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Outlook for Dissolving Pulp Supply, Demand, Costs and Prices A multi-client service, available now HAWKINS WRIGHT www.hawkinswright.com
Outlook for Dissolving Pulp
Supply, Demand, Costs and Prices
A multi-client service, available now
HAWKINS WRIGHT
www.hawkinswright.com
H A W K I N S W R I G H T
O u t l o o k f o r D i s s o l v i n g P u l p
What our Outlook for Dissolving Pulp service offers...
We launched the Outlook service for Dissolving Pulp Demand, Supply and Prices in March 2013. The service has quickly established itself as one of the most authoritative in the industry, with some of the largest and most knowledgeable companies in the sector commenting on its accuracy and value. Today, dissolving pulp producers who account for over 80% of supply subscribe to the service, as do a vast array of buyers, international agents and trading houses, state and provincial governments and financial institutions. Our unique analysis looks at the performance of the dissolving pulp sector in conjunction with the paper grade pulp sector.
The Outlook for Dissolving Pulp service comprises 4 reports per year that provide analysis of:
• Dissolving pulp demand. 2015 review, historical analysis 2000-2015 by region/country. Five year forecast demand by country. End-use market review , including rayon capacity listing by mill. Developments in paper grade pulp market and the impact on DP sector. Specialty cellulose demand by grade.
• Textile market review. Overview of supply and demand trends in the cotton and polyes-ter industries and a discussion on the likely impact on the demand for rayon and dissolv-ing pulp.
• Dissolving pulp supply. Current capacity by mill and an overview of paper grade capacity and analysis of potential conversions to DP. Capacity forecast summary to 2020, by grade and by mill.
• Supply/demand balance. Long term annual projections and a discussion about short term fundamentals.
• Production costs. Regional supply costs for commodity grade dissolving wood pulp. The Industry’s cost curve. Trends in global fibre prices. (The cost data is sourced from Hawk-ins Wrights unique annual cost survey).
• Prices. Macro-economic review. Impact on cost competitiveness of exchange rate fluctu-ations. Dissolving pulp in the context of other global commodities, including paper grade pulp. Five year price forecast for commodity DWP cif. China. BEKP net price forecast. Outlook for specialty grade dissolving pulp prices.
The following pages include a table of contents and list of figures and tables included in a typical Outlook for Dissolving Pulp report.
About Hawkins WrightHawkins Wright is an independent consultancy providing a range of strategic, forecasting, market
intelligence and business information services to the international forest products and bioenergy industries.
Since 1982 Hawkins Wright has provided authoritative and cost-effective services based on in-depth research of the global forest, pulp & paper and bioenergy industries. These services include private consultancy assignments covering a full range of marketing and strategic subjects as well as regular multi-client reports and newsletters.
Our consultancy services build on our global perspective of the macro- and micro-economic trends driving the international forest industry and downstream product markets. Assignments can range from advice on a client’s business development or feedstock sourcing strategies to highly detailed mar-ket feasibility assessments of prospective projects.
