The paper industry is again awash with rumours of another giant merger, this time between International Paper (IP) and Stora Enso.

We are aware of these rumours, but they are just market rumours which we do not comment on, said Kari Vainio, Stora Ensos executive vice president communications and investor relations.

Both IP Europes director of communications, Albert Klinkhammer, and a spokeswoman for International Paper in the US confirmed they had heard the rumours, first circulated in the Swedish daily press, but declined to comment.

A merger of the two global players would create a group with annual sales of more than 26bn ($38bn).

BBC Worldwide paper manager Steve Wehrle said: We, like most publishers, have recently completed two questionnaires on
the UPM-Kymmene/Haindl merger, so obviously the EU is paying close attention to these mergers.

Although BBC Worldwide does not buy from North America, Wehrle said a merger would create a huge amount of control over the market, which cant be good.

Another paper buyer said that although there was still room in the market for consolidation, the move would create a giant that is too big to contemplate.

IP is the worlds largest papermaker in terms of output, and Stora Enso sits at number two following its acquisition of Consolidated Papers a year ago.
The latest noise follows rumours several weeks ago concerning a bid for Sappi, with Stora Enso believed to be an interested party (PrintWeek, 10 August).

Other names in the frame for Sappi included IP and UPM-Kymmene.

Paper pricing has also come under increasing pressure, with Finnish index compiler FOEX cutting the price of Northern Bleached Softwood Kraft (NBSK) pulp to a new low of 313 ($455) per tonne.
US newsprint prices have also fallen by around $10 per tonne on both East and West coasts.

The European price for uncoated woodfrees has also been cut in the German, Italian and French markets.

In the UK the copy paper sector has become more aggressive, but there are conflicting reports as to reductions in cost.

The increased pressure on pricing and rumours of mergers comes soon after the publication of Credit Lyonnais Securities Europe market report into the paper industry, which predicted further price erosion (see p13).

Stora Ensos share price rose by over 6% on the Helsinki bourse following the reports.

Story by Andy Scott