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08 Jan 2009 11:51
South Africa’s Sappi is discussing plans to cut European fine-paper output by a further 25% in January on the back of falling demand, with a final decision expected early next week.
The division already cut output by 20% in December.
“The plan is to cut output by 25%, but the final decision will be made next week,” Sappi spokesperson Andre Oberholzer told Reuters on Thursday.
The paper industry in much of the world has for years suffered from overcapacity, which has kept a lid on prices, while higher wood and energy costs have hit already low margins.
Producers responded with sharp output cuts last year and said they were prepared for more reductions, in new signs the global slowdown was hitting demand for basic materials.
“The market is still quite depressed and we don’t want to overproduce—we would rather take a measured downtime so we can balance supply-demand from our side,” Oberholzer said.—Reuters
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