1. GENERAL ECONOMIC SITUATION - 2002
While the year 2002 began with high hopes on the economic front, prospects of a clear upturn of the general economic situation disappeared after some weeks as the main economies in the world were experiencing a decrease in their growth rate. As a consequence, economic growth in France slowed in comparison to 2001. GDP rose by 1.0 percent during the year. Nevertheless, this growth rate, lower than 2001's, is still over the average growth rate of the European economy (0.8%).
The weakness of the growth rate in Europe, the main partner of the French economy, lead to less dynamic exports. Moreover, uncertainty and lack of visibility, implied by low demand and the fall of the financial markets, put industrial investments under pressure. Household consumption remained the only driver of the French economy.
The consensus view among economists is that the French economy will experience a higher growth rate in 2003 (1.5% - 1.7% GDP growth), the upturn taking place in the second half of the year. However, political, economic and financial uncertainties are still too high at the beginning of this year to draw a clear picture of what will occur in the next months.
Key indicators (% change)
2002* | |
GDP |
+ 1.0 |
Household Consumption |
+1.8 |
Business Investment |
- 0.8 |
Consumer prices |
+1.9 |
Unemployment rate (%) |
9.0 |
* estimated
2. PERFORMANCE OF THE PAPER AND WOOD INDUSTRY - 2002
a. Consumption, production and trade
After the setback in production of the year 2001 (-3.8%), which was an adjustment after two years of growth higher than the long term tendency, the French production of paper and board in 2002 grew by 1.5 percent, reaching 9 770 thousand metric tonnes.
While the internal demand was still weak, French paper and board producers found sources of growth mainly in the international markets, and more particularly overseas (e.g. outside of the European Union). Deliveries of companies established in France to the French market decreased by 1.5 percent, whereas their exports increased by 4.5 percent in 2002.
In this general context of moderate growth, the different grades experienced various evolutions over the year:
• The production of graphic papers rose by 0.5 percent. As advertising investments were still low in 2002, newsprint paper production stood 2.0 percent back from 2001 levels. Printing and Writing paper producers benefited from strong exports, their production rising by 1.3 percent. Apparent consumption of these graphic grades felt by 1.8 percent in 2002, however, the annual average growth rate over the last ten years is still near 2.5 percent.
• Packaging grades experienced a 2.6 percent growth rate, benefiting from both a relatively good tendency in the French general goods consumption and strong exports. Different evolutions were recorded depending on the grades: cartonboard grew by 6.8 percent, corrugating case materials by 2.1 percent and wrappings dropped by 2.2 percent. French apparent consumption of packaging grades decreased by 2.0 percent, but the average annual growth rate since 1992 is still at 1.2 percent.
• New capacities and a relatively strong market implied an 8.4 percent growth rate in the production of hygiene papers. The French apparent consumption of this grade increased by 6.7 percent in 2002, the annual average growth rate being at 4.1 percent over the last ten years.
The French market was supplied 56 percent by foreign producers, whereas 51.4 percent of the paper being produced in France was exported.
Main French figures - 2002 (preliminary)
`000 tonnes* |
Variations 02/01* |
Variations 01/00 | |
Production |
9 700 |
1.5% |
-3.8% |
French shipments to the French market |
4 751 |
-1.5% |
-3.6% |
Exports |
5 019 |
4.5% |
-3.9% |
Apparent consumption |
10 791 |
-0.8% |
-4.5% |
Imports |
6 040 |
-0.2% |
-5.2% |
Source: COPACEL
* estimated
Regarding the different markets19 to which paper produced in France were exported, while the European Union was still the main area (79% of the exports), the most dynamic markets were overseas as exports to North America rose by nearly 25 percent, exports to Eastern Europe grew by 17 percent and exports to Asia increased as well.
Regarding imports, the European Union is the main partner with 88 percent of paper products imported in France coming from this region. Imports from Eastern European countries rose by 2 percent, whereas North American and Asian exports to France declined in 2002.
b. Financial performance
While paper and board production grew during 2002, the general economic slowdown observed in France and Europe implied a pressure on average prices over the year compared to the previous year. The INSEE general price index on Paper and Board fell 3.7 percent in 2002 compared to 2001. The global evolution of the price index over the year reflected the evolution of the demand for different grades. Relatively stable over the first months of the year, the prices rose moderately at the end of the first semester as demand became a little stronger. Beginning in September, the slow down of the price index was implied by weaker demand.
As a consequence, the global turnover of the industry was reduced by 2.3 percent, to 6.4 billion euros. This figure is still in line with the long term tendency.
Raw material prices reflected the general economic situation as well, with NBSK prices continuing to decrease in the first months, before a small rise during the summer, and a new decrease in autumn and winter. However, this evolution in US dollars was completely offset by the appreciation of the euro throughout the year. (pulp price in euro falling down little by little over the year).
French recovered paper prices were very stable over the first four months of 2002. At the turning point of the summer, a strong rise of Asian exports of European recovered paper led to a sharp rise of prices, but as the situation cooled down prices returned to the levels registered at the beginning of the year.
c. Outlook for the future
At the beginning of this year, any forecast is extremely difficult as the uncertainty over the general economic outlook is still very high. However, low inventory levels at the beginning of the year enabled the French paper industry to be relatively optimistic of its opportunity to benefit from any upturn in the general economy.
3. ISSUES OF PARTICULAR INTEREST
a. Illegal logging
France supports the position and action of Confederation of European Paper Industries (CEPI) regarding this issue, as exposed in following statement (August 2002): "CEPI, which represents the interests of the European pulp, paper and board industry, commits itself to the sustainable management and use of forest resources and the implementation of practices and measures to combat illegal logging and trade of illegally harvested wood".
b. Environmental aspects
The French pulp and paper association, COPACEL, participated in the foundation of the Association des Entreprises pour la Réduction de l'Effet de Serre (AERES) in September 2002. Based on voluntary agreements and supported by the French government, the member companies committed themselves to inform the body of their progress regarding emissions reductions.
c. Progress in sustainable forest management and certification
The French forest certification system was acknowledged by the PEFC Council in July 2001. More than 1 million hectares of French forests are now PEFC certified and that area that should be significantly extended in the coming months.
19 The market split and market evolution is based on 10 months figures