In separate announcements yesterday, SCA in Sweden said it was exiting the publication papers market, while UPM revealed a plan for annual costs savings of €75m that centred on closing one mill, selling its UK newsprint operation and streamlining its European and US businesses.

“Yesterday’s announcements by these two paper making giants are a true indication of how Covid has sped the decline in graphic paper consumption, almost 1.5 million tonnes of capacity removal announced in a single day is unprecedented and I fear there will be more to follow,” said one industry watcher.

"Both SCA and UPM are strong financial businesses and whilst their decisions are devastating to the employees affected, they are acting to protect their future stability and stakeholder returns. Choices for buyers become fewer as time marches on and clearly no port is safe in this storm.”

UPM said its restructure was due to “continued long-term decline in graphic paper demand combined with weakened economic outlook".

The Finland-headquartered group is to close its Kaipola paper mill in Finland by the end of the year and decommission its three paper machines, which would result in 450 job losses and an annual reduction of 450,000 tonnes of newsprint and 270,000 tonnes of graphic grades.

Winfried Schaur, executive vice-president of UPM Communication Paper, acknowledged that the news was “devastating” to Kaipola.

“While Kaipola has competent teams and well-operated machines, external factors such as high logistics costs, regulatory and tax burden, high cost of labour and increasing fibre costs make it the least competitive among UPM’s paper mills,” he said.

In addition to the Kaipola closure, UPM plans to sell its Shotton newsprint mill in Deeside, Wales, on the condition it is converted to non-newsprint grades.

“UPM Shotton is well positioned to serve the UK market. However, we look for outside opportunities for alternative long-term use of the mill as the newsprint consumption continues to decline. The paper machine is technically flexible to support conversion especially into containerboard production,” said Schaur.

Shotton is an integrated facility that manufactures recycled newsprint. It employs around 200 staff and encompasses a materials recycling facility, paper machine, and a biomass combined heat and power unit.

As well as the closure of Kaipola and the sale and conversion of Shotton, UPM is looking to reduce headcount across back office functions in Europe and the US, with 170 roles across 10 countries set to go, and an additional 220 roles are under threat at a number of other Finnish mill and forest operations.

The latest cutbacks follow the closure last month of UPM’s Chapelle newsprint mill in Grand-Couronne, which employed 228 staff and produced 240,000 tonnes per year.

Despite the raft of cutbacks, Schaur said UPM remained committed to its paper business.

“It is good to bear in mind that the world markets for graphic papers still exceed 70 million tonnes, whereof more than 20 million tonnes is in Europe. Even if declining, these markets offer profitable business and good cashflow for mills with a competitive cost structure.”

On the same day as the UPM announcement, rival SCA said it was to throw in towel and proposed to scrap paper production at its last remaining publication grade mill.

The group plans to invest SEK 1.45bn (£125m) at its Ortviken paper mill in Sundsvall to decommission its three paper machines and convert the site to the production of chemically pre-treated thermo-mechanical pulp (CTMP).

Once converted, the facility will have an annual production volume of 300,000 tonnes of CTMP pulp and, according to SCA, generate an EBITDA of circa SEK 300m per annum on sales of SEK 4bn.

The switch will impact around 800 jobs, including circa 500 at the mill. The timescales of when it will cease paper production are unclear at this stage, although SCA said it planned to begin pulp production in early 2023. When the new facility goes live, SCA said it planned to switch CTMP production at its Östrand pulp mill to kraft pulp.

The company said it was exiting publication because while demand had fallen 5% annually since 2008, as a result of Covid-19 it had nosedived a further 30-40%.

“Our pulp customers want us to grow with them in product segments such as packaging board and hygiene products, segments with healthy growth,” said SCA CEO Ulf Larsson.

“In line with our strategy, we have gradually reduced our exposure to publication paper. We now initiate negotiations to leave this product segment completely.”

One industry observer noted: "It feels like if you're operating in the big volume end of the [publications] market it's a little like living in one of those bungalows on the Norfolk coast where you're getting closer and closer to the cliff edge and you're just waiting for the next wave to take you out."