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The contents of a typical reportSection One: Chemical Cellulose Historica DemandWorld chemical cellulose demand by regionWorld dissolving wood pulp demand by regionWorld cotton linter pulp demand by regionSpecialty grade DP demandChinese import demand by country of originChemical cellulose demand in the con-text of paper grade pulp demandGlobal paper and board market review
Section Two: Chemical Cellulose Forecast DemandEnd-use markets for chemical celluloseThe global textile industryCellulosic fibre production by region/countryCotton market summaryPolyester market summaryViscose market summaryWorld rayon capacity by regionAcetate and Ether grade market reviewChemical cellulose demand forecast by regionRayon grade demand forecast by regionSpecialty grade demand forecast by region
Section Three: Chemical Cellulose SupplyWorld chemical cellulose capacity by region and by gradeProject description by regionCapacity table by countryPaper grade pulp capacity review
Section Four: Chemical Cellulose Supply & DemandDissolving wood pulp supply and de-mand ratioViscose grade supply and demand ratioSpecialty grade pulp supply and demand ratioPaper grade pulp supply and demand ratio
Section Five: Chemical Cellulose Production CostsWood fibre costs by regionCotton linter pulp cost review Global weighted average cash cost of production for rayon grade producersRayon grade dissolving pulp cost curvePaper grade cash cost summary
Section Six: Price ForecastMacro economic reviewDissolving wood pulp prices vs. other commoditiesDissolving wood pulp price and the US$ index Dissolving wood pulp price and BEKP pricesDissolving wood pulp prices in other currenciesHistorical trend price in real and nomi-nal termsTrend price forecast Baseline forecast (commodity and spe-cialty grade)Antidumping dutiesRisks to the forecast
Appendices: DWP capacity by region and by millRayon capacity by region and by millWorld chemical cellulose demand since 1960Trend DWP pricing, nominal and real
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List of Tables and Figures contained in a typical reportTable 1: World chemical cellulose demandTable 2: DWP demand by regionTable 3: Cotton linter pulp demand by regionTable 4: Specialty grade chemical cellulose demandTable 5: Year-to-date DWP demand reviewTable 6: Year-to-date DWP trade matrixTable 7: Spotlight on Chinese chemical cellulose consumptionTable 8: Chinese imports of DWP by country of originTable 9: World chemical cellulose demand in the context of paper grade fibre demandTable 10: Fibre production for the global textile industry by gradeTable 11: World viscose capacity forecastTable 12: Chemical cellulose demand forecastTable 13: Viscose grade chemical cellulose demand forecastTable 14: Specialty grade demand forecastTable 15: World DWP capacity summaryTable 16: North American DWP capacityTable 17: European DWP capacityTable 18: Other DWP capacityTable 19: Asian DWP capacityTable 20: Recently active/projected swing capacityTable 21: DWP capacity by country and regionTable 22: DWP (commodity grade) capacity by country and regionTable 23: DWP (specialty grade) capacity by county and regionTable 24: Paper grade market pulp capacity overviewTable 25: DWP supply-demand ratioTable 26: Potential DWP capacity closuresTable 27: DWP supply and demand, viscose gradeTable 28: DWP supply and demand, specialty gradeTable 29: Supply/demand outlook for bleached paper grade pulpTable 30: World weighted average production costs by region, commodity grade DWPTable 31: Global fibre pricesTable 32: Chinese hardwood imports by country of originTable 33: Capital Economics GDP forecastTable 34: DWP price, baseline forecast by quarter, commodity grade, CIF ChinaTable 35: DWP price, specialty grade, indexTable 36: North American DWP mill capacity listingTable 37: European DWP mill capacity listingTable 38: Chinese DWP mill capacity listingTable 39: Asian DWP mill capacity listingTable 40: Other DWP mill capacity listingTable 41: Rayon capacity listing (confirmed projects only)Table 42: DWP price trend forecasting (using 1970 as base year)Table 43: DWP price trend forecasting (using 2000 as base year)Figure 1: Different pulping processes and yieldsFigure 2: Alpha Cellulose content by grade of pulpFigure 3: Alpha Cellulose by end use vs. priceFigure 4: Key qualities of the major textile fibresFigure 5: The textile value chainFigure 6: World chemical cellulose demand by gradeFigure 7: World chemical cellulose demand by end-useFigure 8: DWP demand growth by regionFigure 9: Evolution of DWP demand by regionFigure 10: World DWP demand by regionFigure 11: World cotton linter pulp demand by regionFigure 12: Chemical cellulose demand by gradeFigure 13: Specialty grade chemical cellulose demand by gradeFigure 14: Year-to-date demand growth
