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ASSOCIATION OF ROMANIAN PAPER MERCHANTS

 

 

Papermerchanting in Romania in 2012

 

 

Economic developments

 

 

General features of the Romanian Economy

2012 was for Romania a year of intense political events, that tremendously impacted the social and economic environment. A referendum for the president suspension during summer and parliamentary elections in December 2012 drained the energies and the attention of all society forces and changed the political poles, with echoes that involved also UE opinions and reactions. Whether justified or not, these lead to a unfavourable CVM report in January 2013 and to a denial from EC for Romania and Bulgaria to access Schengen zone.  "The Economist" commented that "for Romanians, the Schengen membership will not bring a major change. They have been able to travel around Europe only with their ID or passport since 2007", but in our opinion, there are also other aspects involved in this matter.

What we depict, beyond the rethoric of different loud voices referring to Romania and "protecting the democracy and the rule of law" is that, too much political, and other categories of interests, are vested into all positions taken on this topics and that, genuine care and interest on what really the Romanian people need and want for their lives doesn't actually concern the rulers of any colour.

 

Having swallowed the bitter austerity pills over the past four years, Romania received a EUR 20 billion bailout from IMF, European Commission and World Bank in 2009 to prevent a blockage in payments and soaring lending costs and signed up in 2012 for a new EUR 5 billion stand-by agreement with the troika, subject further reforms in the public sector, new privatisations of state-owned enterprises be implemented, appointment of private managers be introduced, etc, measures that would maintain foreign investors' confidence in the country. Romanian authorities announced their intention not to draw funds from  the facility.

With a public debt of EUR 51 billions (34,7% of GDP), Romania is the fourth least indebted EU member. 48% of the debt is internal and 52% external.

 

Romania's international profile has improved as it has moved beyond the crisis, with Barcalys and JP Morgan deciding to include the country in their emerging bond indices."

 

In his state-of-the-nation speech, the PM, Victor Ponta underlined that " The macroeconomic and financial adjustments over the 2008-2012 period were undoubtedly necessary but austerity and inequitable measures that had been implemented during these years halted Romania's development  and built-up social unrest."

However, economic results in 2012, compared to other impacted countries, show a slight improvement and encourage for a gradual further growth in the coming years, driven by domestic demand.

According to the National Centre for Prognoses (NCP) in its 25.02.2013 statement, GDP climbed back to EUR 131.3 billion in 2012 (0.2%), while the budget deficit fell to bellow 3 % from GDP ( a decrease by 2,5 billions EUR vs. 2011, the best from the 27 EU countries). The 2013 budged targets a deficit of 2.4% of GDP in accrual terms and 2.1% in cash terms (IMF Press release No.13/25 of January 2013) and for 2014 a level of 2.2% of GDP.

Unemployment  rate (BIM) dropped to 7,0 % at the end of 2012 (696,000 registered unemployed people).

Inflation rate in 2012 was 4.95%, below the NBR projection of 5.1% and is expected to be in 2013 slightly above 3.5% by year-end.

The new cabinet, supported by a comfortable majority in parliament, formed by centre-left coalition USL, targets a GDP of EUR 130-140 billion in 2013 (a return to the prerecession level from 2008), which is 1.6%, a prudent growth rate and is expected to expand by 2.5% in 2014.

A substantial increase of the absorption rate of European funds is also a must for the Ponta government and will have its impact on important projects.

 

Paper market in Romania in 2012

The overall size of the Romanian paper market is only estimated, based on the figures obtained from the  NIS- the National Institute for Statistics for 12 months 2012, derived from Intrastate declarations and custom clearances (for paper purchased from countries outside EU), as within RPMA no reporting  takes place since 2011. Hence, quantities of paper that entered Romania in 2012 totalise  according NIS  359,345 tons, a decrease of 6% compared to 2011 (383,289 tons). Purchases from EU would have been 299,064 tons ( 83%) and from outside EU 60,281 tons (17%)

Sheets totalise  181,345 tons, reels  178,000 tons.

