Post on 30-Jan-2018
transcript
Outlook for the World
Paper Grade Pulp Market
Kurt Schaefer, VP Fiber
November 2015
kschaefer@risi.com
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World Pulp & Recovered Paper
5-Year and 15-Year Forecasts
www.risi.com/forecasts
World Pulp Monthly
www.risi.com/wpm
This Forecast Presentation Is Based on Our Pulp and RCP Forecasts For more information:
New Edition:
The China Pulp Market in
Transition:
A Comprehensive Analysis
and Outlook
Announcing Our Updated China Pulp
Study---Available This Week.
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Abbreviations and Grades
• BSK = Bleached Softwood Kraft Pulp (“long” fiber)
– NBSK (northern), SBSK (southern), radiata
• BHK = Bleached Hardwood Kraft Pulp (“short” fiber)
– BEK (eucalyptus), NBHK (northern mixed), acacia
• DP = Dissolving Pulp
– Primarily textile grade (“viscose” pulp)
• P&W = Printing & Writing Paper
– Coated and uncoated; woodfree and mechanical
• Delivered Cash Cost = Mill Cost + Delivery Cost
– Includes: Fiber, chemicals, energy, labor, logistics
– Excludes: Depreciation, interest, SG&A
• TPY = Tonnes per year
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Global Real GDP: Economic Growth
Rebalancing and Accelerating in 2016
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-0.8
-0.3
0.9
1.6 1.8
2.2
1.5
2.4 2.7
3.0
7.7 7.7 7.3
6.9 6.6
3.4 3.3 3.3 3.1
3.7
-2
-1
0
1
2
3
4
5
6
7
8
9
12 13 14 15 16 12 13 14 15 16 12 13 14 15 16 12 13 14 15 16
Euro area United States China World
%
World Production of Paper and Board:
Accelerating Slowly Graphic, Packaging and Specialty and Tissue; Percent Change
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3.7%
-2.0%
3.3%
2.7%
5.7%
2.1%
4.0%
3.0%
-0.6%
-5.4%
6.5%
1.0%
0.2%
0.8% 0.9% 1.3%
1.6%
-6%
-4%
-2%
0%
2%
4%
6%
8%
2000 2002 2004 2006 2008 2010 2012 2014 2016
Most of the Growth in the Industry Is in
Packaging—Modest Effect on Market Pulp
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0
50
100
150
200
250
300
2000 2002 2004 2006 2008 2010 2012 2014 2016
Packaging/Specialty
P&W
Tissue
News
0
20
40
60
80
100
120
140
160
180
2000 2002 2004 2006 2008 2010 2012 2014 2016
Tissue + P&W
The New Reality for World P&W Demand:
Peak Demand Has Already Happened
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0
20
40
60
80
100
120
140
160
180
80 85 90 95 00 05 10 15
Millio
n M
etr
ic T
on
s
P&W Production
2007 Forecast
In China, P&W Production Is Leveling
Off, While Tissue Continues to Grow
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0
5
10
15
20
25
30
1990 1995 2000 2005 2010 2015
Millio
n T
on
nes p
er
Year
P&W
Tissue
P&W Consumption per Person,
1970 to 2014
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0
20
40
60
80
100
120
140
0 5000 10000 15000 20000 25000 30000 35000
Japan
South Korea
China
kg/person
Per capita real GDP, US$
BHK Capacity in China on a Mill-by-Mill
Basis
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0
1
2
3
4
5
6
7
8
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Oji Nantong
Chenming Zhanjiang
Asia Symbol Rizhao
APP Hainan
Others
Even in a Weak Dollar Setting, China’s
Pulp Producers Have Competitiveness
Problems Related to Fiber Supply
• Lack of woodfiber
and available land
– Many plantations are
on marginal sites
with low yields
– Labor costs have
been rising quickly
– Importing woodfiber
is expensive
• Tighter enforcement
of pollution and water
use standards
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Eucalyptus in southern China
What Are the Sources of Incremental
China’s Pulp Demand?
• Tissue production is rising by about 600,000 tpy
– Predominantly based on virgin fiber
• Policy closures of “backward” pulp and paper
capacity favors BHK consumption growth (at the
expense of local fiber, including nonwood).
• Rising demand for higher quality paper also raises
BHK demand
• Continuing move toward more BHK, less BSK, as
new paper machines are installed.
