Metsä Board Warns of Market Pressure as Pulp Shutdown, Rising Costs and European Overcapacity Reshape Packaging Sector

Metsä Board has highlighted mounting pressure across the European paperboard and pulp markets as weak demand, geopolitical tensions and rising industry overcapacity continue to reshape the global packaging sector.

In its Q1 2026 results, the company disclosed that Metsä Fibre has initiated an indefinite market-driven production shutdown at its Joutseno pulp mill due to persistently weak pulp demand in both Europe and China. The move reflects continued softness in global pulp consumption and low utilisation rates across the paper and paperboard industry.

Metsä Board also warned that escalating tensions in the Middle East, particularly involving Iran, are increasing pressure on logistics, chemicals and energy-related costs. The company said the impact is expected to become more visible in coming quarters, with rising oil and natural gas prices already affecting the broader packaging supply chain.

At the same time, the company signaled growing structural challenges in the European packaging market, citing increasing overcapacity, rising paperboard imports from China and continued pricing pressure across the region. Metsä Board noted that cautious consumer demand and weak market visibility are weighing on industry profitability.

As part of its strategic response, Metsä Board said it is shifting toward stricter capital discipline following a major investment cycle that saw approximately €1 billion invested between 2021 and 2025 to improve competitiveness and environmental efficiency. The company stated that no significant growth investments are planned during the current strategy period, with 2026 capital expenditure expected to remain well below €100 million.

Despite the difficult operating environment, Metsä Board continues to strengthen its packaging logistics and customer service capabilities. During the quarter, the company acquired the Winschoten sheeting and distribution center in the Netherlands, a move aimed at improving supply chain flexibility, shortening lead times and supporting more efficient utilization of the Husum integrated mill.