Today, the world produces roughly 470–480 million tonnes of paper and board annually, with around half of this output now derived from recovered fibre. This marks a positive shift towards circularity. How does 2026 look for the industry?  

We spoke to industry experts to explore how markets are responding to changing fibre dynamics, where demand is heading, and what challenges lie ahead for paper recycling in an increasingly interconnected world. 

At the heart of this transformation is a structural shift in demand. “Traditional graphic papers are witnessing a steady decline, while packaging grades, particularly containerboard, are experiencing sustained growth,” observed Ranjit Baxi, Managing Director, J&H Sales International Limited. He attributed this trend to the rapid expansion of e-commerce. “As global online retail accelerates, the demand for corrugated packaging and brown paper is expected to rise in tandem,” he noted.  

The other key growth segment highlighted by Baxi was the hygiene paper. “The expansion of the global middle class, especially in emerging economies, is fuelling demand for products such as tissue and other hygiene-related paper grades. As incomes rise, so too does the consumption of convenience and hygiene products, creating new opportunities for the industry,” he said.  

Asia and Africa, the future markets  

He was quick to note that this growth is not uniform across regions. “In mature markets such as the UK and Western Europe, demand for many paper grades has reached saturation. In contrast, countries across Asia and Africa are witnessing significant increases in consumption, driven by population growth and improving economic conditions.” Baxi pointed out that these two continents are expected to remain the primary engines of future demand. 

The UK collects approximately 10 million tonnes of recovered fibre annually, yet domestic mills can consume only about half of that volume. The surplus is exported to markets such as India, Indonesia, Pakistan, and Thailand. Similarly, Europe generates an annual surplus of around 8–9 million tonnes, even after accounting for new recycling capacity in countries like Turkey. As a result, international trade, particularly towards Asia, remains a vital component of the recycling ecosystem. 

Speaking of the challenges, Baxi drew our attention to how the paper industry’s reliance on global trade exposes it to a range of constraints. “Rising energy prices, increasing labour costs, and high logistics expenses are placing pressure on margins across the value chain,” he noted.  

From the initial collection of recyclable material to its processing, transportation, and eventual conversion into finished products, logistics plays a central role and a costly one. In some cases, freight alone can account for 35–40% of the total cost of recovered fibre. 

“Quality requirements are also becoming more stringent. Paper mills are demanding cleaner, better-sorted feedstock, prompting the need for greater investment in recycling infrastructure and technology. This shift towards higher-quality recovered fibre is essential to meet the performance standards of modern paper production,” he added.  

Adding to the complexity are evolving regulatory frameworks. “Policies such as the Carbon Border Adjustment Mechanism (CBAM) are expected to influence trade flows and cost structures in the coming years. At the same time, stricter waste shipment regulations are raising questions about the viability of exports to non-OECD countries.” 

These regulations require importing facilities to meet environmental standards equivalent to those in Europe, a requirement that may prove challenging for smaller mills in regions such as India and Africa. Many of these facilities operate on tight margins, and the cost of upgrading infrastructure, including wastewater treatment systems, could be prohibitive. The lack of clarity around what constitutes “equivalent standards” further complicates the situation, leaving the industry in a state of uncertainty as it awaits more stringent auditing and enforcement mechanisms. 

Baxi viewed that these challenges may accelerate the development of domestic recycling systems in emerging markets. “Countries like India are already making significant progress in improving waste collection and integrating informal and formal recycling sectors. Over time, this could reduce their reliance on imported recovered fibre, much as China has done in recent years.” 

Despite these headwinds, the long-term outlook for the paper recycling industry remains positive. “Global population growth, expected to rise from under 8 billion to nearly 10 billion over the next three decades, will inevitably drive higher consumption. Regions such as Asia, Africa, and the GCC are already witnessing this upward trend, reinforcing the industry’s growth trajectory.” 

He further noted that the sector is highly sensitive to external shocks, from currency fluctuations and geopolitical tensions to sudden shifts in supply and demand. “Events such as the COVID-19 pandemic have demonstrated how quickly market conditions can change, with logistics costs surging and price volatility affecting stakeholders across the value chain.”  

