GERMANY

Verband Deutscher Papierfabriken e.V.

General economic situation of the country - 2000

The German economic growth in 2000 was at its highest level since reunification. The GDP rose 3.1 percent in real terms, which is twice as high as the average for the last decade.

Supported by global economic recovery and the weak Euro, exports made a decisive contribution to growth, rising in real terms by 13 percent. Investments in equipment remained high and increased by 9 percent. Private consumption was weaker than in the previous year, with only a 2 percent increase.

The economic upswing slowed slightly over the course of the year. While there was no change in strong foreign demand, a downturn in domestic demand was clearly evident in the second half of the year, when the high oil prices had the effect of curtailing consumer purchasing power.

The majority of forecasts for 2001 assume growth in GDP of 2.5 percent. A slowdown in the global economy is likely to have a negative effect on further economic growth. In addition, a sharp rise in the value of the Euro will curb exports. At the same time, tax relief and declining oil prices will boost private consumption.

Performance of the paper and wood industry - 2000

Consumption, production, trade, financial performance and investment

In the year 2000, German pulp mills produced 873 000 tonnes of pulp and thus 23.7 percent more than in the preceding year. Paper-grade pulp for 3.7 million tonnes were imported to Germany, while only 361 000 tonnes were exported.

The positive developments in the German paper industry during the second half of 1999 continued in 2000. The industry was pleased to note that the much feared slump in demand during the summer months did not occur in respect of the majority of paper grades. The order books were well filled and the paper machines more or less operating to capacity throughout the year. Supported by exports and positive domestic sales, paper and board production rose over the preceding year by 8.2 percent to 18.1 million tonnes. The positive demand situation in Germany also led to a rise in imports of 6.7 percent to 9.6 million tonnes. German exports profited from an increase in demand on world markets, especially the emerging markets in the Asian region and in eastern Europe, rising 8.7 percent to 8.7 million tonnes. Consumption also increased by 7.2 percent to 19.0 million tonnes. This was associated with an increase in per capita consumption in Germany to 232 kg.

There were several marked advances in the price of raw materials during the first half of the year. The strong dollar further intensified the upward trend in the pulp segment. The price of recovered paper increased by two and three-figure percentages, depending on grade, though this development eased off during the second half of the year.

Paper prices showed a delayed response to the increase in raw materials prices. In 2000, the producer price index rose by 11.6 percent. It is thus still 3 percent lower than its 1995 level.

Two-thirds of the almost 22 percent growth in sales in the paper industry to DM 25.1 billion was due to higher revenues and one-third to an increase in the volume of sales. Overall, the series of good years for the paper industry of 1998 and 1999 continued in 2000.

In 2001, there will be another rise in production in the German paper industry. Output will be increased at the production facilities that commenced operation in 1999 and 2000 and the capacity at other facilities will be expanded. Further growth in exports is anticipated.

Fibres for the production of paper and board

^a estimated

Paper and board

^a estimated

Issues of particular interest

Environmental aspects such as carbon sequestration and substitution (Kyoto Protocol)

The voluntary undertaking on the part of German industry was revised in November 1999. Taking 1990 as the base year, German industry made an undertaking to realize a 35 percent reduction of specific CO₂ emissions by 2012.

In 1998 already, the German pulp and paper industry surpassed its original voluntary undertaking to reduce on the basis of 1990 CO₂ emissions by 22 percent by 2005. In light of this fact, in 2000 the undertaking was extended to 2012 within the scope of the `Chapeau Declaration of German Industry', and also envisages a 35 percent reduction in CO₂ emissions.

Improvements that have been realized to date are predominantly due to the following specific measures:

_ Improvement of energy efficiency at production facilities and industry-owned power stations, especially in the new Länder.

_ Construction of new industry-owned power stations, the majority in the form of cogeneration-based combined cycle plants, especially in the new Länder.

_ Substitution of coal and fuel oil with gas.

_ Increased utilization of pulp and paper residues for power generation. Thus, power generation from fossil fuels is substituted by power generation from residues that accrue during the processing of wood in the pulp and paper manufacturing process.

_ Substitution of power-intensive with power-saving raw materials - utilization of higher quantities of recovered paper through increasing the recycling rate.

The German pulp and paper industry will continue with the consistent realization of all possible improvements to realize the envisaged target.

Progress in sustainable forest management and certification

To date, 199 447 ha of forest land have been certified in accordance with the Forest Stewardship Council (FSC) guidelines in Germany.

In six German Länder, 3 305 980 ha are certified in accordance with the Pan European Forest Certification Scheme (PEFC) rules. Three more Länder have voiced their support for PEFC as a certification system.