Paper Industry: Tangible Recovery After the Crisis - Raw Material Costs Soaring

FRANKFURT, Germany, February 24, 2011 - Thanks to the very good development in terms of volume in 2010, the paper
industry has managed extensively to recover from the economic crisis. Dr.
Wolfgang Palm, president of the German Pulp and Paper Association, stated at
the association's annual press conference that production and sales had risen
over the year by more than 10 per cent to 23.2 million tons. This meant that
the industry had already surpassed the pre-crisis performance in 2008. Sales
rose in 2010 by 17 per cent to 14.4 billion euros, although company profits
were considerably encumbered by soaring raw material costs, which rose on
average in 2010 by over 80 per cent for recovered paper and almost 70 per
cent for pulp compared with the 2009 figures. This development was bound to
have an impact on the market and many companies announced that they would be
following other industrial sectors and increasing their prices, said Palm.

Packaging papers saw a marked increase in volume. Production in 2010 was
13 per cent higher than in 2009 and also 9 per cent higher than in 2008.
Graphic paper production also improved by 10 per cent, although it was still
5 per cent down on the 2008 level. The manufacturers of hygiene papers
registered 6 per cent growth over 2009 while technical and speciality papers
experienced a marked recovery with a 15 per cent improvement in 2010 after
the heavy decline in 2009.

The driving force within the paper industry in 2010 was foreign sales,
which performed better than domestic sales, improving by 15 per cent compared
with just 6 per cent within Germany. Western Europe remained the largest
foreign market. The industry is hoping this year for greater stimulus from
the domestic economy.

    German Pulp and Paper Association
    Adenauerallee 55
    D-53113 Bonn
    FON +49(0)2-28-2-67-05-30
    FAX +49(0)2-28-2-67-05-62
    www.vdp-online.de

German Pulp and Paper Association, Adenauerallee 55, D-53113 Bonn, FON +49(0)2-28-2-67-05-30, FAX +49(0)2-28-2-67-05-62