Renewable resource company Sappi has concluded a consultation process for the closure of its Stockstadt mill, in Germany, and has started consultations on the potential closure of its Lanaken mill, in Belgium.

"We continue to be faced with significant overcapacity in graphic paper, forcing us to take extended periods of costly commercial downtime. As the recent over-stocking by customers reduces, it has become very clear that demand will not return to previous levels.

"Combined with input cost pressure, we do not see this situation, caused by factors beyond our control, improving in the foreseeable future," Sappi says.

The company says it is also reviewing how best to reduce overall fixed, and other overhead, costs.

"The persistent global economic downturn is proving to be much tougher than anticipated, with depressed markets, geopolitical instability and weak economic growth combining to put significant pressure on Sappi, particularly in Europe," it states.

These factors prompted it, in July, to start consultations regarding the closure of the Stockstadt mill, which has capacity to produce 145 000 t/y of pulp for internal use and 220 000 t/y of coated and uncoated woodfree paper that is mainly sold into the European market. A social plan for the mill's employees has been agreed, as has an agreement for the sale of the site, which Sappi expects to be concluded in the first quarter of 2024.

The Lanaken mill has capacity to produce 165 000 t/y of pulp that is used to produce 530 000 t/y of coated woodfree paper. The mill employs about 644 workers.

Sappi states that these restructuring measures will improve utilisation of Sappi's remaining assets.

"Our strategic focus includes reducing exposure to the graphic paper segment, while expanding our presence in packaging, speciality papers, pulp and biomaterials.

"Sappi Europe is focused on building a sustainably resilient company. This requires evaluating the future of all facets of the business based on market dynamics and the market segments Sappi believes will be strongest in the future. While continuing to serve the graphic paper market through its competitive assets, the overall priority of the European business will be to grow the packaging and specialities segment, specifically within flexible packaging, functional papers, self-adhesives including glassine, labels, as well as dye-sublimation categories," Sappi says.