ACPWP97 THE STATE OF THE INDUSTRY - HUNGARY
April 1997 FO: ACPWP 97/2

ADVISORY COMMITTEE ON PAPER AND WOOD PRODUCTS

THIRTY-EIGHTH SESSION

Rome, 23 - 25 April 1997

THE STATE OF THE INDUSTRY


HUNGARY

General Economic Conditions

In 1995, government launched an economy-stabilizing policy introducing very strict measures. These measures continued in 1996, with the following effects on the economy:

  • The balance of the central budget looks more favourable. The deficit dropped substantially; in December it was only 40 percent of the 1995 amount.

  • The deficit of the current account has diminished to US$ 1.7 billion, which is US$ 800 million less than in the previous year.

  • Economic growth picked up in the second half of the year. Industrial output increased by 2 percent. The slow recovery was possible because of a 14 percent rise in exports. Domestic sales were slightly below the 1995 level.

Privatization in 1996 can be outlined as consolidated. The essential feature of the privatization in 1996 was that the decrease in the net worth of the companies before change in ownership ceased and signs of stabilisation were noticeable. The sales of banks and large companies stabilized during the year and this trend will be continued in 1997, too. The proportion of the private industry property reached 60 percent.

Since the beginning of the privatization process, German investors showed interest in the country. Their participation amounts to 34.5 percent, while that of USA amounts to 20 percent and that of France is of the order of 12 percent.

Consumer prices rose by 23.6 percent. Wage increases did not keep pace with the inflation rate. Real income reduced by 3.6 percent. Unemployment decreased by 50 000, reaching 477 000, or 10.5 percent of the economically active population. For 1997 a modest growth of 2 percent can be expected.

Performance of the Pulp and Paper Industries in 1995-96

Paper consumption increased by 4 percent compared to that of last year which is in harmony with the economic growth and general stage of development of the country.

Paper and Paperboard Consumption

(thousand tons)
1993
1994
1995
1996
1996/1995

(%)
Consumption479 537509 529a104
Production292 328321 363  113
Export49 7879 132a167
Import236 287267 298a112

a   Estimate.

Although official data are not available yet, it can be noted that there was no considerable change in the structure of the consumption. The restructuring period that followed the political and economic change seems to be over and the structure of the consumption consolidated as follows:

Newsprint18 percent
Other printing and writing paper 30 percent
Household and sanitary paper 9 percent
Linerboard and fluting medium 24 percent
Other wrapping and packaging paper and board 5 percent
Other paper and board 14 percent

In Hungary there is only one pulp mill and it is also a straw pulp mill of a small capacity (max. 30 thousand t/year). In 1996 it produced 16 000 tons of straw pulp. The biggest part of the fibres used came from waste paper and imported market pulp. The estimated break-down of the raw materials used in Hungary in 1996 is as follows:

Bleached straw pulp 4 percent
Bleached market pulp 23 percent
Unbleached market pulp 7 percent
Waste paper - domestic 46 percent
Waste paper - imported 20 percent

Paper production increased from 321 000 tons to 363 000 tons in 1996 which corresponds to 13 percent. The growth was realized in the uncoated woodfree sector as a result of the restart of Szolnok Paper Mill (new name: Neusiedler Ltd). In the other fields production volume remained approximately at the same level.

Paper and Paperboard Production

(thousand tons)
1993
1994
1995
1996
1996/1995

(%)
Total paper and board 292328 321363 113
Newsprint- -- --
Coated p-w. paper -- -- -
Uncoated p-w. paper 6480 83142 171
Household and sanitary 3439 3637 103
Linerboard33 2829 30103
Fluting medium92 10698 9698
Kraft wrapping and packaging 2630 3029 97
Folding boxboard24 2916 --
Other paper and board 1916 2929 100

In 1997, consumption and production are expected to increase at a similar rate than in 1996. Consumption may probably reach some 550 000 tons and production some 400 000 tons. Production will grow as a consequence of more intensive utilization of the existing capacities and the smaller investments in removing bottlenecks.

Performance of the forest industries

The most important structural changes in the last few years in the forest industry sector in Hungary can be summarised as follows:

  • significant decrease in fellings, first of all in industrial timber;
  • decline of timber consumption;
  • exportation of forest products decreased in total, however the export volumes of industrial timber increased;
  • a decline of demand for timber is also demonstrated by the fact that import volumes of industrial timber decreased;
  • the proportion of imported wood raw material in the country decreased, at the same time that of processed and final wood products (such as furniture) increased disproportionately;
  • losing the former East European markets not only resulted in a fall of exports, but also the imports have been significantly shifted towards the developed western countries.

Forestry

The managed forest area in Hungary amounts to 1 719 699 ha, i.e., 18.6 percent of the total land area (as at 31 December 1995). By major functions, this forest area is divided as below:

Exploitable (wood production) 80 percent

Unexploitable

- protection 15 percent

- recreation 5 percent

The growing stock is 303 million m3 overbark, the average growing stock per unit area being 192 m3/ha. The gross annual increment is 11.4 million m3, i.e., 7.1 m3/ha. Differently from the European picture, broad-leaved stands account for 85 percent of the total forest area, 15 percent being coniferous stands.

The composition of species of trees with their respective share of forest lands is as follows:

Oak 22 percent

Turkey Oak 11 percent

Beech 6 percent

Black locust 20 percent

Other hard broad-leaved 10 percent

Poplar 10 percent

Other soft broad-leaved 6 percent

Conifers 15 percent

The total area of forest regeneration completed in 1995 was over 21 000 ha, 79 percent of which (about 16 000 ha) accounted for reforestation and 21 percent for afforestation. By target tree species, this area is distributed as below:

Oak 14.3 percent

Turkey oak and other hard b.l. 9.4 percent

Beech 2.1 percent

Black locust 41.1 percent

Poplar and other soft b.l. 23.6 percent

Conifers 9.5 percent

Fellings amounted to 6 049 000 m3 in 1995, which is 84 percent of the potential of sustainable forest management.

Wood-processing industry

Sawmilling industry processes mainly domestically removed broad-leaved (hard and soft) timbers and also coniferous sawlogs mainly from import. Further processing of sawn timber is partially performed in sawmills and products such as flooring and siding material, pallets, packaging, barrel staves, etc., are being manufactured. There are currently some 2000 individual mills in the country.

Production of sawn timber in 1995 decreased by 6 percent as compared to the previous year, and that of flooring and siding material by 10 percent. At the same time, there was an important increase in the production of pallet and packaging elements (14 percent) and other sawnwood products (26 percent).

The wood-based panel industry mainly processes broad-leaved veneer logs (for veneer and plywood) and low-diameter industrial wood (for particleboard and fibreboard). There exists no manufacturing capacity for OSB and MDF.

Sustainable Forest Management

The Hungarian forest management has met the most important criteria of sustainable development for quite sometime. Considering the obligations accepted in international agreements and the intention to harmonize the Hungarian rules with those of the EU, in 1996 Parliament passed a new act on forest and forest protection (Act LIV, 1996). During the preparation of this law, the decisions of Rio de Janeiro, Strassbourg and Helsinki were followed. Concerning the environment and nature protection, the law contains all requirements spelled out in the principles of sustainable development and conservation of biodiversity.

Fibre Supply

Regarding fibre supply, the country still has considerable unutilized capacities:

  • fellings reach some 84 percent of the quantity which would be permissible as per criteria of sustainable forest management (the unutilized potential amounts to approximately 1.2 million m3/year);

  • although the fibre recovery rate is continuously growing, at the moment it only reaches 43­44 percent.



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