 

As certain figures registered by NIS are subject of discussion, taking into consideration comparison with EuroGraph figures for Romania for certain paper categories, we only have to state that, for an estimation of the  paper consumption per capita, RPMA doesn't has other choice but to take into consideration  NIS figures.

As to paper merchants market, the fifth main players active in Romania: Agressione, Antalis, Europapier, Papyrus, Romanian Paper Distribution estimate that they  fight on the market here for a total quantity  that goes from 95,000 tons to 105,000 tons (stock sale). Indend sales share varies from a paper range to another but in average represent around 30%.

 

EuroGraph figures for Romania  2012 are:

Woodfree coated Sheets            = 25,257 tons

Woodfree uncoated sheets       = 14,467 tons

Woodfree uncoated cut-size     = 54,983 tons

Coated mechanical                        =       128 tons

Woodfree coated reels                               =    6,492 tons

Woodfree uncoated reels          =  15,778 tons

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Total = 117,105 tons ( an increase of 11% compaired to 2011 = 105.649 tons)

 

This figure doesn't  include  all paper grades that are sold by the merchants and at the same time it includes  also indent sales.

Leader of the market remain Agressione, followed by Antalis, Europapier, Romanian Paper Distribution and Papyrus.

Romanian paper merchants are supposed to go through a restructuring and consolidation process that will enable them to become more efficient and cope with the market challenges.

 

Printing Industry in Romania

Romanian printers faced a fierce competition for the clients' decreasing orders and especially for their money.

Most disturbing behaviour is that of unbearable long payment times, extended beyond 130 days in many cases without any consent from the supplier. While paper mills exerted on the merchants a very tight survey of their granted payment terms and credit limits, dictated by Hermes or Coface and similar insurance companies, paper merchants and their customers had to undergo a very tough treatment in cash collection from their clients. Cash shortage caused many printing houses to give up their business or had to restructure toward other types of business.

The printing market shows continuation of the same tendencies as described in the Report for 2011 under the digitalisation impact on all  activities. Fortunately, Romania's  gap in consumption for paper grades that are used for labels, packaging and other uses still act as a stimulus for paper consumption in the near future.

Romania's total population (after 2011 census) : 19,2 million

Paper consumption per capita: 359,345,000 kg: 19.200.000 = 18,72 kg/capita (without hygienic papers and technical papers)

Number of paper merchants: around 8, out of which 5 important players

Employees in paper merchanting : around 300

Number of printing houses: around 950 with almost the same structure as in 2011

GDP in 2012 = 132,6 bilions of Euro;  Forecast for 2013 : 139,8 billions of Euro

Growth GDP Forecast

2007    2008    2009    2010    2011    2012                                       2013    2014    2015    2016

6,3       7,3       -7,1      -1,3      2,5       0,2                                            1,6       2,2       2,8        3,-

Annual Inflation rate: 4.95% in 2012 with predictions of  3,5% for 2013 and 3,2% for 2014

Average number of employed people (according to AMIGO): 6,22 millions at the end of 2012

Unemployment rate: 5.6 % at the end of 2012 (493,800 registered unemployed people), following to drop in the coming years (5,2% in 2014, 5% in 2015, 4,7% in 2015).

Average medium net salary: 350 Euro/month; average medium brutto  salary: 480 euro/month

Annual Exchange Rate: 4,4560 Ron/euro in 2012 with predictions of 4,5 Ron/euro for 2013 ( 4,3852 Ron/Euro in the first 3 months of the year.)

"Romania's economic prospects are particularly encouraging," said Greg Konieczny, Executive Vice President of Templeton Emerging Markets Group and Fund Manager of Romanian investment fund Fondul Proprietatea in an outlook for Romania in 2013 released January 21. Greg Konieczny suggests that Romania is in a good position to outpace the EU for economic growth this year, as well as predicting GDP advance of greater than 1 percent in 2013.

The outlook also predicts higher EU funds absorption rates in 2013, which will in turn drive investments, cause growth and create jobs.

"If Romania's solid fundamentals are coupled with the Government's willingness to implement reform, we believe it has the potential to become one of the leaders of economic growth within the European Union," said Greg Konieczny.