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List of Tables and Figures contained in a typical report (continued)Figure 15: Viscose grade dissolving pulp shipments by quarterFigure 16: Specialty grade dissolving pulp shipments by quarterFigure 17: Chinese DWP imports vs. Chinese viscose productionFigure 18: The seasonality of Chinese DWP imports and viscose staple fibre productionFigure 19: Fibre demand by grade as an indexFigure 20: World-20 bleached chemical pulp demand growthFigure 21: The end-use markets for chemical celluloseFigure 22: The global textile industry by gradeFigure 23: World fibre market share my gradeFigure 24: World viscose staple fibre productionFigure 25: World acetate tow productionFigure 26: World cotton consumption, production and stocksFigure 27: Historical staple fibre pricesFigure 28: Historical staple fibre prices as an indexFigure 29: Viscose staple fibre price premium/discount vs. polyester and cottonFigure 30: World viscose capacity forecastFigure 31: World viscose capacity by regionFigure 32: DWP demand forecastFigure 33: Chemical cellulose supply by gradeFigure 34: Chemical cellulose supply by regionFigure 35: DWP supply by regionFigure 36: Chemical cellulose supply by feedstockFigure 37: DWP supply commodity grade by feedstockFigure 38: DWP supply specialty grade by feedstockFigure 39: World DWP capacity summaryFigure 40: North American DWP capacityFigure 41: European DWP capacityFigure 42: Other DWP capacityFigure 43: Asian DWP capacityFigure 44: Annual change in bleached chemical pulp capacityFigure 45: Supply/demand ratio vs. DWP pricingFigure 46: DWP supply-demand ratioFigure 47: Supply/demand outlook for bleached paper grade pulpFigure 48: World weighted average production cost historyFigure 49: Index of selected major pulp producing currencies against US dollarFigure 50: World weighted average production costs by region, commodity grade DWPFigure 51: World weighted average ‘all in’ production costs by region, commodity grade DWPFigure 52: Net equilibrium price, commodity grade dissolving pulp producersFigure 53: Chinese hardwood imports by country of originFigure 54: Cotton Linter Pulp priceFigure 55: Cotton Linter priceFigure 56: Cotton linter pulp converting marginFigure 57: Industry profitabilityFigure 58: BSKP cash costs, CIF ChinaFigure 59: BHKP cash costs, CIF ChinaFigure 60: Pulp prices versus other commoditiesFigure 61: Exchange rates: US dollar indexFigures 62-68: Exchange ratesFigure 69: Chinese DWP prices (commodity grade) in different currenciesFigure 70: Chinese DWP prices (commodity grade) in different currenciesFigure 71: DWP price, baseline forecast by month, commodity grade, CIF ChinaFigure 72: DWP baseline forecast by year, commodity grade, CIF ChinaFigure 73: DWP price differentials with BSKP and BHKP, forecastFigure 74: High alpha paper prices, indexFigure 75: World chemical cellulose demand, from 1960Figure 76: Historical trend price for DWP, from 1970Figure 77: DWP prices since 1970, nominal
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Sample pagesSECTION
ONE: QUARTERLY
SHIPMENTS
OFDW
P
Viscose grade dissolving pulp shipments by quarter, 2013-2015
18
Source: Hawkins Wright
Specialty grade dissolving pulp shipments by quarter, 2013-2015
Source: Hawkins Wright
The chart opposite shows thequarterly evolution of globaldeliveries of viscose grade dissolvingpulp. Shipments weakened throughQ4-2014 and Q1-2015 on the backof widespread downtime in theChinese viscose industry. Shipmentsstarted to recover during Q2 asviscose production improved.
900
920
940
960
980
1,000
1,020
1,040
1,060
1,080
Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 Q1-2015 Q2-2015
thou
sand
tonn
es
270
280
290
300
310
320
330
340
Q1-2013 Q2-2013 Q3-2013 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 Q1-2015 Q2-2015
thou
sand
tonn
es
The chart opposite shows thequarterly evolution of globaldeliveries of specialty gradedissolving pulp. Shipmentsweakened sharply through Q4-2014and Q1-2015, primarily driven byconsumer destocking of bothacetate pulp and acetate tow.Consumer destocking of ether gradepulp also served to depress demand.
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Source: Hawkins Wright
World viscose capacity forecast, 2011-2019
World viscose capacity by region, 2015
SECTIONTW
O: WORLD
VISCOSECAPACITY
Source: Hawkins Wright
China is the world’s largest viscose producingregion, with an estimated 3.8 million t ofcapacity in 2015. Indonesia is the secondlargest producing region, with an estimated0.54 million t of capacity. Europe’s capacity isestimated at 0.53 million t, the same as inIndia.
