” he says. “We should work together to find value out of this wood. At the same time, your Red Leaf Pulp wheat straw mill project is showing the world that alternative feedstocks can replace wood in areas where there’s an alternative feedstock available. There is also a tissue mill in Germany using wheat straw. I also think it’s very positive that production of lignin for a variety of purposes is growing in both Canada and Europe, gaining additional value from the paper-making process.”
Sosa notes that replacement of plastics by fibre products in Canada is a little uncertain, as it is globally. The use of single-use plastics is presently banned in Canada, but that ban could be overturned by a new government after the coming election. She notes that in the U.S., Coca-Cola has made waves recently by scaling back its plastic replacement promises, which may create uncertainty relating to the speed of change in the packaging sector.
“As we’ve mentioned, the challenge is to find the coatings that are recyclable or compostable and come from renewable sources,” she says. “There are now many startups and we do see for example nanocellulose and seaweed coatings that are compostable, but cost is the hurdle for these new materials. The other hurdles are that the new coatings and barriers may require changes in equipment in the manufacturing process, and there is the need to maintain manufacturing speed. We will see if there are any big breakthroughs in 2025.”
