Packaging Strategies recently asked Carl Kanner, vice president, Smith Corona, about the reduced availability of paper-based release liners and why some parties are turning to PET release liners as an alternative.
Paper-based release liner consumption in North America is very high, representing around 87% of total release liner consumption. How have recent events affected the supply and demand of this product?
CARL: Going back about a year ago, there was a major strike in Finland at a company called UPM. Unfortunately, due to this strike, which lingered much longer than originally anticipated, this created a major shortage in both Europe and North America for paper-based release liners. And as a result of that strike and the shortage, many producers were forced to look for alternative technologies for liner. One particular technology was PET release liner, and the demand for that product has substantially increased. The percentage of PET liner – as a total percentage of release liners for the label market – has risen from about 13% two years ago to about 18% now. This has had huge implications for the label market.
Have any other events made it more difficult to secure materials for release liners?
CARL: Yes. Unfortunately, there was also another incident in April of 2020 in which one of the major release-liner vendors here in North America – a company called Pixelle which happens to have a mill in Androscoggin, Maine – they regrettably had an incident at their paper manufacturing facility where their pulp digester had an explosion. Thankfully, nobody was killed, but it took out the ability of that mill to produce pulp. Effectively, that was a mortal wound for that mill.
Unfortunately, Maine is an extremely difficult place for logistics and also for energy. As you know, paper mills consume an incredible amount of energy, and traditionally that high energy cost would be offset by the production of pulp. That process generates a considerable amount of power that the paper mill would traditionally use. But, with no longer being able to produce their own pulp, they’ve lost that ability to produce energy, and therefore their energy prices have increased substantially, and Maine has a bottleneck in terms of natural gas pipeline capacity. In Everett, Massachusetts, there is an LNG [liquefied natural gas] import terminal, which makes the situation quite bleak for the mill because, with the situation in Ukraine, their natural gas price effectively is being set in Europe now as opposed to North America.
It is no longer economical to produce paper at that mill. In September they made an announcement that they will be closing the mill in Androscoggin, Maine, and that paper mill represents about 25-30% of the North American release paper production. So 2023 will be a very challenging year for label makers and for large brand owners that will be consuming a lot of labels – companies like Amazon, Wal-Mart, Home Depot, etc. It could be a considerable challenge in the second half of 2023 and into 2024.
As a direct result of the paper shortage, we’ve seen a rise in PET release liners as an alternative material. Why is this the material people are moving toward?
CARL: PET is a really wonderful product for labels because it’s extremely strong. It’s extremely uniform. It’s very flat. When you apply silicone to it for making the release liner, it takes to it quite well. It creates a premium release. That is, when you remove the label from the backing material, it comes off really easily.
Furthermore, there happens to be a fair bit of capacity in the marketplace for PET film, and it’s very ubiquitous. I can buy PET from here. I can buy it from South America or Europe, and it performs the same, whereas paper from one mill versus another could really have substantial implications for our manufacturing process as well as this release value for our end customer. In high-speed release applications like bottling, where you need that, it performs far superior to paper. Because it’s stronger and because it doesn’t tear, there are fewer equipment malfunctions.
It’s never easy to get customers to try out or accept new products, especially when what they normally purchase isn’t available. How would you describe the reception of PET among label users who normally wouldn’t buy this material?
CARL: Some of our very large customers – those who can take truckload quantities of labels – take to it quite well and are extremely happy with it.
It’s worth noting that the PET product is fully recyclable. The paper product can be re-pulped as well. However, there are some challenges to that in that the silicone on the paper fiber, for certain manufacturers, when they go to re-pulp it, won’t want the siliconized paper, so there are some issues there. Whereas the plastic product can go right back into the plastic stream and be re-used to make whatever new product. So for some of our customers that are more environmentally sustainable, this is a product they’d much prefer.
As far as challenges to it [PET], it could be an issue in terms of calibrating the printers, or when they go to rewind the spool of labels, it could have some challenges releasing from that rewinding spool.
What are some things we should be keeping an eye on in 2023?
CARL: Labels, particularly our kind of labels – like warehouse and logistics labels – nobody really cares about this product until you don’t have it. If you don’t have it and you’re an Amazon or some high-speed logistics company, you’re going to shut down your factory if you don’t have labels to address your packages or to barcode them. Given that there’s this potential for huge disruption in this product, they’ll have to adapt to different technologies. One of those will be PET – and maybe polypropylene, which is another perfectly usable film for this application.
I think you’ll also see much more imports coming in. Europe probably has an overcapacity of release liner, or certainly mills that could convert to the production of paper that’s suitable for release liners.
There’s a distinction on a product called glassine, which is another type of paper that’s used for paper release liners. In North America, we use a product called CCK, which is a Clay Coated Kraft, and we also use an SCK, which is Super Calendered Kraft, and they’re really used interchangeably. Glassine historically never came into the North American market because it’s a more processed paper. It’s sold at a premium relative to the SCK and the CCK. But, where we are at this price level today for release liners, I think you’re going to start to see more glassine coming into North America.
I think we’ll start seeing some down-gauging. Traditionally, we use a 2.4mL paper release liner in North America, but I think that will start coming down substantially. In Europe, customers use as low as a 1.6 or 1.7mL, and I think there’s no reason why we couldn’t see that here. So I think the hole will be filled.
They always say the cure for high prices is high prices, and as the price level for paper-based release liners increases, we’ll see new entrants to the market. In that regard, the future is bright.
More information on the growing role of PET release liners can be found here: The Unavoidable Shift From Paper to PET Liner - Barcode Blog (smithcorona.com)