Geopolitical developments also continue to play a role. Shipping disruptions and potential surcharges, whether related to fuel costs or conflict, can significantly impact trade flows, increasing costs for importers and complicating pricing dynamics. These factors, combined with fluctuating raw material prices, create an environment of constant adjustment for industry players, he said.  

Reflecting on decades of experience, Baxi pointed to the cyclical nature of the business. “From the days of Germany’s “Green Dot” system in the 1980s, when recovered paper prices could even turn negative, to today’s globally interconnected market, the industry has continually adapted to changing conditions.” 

Ultimately, the resilience of the paper recycling industry lies in its essential role within the circular economy, Baxi concluded. 

The Middle Eastern landscape  

In the Middle East, regional dynamics, government initiatives, and emerging market demand are shaping the future of paper recycling.  According to Eng. Hasan Al-Amri, Group Vice President, Waste Business Management, MEPCO Group, the region is shifting from a fragmented recycling landscape to a structured, industrialized ecosystem that places recovered fiber at the center of sustainable growth. 

“Saudi Arabia is gaining significant momentum, especially with the launch of the Environmental Industry Sector initiative by the Ministry of Industry and Mineral Resources,” Al Amri explained. “The program aims to localize recycling industries and build a comprehensive environmental services sector. At the same time, the National Center for Waste Management, MWAN, is implementing a national strategy to increase recycling rates and develop integrated waste value chains across the Kingdom.” 

These initiatives are creating a structured ecosystem for recovered materials, including paper, where domestic recovery and collection are being actively strengthened. “From a demand perspective, the strongest growth will come from packaging and corrugated materials, supported by expansion in retail distribution, logistics, and e-commerce supply chains,” observed Al Amri. “Fiber-based packaging plays an important role in circular material systems because it can be collected and recycled multiple times, making recovered fiber a strategic raw material for the paper industry.” 

When it comes to growth and profitability, Al Amri identified packaging grades, particularly containerboard and corrugated packaging, as the most attractive. “Across the global paper industry, we are seeing a structural shift toward packaging applications,” he noted. “This trend is being driven by logistics, retail distribution, and e-commerce activity: all of which rely heavily on corrugated packaging solutions.”  

These grades align well with circular economy principles. Packaging materials are widely recyclable and can re-enter the fiber cycle multiple times, offering both sustainability benefits and economic advantages. In Saudi Arabia, packaging and containerboard are expected to remain the primary drivers of recycled fiber demand for the foreseeable future. Companies that secure reliable recovered fiber supply and maintain strict quality control will be best positioned to capitalize on this growth. 

Shifts in supply chains 

The Middle East is also seeing notable changes in recovered paper supply chains. Historically fragmented and heavily dependent on international trading flows, supply chains are now becoming more structured and integrated as regional paper manufacturing capacity expands. “We are seeing increased collaboration between industry, retail sectors, and recycling operators to strengthen the availability and quality of recovered cardboard,” Al Amri explained. 

At MEPCO, the focus is on three priorities: strengthening domestic collection networks, improving sorting and fiber quality, and building long-term partnerships with commercial waste generators, he said, adding, “The industry is gradually shifting from a volume-driven collection model toward a quality-focused fiber supply system, which is essential for modern paper manufacturing.”  

Domestic collection vs imports 

The evolution of local collection systems is promising, particularly in Saudi Arabia, where regulatory frameworks are advancing rapidly. MWAN’s strategy aims to significantly increase national recycling rates and establish integrated waste management infrastructure. However, Al Amri noted that the region will remain linked to global recovered fiber markets in the near term. “Domestic recovery is increasing, but demand is also expanding as new paper manufacturing capacity comes online. International fiber flows will continue to balance supply and demand for the foreseeable future,” he says. 

Operational bottlenecks and challenges 

Compared to mature recycling markets in Europe and Asia, the Middle East still faces operational challenges. Source separation, collection efficiency, and consistency of recovered fiber quality are key areas for improvement. “In Europe and some parts of Asia, recycling systems have been established over decades with standardized grading systems and extensive collection infrastructure,” Al Amri pointed out. “Here, we have an opportunity: many recycling systems are being built today with modern technologies and strong government support, allowing us to leapfrog traditional development paths.” 