4,2354,715 5,165
5,640
7,030
+190+160
+500+240
+50+250
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 end 2019
thou
sand
tonn
es
Baseline capacity Planned capacity additions
---------------------- Forecast ----------------------
North America, 50
Europe, 530
China, 3845
India, 535
Indonesia, 545
Thailand, 150Japan, 45
Taiwan, 130
This year world viscose capacity is forecastto grow by 190,000 t. Capacity will growthrough Birla’s investment at Vilayat inIndia, and through several projects inChina. Note that start-up of the Sritex millin Indonesia has been pushed back to 2016.
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Sample pages
75
Cotton linter pulp converting margin
The cotton linter pulp producers' convertingmargin is the absolute difference between theselling price of cotton linter pulp and the inputcost of fibre (cotton linter). We assume thatone tonne of cotton linter pulp consumes1.39t of cotton linter.Since 2011 the margins of cotton linter pulpproducers have trended downwards, leadingto widespread curtailment. Although themargin grew through Q2 this year, it has sincedeteriorated again suggesting there will belittle incentive to increase cotton linter pulpproduction through the remainder of the year.
Source: Hawkins Wright
Cotton Linter Pulp Price (US$/t) Cotton Linter Price (US$/t)
Source: Hawkins Wright, Fibre 2 Fashion
SECTIONFIVE: COSTS–
COTTONLINTER
PULP
400
420
440
460
480
500
520
540
Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
US$
/t
CLP Converting Margin
The cotton linter pulp producers' converting margin is the absolute difference between the selling price of cotton linter pulp and the input cost of fibre (cotton linter)(Data based on a 3 month moving average)
High value encourages production
Low value discourages production
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
US$
/t
CLP Price
300
400
500
600
700
800
Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15
US$
/t
CL Price
APPENDIX
ONE: DISSOLVINGPULP
CAPACITYBY
MILL
European (.cont) Dissolving Wood Pulp Mill Capacity Listing
Source: Hawkins Wright
97
thousand tonnes per annum Total Total
end 2014 2015 2016 2017 2018 2019 2019
EuropeALTRI CAIMA PORTUGAL CAIMA HARDWOOD 90 +10 +5 - - - 105
Commodity 90 +10 +5 - - - 105Specialty 0 - - - - - 0
BIRLA SWEDEN ÖRNSKOLDSVIK SOFTWOOD 235 - - - - - 235Commodity 190 - - - - - 190Specialty 45 - - - - - 45
SODRA SWEDEN MORRUM HARDWOOD 135 +10 +10 +5 - - 160Commodity 135 +10 +10 +5 - - 160Specialty 0 - - - - - 0
STORA ENSO FINLAND ENOCELL HARDWOOD 150 - - - - - 150Commodity 150 - - - - - 150Specialty 0 - - - - - 0
TOTAL 1635 +30 +15 +55 +30 +10 1775Commodity 1290 +30 +15 +55 +30 +10 1430Specialty 345 - - - - - 345
Softwood 965 +10 - +50 +30 +10 1065Hardwood 670 +20 +15 +5 - - 710Softwood 620 +10 - +50 +30 +10 720Hardwood 670 +20 +15 +5 - - 710Softwood 345 - - - - - 345Hardwood 0 - - - - - 0
ALL GRADES
COMMODITY GRADES
SPECIALTY GRADES
GRADE
EUROPE
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Deliverables and order formAn annual corporate subscription to the Outlook for Dissolving Pulp service costs £3,950 (or the equiva-
lent in US dollars or euros). Existing subscribers to our other services qualify for a discounted price of £3,450. Discounted subscriptions are available on request for non-dissolving pulp producers. The service comprises:
• Two main reports published in March and September, containing detailed supply, demand and price analyses and five-year forecasts for dissolving wood pulp (both commodity and specialty grade). The reports are distributed as electronic and hard copies.
• Two interim price forecast updates, published in June and December. Taken together with the main reports, these short update reports allow the key forecast data and assumptions – in particular the price forecast – to be updated every quarter. Distributed electronically.
• Hawkins Wright’s response to any questions that the subscriber may have on matters relating to the international dissolving wood pulp market throughout the year. In this way Hawkins Wright can be used as a virtual extension of the subscriber’s own marketing or market research department.
• A personal presentation: it will usually be possible for a Hawkins Wright consultant to meet with each client at least once a year to make a presentation on market developments.