• BSK demand for absorbent applications is growing
• Conclusion: Net imports of BHK into China will
continue to show solid growth
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“World Class” Pulp Lines are Growing
Exponentially in Size (1000 annual tonnes of capacity)
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0
500
1000
1500
2000
2500
1975 1980 1985 1990 1995 2000 2005 2010 2015
BHK Net Imports by Region: Trade Flows
Continue to Adjust to New S. Amer. Supply
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-20
-15
-10
-5
0
5
10
2000 2005 2010 2015
South America
Asia
Europe
N. America
Other
In Indonesia, APP’s South Sumatra BHK
Project Will Open in 2016/Early 2017
• 2.0-2.8 million tonnes per year of BEK and BAK
• Acacia from plantations in South Sumatra
• May include paper machines eventually
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In Brazil, Five Large BEK Lines Will Be
Started Up in 2014-2018; ~ 8 MTPY
• Suzano Maranhao
– 1.5 MTPY, 2014
• CMPC Guaiba
– 1.3 MTPY, 2015
• Klabin Ortigueira
– 1.1 MTPY, 1Q 2016
• Fibria Tres Lagoas
– 1.85 MTPY, 4Q 2017
• Eldorado Tres Lagoas
– ~2.2 MTPY, 2H 2018
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2015 Capacity Developments
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Company (Mill) Location Country Grade Mkt. Cap Int. Cap Status Year Date
Altri Constancia Portugal BHK -120 C 2011-2015
Jari Monte Duardo Brazil DP/BHK 330 C 2015 January
Paper Excellence (Chetwynd) British Columbia Canada BCTMP (hwd) 240 C 2015 May 1
Nanning Phoenix Nanning China BHK/BSK -150 C 2015 Q1
CMPC Guaiba Brazil BHK 1,300 C 2015 May 3
Yibin Paper Yibin China Bamboo 200 C 2015 Q2
Yinquant Paper Qing'an China Wheat Straw 90 C 2015 Q3
Portucel Cacia Portugal BHK 70 C 2015 Q3
Sun Paper Zoucheng China DP/BHK C 2015 Q4
Sun Paper Yanzhou China BHK 300 C 2015 Q4
Resolute Calhoun USA BHK 75 25 C 2015 Q4
Tralin Jiamusi China Straw 95 C 2015 Q4
Heinzel Pols Styria Austria BSK 240 C 2015 Q4
Holmen Iggesund Sweden BSK 50 C 2015 Q4
UPM (Kymi) Kuusankoski Finland BSK 70 C 2015 Q4
UPM (Kymi) Kuusankoski Finland BHK 100 C 2015 Q4
Verso Androscoggin Maine BSK 225 C 2015 October
Verso Wickliffe Kentucky BHK 200 C 2015 October
Paper Excellence (Howe Sound) British Columbia Canada BSK 25 C 2015 Q4
Suzano Suzano Brazil BHK (fluff) 100 -100 C 2015 Q4
Waggeryd Vaggeryd Sweden BCTMP (swd) 20 C 2015
Rottneros Vallvik Sweden BSK 20 C 2015
Chenming* Nanchang China BCTMP 250 C 2015
2016 Capacity Developments
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Company (Mill) Location Country Grade Mkt. Cap Int. Cap Status Year Date
ENCE Navia Spain BHK 40 C 2015-16 Q2-Q1
Catalyst Paper Maine USA BHK -130 P 2015-18
Expera Old Town USA BSK/BHK -180 C 2016 Q1
WestRock Evadale USA BSK -90 90 C 2016 Q1
Svetlogorsky Svetlogorsk Belarus BSK/BHK/DP 400 C 2016 Q1
Klabin Ortigueira Brazil BHK 1,100 C 2016 Q1
Klabin Ortigueira Brazil BSK 400 C 2016 Q1
SodraCell Morrum Sweden BSK 35 C 2016 Q1
IGIC (Woodland) Maine USA BHK -100 100 C 2016 Q1-Q2
International Paper (Riegelwood) North Carolina USA BSK 360 C 2016 Q2
PT OKI/APP Sumatra Indonesia BHK 2,800 C 2017 Q3
Double A Alizay France BHK 130 C 2016 Q3
ITC Bhadrachalam India BCTMP 105 C 2016 Q3
SodraCell Varo Sweden BSK 275 C 2016 Q3
Domtar (Ashdown) Arkansas USA BSK 230 -95 C 2016 Q3
Domtar (Ashdown) Arkansas USA BHK -135 C 2016 Q3
UPM Kaukas Finland BSK/BHK ? C 2016 End
Columbia Pulp Washington USA UKP (Straw) 125 P 2016
Yongfeng* Xuyong China Bamboo 200 C 2016
Irving New Brunswick Canada BSK 30 C 2016
Key BHK Capacity Developments
• Sun Paper Yanzhou switch to BHK, Q4: 250-300k?
• Old Town closures, Q4/Q1: ~180k BHK/BSK
• Klabin Ortigueira, Q1: 1.1 million BHK
• APP OKI, Q3/Q4: 2.0-2.8 million BHK
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Key BSK Capacity Developments
• Svetlogorksy BSK/BHK/DP 1H2016: 400k
• Klabin Ortigueira 1Q16: 400k
• IP Riegelwood 2Q16: 360k
• Domtar Ashdown 3Q16: >300k
• Sodra Varo 3Q16: 275k
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FX: Strong Dollar Continues in 2016
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$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
EUR USD
CAD USD
BRL USD
2016 Forecast Summary
• Continuing strong dollar, with upside risk in terms of
dollar strength with acceleration of the US economy
– Putting downward pressure on production costs
• Modest acceleration in growth of paper and board
demand, mostly b/c of packaging
• In the pulp market, supply-side changes remain
more prominent than usual
• For BHK, given the new assumed timing for the
South Sumatra project, profitability seems to be on a
downward trend through the end of 2016
• For BSK, 2nd half of 2016 could see capacity growth
> demand growth, esp. for SBSK/fluff
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