The biggest hurdle, however, remains creating a fully integrated recycling ecosystem that connects waste generation, collection, sorting, and industrial utilization, he said. Household recycling systems are still maturing, and commercial sectors, while generating significant volumes of recyclable cardboard, need more structured collection mechanisms. Scaling infrastructure in line with industrial demand, particularly as new paper production capacity is added, requires close coordination among municipalities, industry players, and regulators. 

Despite these challenges, Al Amri is positive that the GCC’s paper recycling sector is poised for robust growth. “The combination of government support, private sector engagement, and structural market shifts is laying the foundation for a circular fiber ecosystem that could serve as a model for the region.” 

Rajasekar Veerichetty, Deputy Managing Director, Al-Jawdah Paper, Saudi Arabia, opined that Saudi Arabia’s paper recycling industry is on the cusp of a steady growth phase through 2026. According to him, the key drivers are robust packaging demand and government-backed sustainability initiatives. “With e-commerce, FMCG, and industrial expansion fueling the need for kraft liner and fluting medium, the Kingdom is positioning itself as a potential regional hub for recycled paper,” 

Packaging leads the charge 
He echoed the views of Al Amri noting that the strongest growth segments in Saudi Arabia remain packaging-focused. “Kraft liner and fluting medium are experiencing surges in demand, reflecting the expansion of logistics and e-commerce supply chains. Corrugated packaging is also benefiting from these trends, while office paper grades continue to decline in line with global digitalization trends.” Industrial growth across the Kingdom further reinforces demand for high-quality recycled fiber, he noted.  

Supply chain challenges amid geopolitics 
While the fundamentals are solid, the industry faces operational pressures linked to supply chain volatility. Highlighting the challenges from the recent geopolitical tensions, he said that, “Rising freight rates, insurance premiums, and shipping delays often influenced by geopolitical tensions are increasing landed costs and impacting competitiveness,” he noted. Inland transportation and port efficiency, particularly through major hubs such as Jeddah Islamic Port and King Abdulaziz Port in Dammam, remain critical operational factors. 

Hybrid sourcing model 
Saudi Arabia is gradually moving towards self-sufficiency in recovered paper, supported by Vision 2030 sustainability initiatives. Veerichetty underscored that the domestic collection is not yet sufficient to meet industrial demand, making imports essential in the medium term. This has resulted in a hybrid sourcing model, blending domestic recovery with strategic international procurement. 

Operational bottlenecks and advantages 
Veerichetty highlighted some of the unique challenges that affect operations in the Kingdom. “Global supply chain volatility, rising logistics and shipping costs, climate-related storage constraints, and dependence on expatriate skilled workers create a complex operating environment.” 

Delays in critical spare parts and limited access to foreign technical experts due to travel restrictions further exacerbate these challenges, he noted. “Nevertheless, Saudi Arabia benefits from a robust energy infrastructure, modern industrial base, and a clear policy framework to support recycling development.” 

Strategic Opportunities for Growth 
Packaging grades dominate both demand and profitability, he said, adding that kraft liner and fluting medium lead the growth curve, while corrugated packaging supports e-commerce and FMCG growth. “Duplex board remains stable but less dynamic, and office grades continue to see declining demand. Companies that secure high-quality recovered fiber and strengthen supply chain resilience will be best positioned to capitalize on these opportunities.” 

Vision for 2026 and beyond 
Veerichetty asserted that Saudi Arabia has the potential to emerge as a regional hub for recycled paper production. Key enablers include: Strengthening domestic waste paper collection systems; Expanding recycling infrastructure and adopting modern technologies; Improving logistics efficiency and building supply chain resilience; Encouraging circular economy policies and industrial integration; and Developing local technical expertise for operations and maintenance.  

Although short-term geopolitical uncertainty affects logistics, input costs, and operational flexibility, the long-term fundamentals of the Saudi paper recycling industry remain strong. Growth will continue to be driven by packaging demand, industrial expansion, and sustainability initiatives. “The industry’s success in the coming years will hinge on its ability to manage supply chain resilience, increase local sourcing, and achieve operational independence.” 

Mills that adapt early to these structural shifts will be well positioned to lead the GCC recycled paper sector into 2026 and beyond, establishing Saudi Arabia as a key player in the regional circular economy, he noted.