Paper and Paperboard in Egypt

Paper and Paperboard Industry in Egypt

U.S. Commercial Service Egypt Summary The 2007 Egyptian market for paper, paperboard and pulp is estimated at $1.4 billion and is expected to grow at an annual rate of 10% over the next three years. Paper and paperboard represented the bulk of the market at approximately $1.32 billion (2 million MT), while pulp made up the rest at $80 million (107,000 MT). In 2007, pulp was imported mainly from the U.S., Canada, Europe and Russia. The U.S. has the largest market share in pulp and kraft liner board, while cement sack paper is imported mainly from Scandinavian countries. Newsprint is largely from Canada, the U.S. and Finland, while magazine paper, packing/wrapping paper, writing, duplex board, printing and photocopy paper from Europe. The U.S. market share is estimated at 10%.

Egypts paper market is supplied 78% from imports and 22% from domestic sources. The main suppliers are Europe, Canada, USA and the Far East. Paper and paperboard are subject to 2-12% customs duty, with higher duties in areas that are entirely covered by local production. Pulp, printing paper, test-liner, tissue paper and recycling paper are manufactured locally. Importing from Europe is more lucrative due to the EuroMed Association Agreement, which decreases tariffs on imported paper and paperboard vis-vis importing from the U.S. However, due to the weaker US$ against the Euro, imports from the U.S. can be expected to increase.

Market Demand Egypt manufactures 22% of its paper and pulp, including all tissue paper of which it exports 31% to the Gulf and Arab countries. Egypt also produces 31% of its pulp, which caused a 27% drop in imports. This occurred, when the government built two factories (Edfu and Qena). During 2007, Egypt produced 23% of its thriving printing and writing paper market. In spite of the existence of paper mills and a growing paper-converting industry in Egypt, the country imports 78% of its paper and paperboard requirements. There are three public sector paper mills in Egypt and production of tissue paper satisfies domestic market demand, plus 31% of production is exported to the Gulf countries.

The paper converting industry is completely in the hands of the private sector. The local industry manufactures corrugated carton boxes, cement sacks, micro-flute boxes, egg and food produce

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trays, writing paper, and tissue and toilet paper. Companies currently working in this sector vary in size and structure and include large corporate entities, small companies that employ ten to 20 workers, and individual enterprises with less than five employees.

Corrugated carton boxes are manufactured from test-liner or kraft-liner-board and semi-chemical fluting board. In 2007, the market consumed 400,000 MT of test-liner board, kraft-liner board and semi-chemical fluting. Test-liner is sold approximately 10% cheaper than kraft-liner board and is used for manufacturing boxes that carry lightweight products. Kraft-liner board, however, is now used more then test-liner because of the countrys growing export market. Kraft-liner produces more durable boxes that are used to carry heavyweight products, such as textiles, and for exported products. During 2007, Egypt produced 150,000 tons of test-liner board. Virgin kraft-liner is imported mainly from the U.S., while semichemical fluting is imported from Finland and France. Test-liner board is either produced locally or imported from Eastern Europe and Germany.

The cement sack industry is dependent on cement production, which is increasing rapidly in Egypt and is expected to reach 55 million MT by 2011. Cement sacks are produced from imported kraft sack paper.

Cement sack production in Egypt is part of the cement production line. The typical cement sack is a standard package holding 50 kilograms of cement and is made of 2 or 3 layers of kraft paper 70-90 gm/square m. A modern packing machine requires kraft paper rolls of 102 cm width with standard wear and tear and burst-resistant factors. Statistics show that total cement market reached 38 million MT in 2007, of which 30 million MT are consumed locally, while exports totaled 8 million MT. This quantity requires a total of 197,000 MT., worth $158 million. Demand for cement sacks is expected to increase with the increase in production; the GOE auctioned eight licenses in October 2007 to add more capacity to the sector. Cement sack paper is imported mainly from Sweden, Norway and Finland. The U.S. has no market share in the cement sack industry, as it does not produce to local specifications.

Newsprint paper imports in 2007 reached 194,000 MT, with three main presses consuming all imported newsprint paper for publishing local journals. However, the number of newspapers in Egypt has soared to more than 500, most of which are independent. One public sector entity uses newsprint paper for producing transportation tickets. During 2007, Egypt imported newsprint from The USA, Canada and Finland. Low-weight coated paper (LWC) imports reached 10,000 MT and is used as inner magazine paper and telephone directories. This kind of paper is light in weight (10-12 grams) and can be printed on both sides. LWC is imported mainly from Europe.

White wood free and printing paper consumption totaled 650,000 MT estimated at $570 million in 2007. Egypt produced 150,000 MT locally and imported 500,000 MT mainly from Brazil,

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Indonesia, Europe and the U.S., which captured only 5% of the market. Three public sector paper mills produce lower quality paper, but have captured 31% of the total market consumption. A new private sector company has been established and produces 60,000 MT. However, since the growth rate of this market is estimated at 12%, no decrease in imports is anticipated.

Packing and wrapping paper including one-side coated and two-side coated paper imports in 2007 totaled 14,000 MT estimated at $200,000. This includes 40 gm machine glazed bleached kraft paper. The majority of packing and wrapping paper are imported from Europe.

Egypt is self-sufficient in the production of tissue and toilet paper. There are three large, private entities manufacturing tissue paper, produced from hardwood pulp, especially that of the eucalyptus tree. Total annual domestic tissue paper production is 40,000 MT. The quality of tissue paper has improved in Egypt and now 37% of total production is exported to the Gulf and the Arab world. Tissue and toilet paper demand is increasing due to an increase in health awareness. This should trigger an increase in production and an expected increase in exports.

Duplex board: Grey back and white back, are used to produce better quality carton boxes for the cigarette, cosmetic and pharmaceutical industries. During 2007, Egypt consumed approximately 180,000 MT of duplex board worth $121 million, mainly from Europe (Austria, Czech Republic, Germany, and Spain.)

Egypt consumed 125,000 MT of Grey back and 55 MT of white back in 2007. Cast-coated board is now being replaced by plastic and laminated covers for producing the cover of exercise books, while playing cards, are produced from playing cards paper by Moharram Press company, which consumes 100 MT/year.

The Wood pulp market in 2007 is estimated at 107,000 MT worth $80 million. Three public sector companies produce 41,000 MT of pulp while the balance 66,000 MT are imported mainly from the U.S.,which has captured the lions share of 50%. Europe has a 30% market share, while Canada has captured 30% of the market.

Recycling of 80% of trash in Cairo and Alexandria provides a significant local source of waste paper used for local kraft and cardboard manufacturing. This consists of trash paper and cardboard collected by donkey-cart boys and larger trash trucks. Egypt consumes 110,000 MT of recycled paper used in producing cartons and egg trays.

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