Paper360 - January/February 2018 - 14

trendspotting | OUTLOOK 2018

Pulp in a Frenzy
Growth, inflation and uncertainly mark the industry's
global outlook; but markets should loosen in early 2018.
GRAEME RODDEN

Economists see hope for some
sectors of the forest products industry-but
the bad news for graphic papers seems to
have no end.
Lassa Sinikallas, director, macroeconomics at RISI, was the kickoff speaker at the 32nd
annual RISI North American Conference in
Boston this past October. Sinikallas said the
global economic outlook has three themes:
growth, inflation and uncertainty. He is looking at moderate GDP growth globally.
In North America, the estimate is for 2.7
percent growth in 2018. China is still experiencing better growth than other regions with
a 5.9 percent rise expected. Latin America is
on pace for 2.4 percent growth in 2018 while
Europe can look for an increase in GDP of
1.7 percent.
Both developed and developing economies
are showing promise. The US is doing well
while China is in transition, although the
fiscal and monetary stimuli seem to have
worked well.
There is positive momentum in Europe,
Sinikallas continued, but there is some risk
of deflation.

Uncertainties do make the global economy
brittle. These include the US political situation, geopolitical tensions, populism, and low
population growth.
As well as the RISI economists, several
guest speakers contributed to the event. Pete
Madden, president, Drax Biomass, said industrial pellet demand continues to increase with
significant growth in the UK, Japan, South
Korea, and the Netherlands. Madden said that
pellet-fueled bioenergy offers a cost-effective,
reliable and low-carbon alternative to coal.
Rod Young, founder and now chief economic advisor of RISI, began the forecast
for the various pulp, paper and board markets. Looking at pulp, he said the market is
in a frenzy, with sustained momentum for
bleached hardwood kraft (BHK). Prices have
rebounded in bleached softwood kraft (BSK).
Factors that led to the situation include
the environmental crackdown in China,
combined with its moratorium on recovered paper (RCP) import licenses and its ban
on imports of some RCP grades. There was
also unexpected downtime and a slower than
expected ramp up of the giant OKI mill. BSK

Fig. 1: Most P&B growth is expected to be in the packaging end.
Source, RISI.

14

Paper360º

JANUARY/FEBRUARY 2018

producers are taking advantage of the high
BHK prices in China.
Young described three near-term
conditions:
* First, there is seasonal strength in the P&W
markets. Pulp prices are high, therefore
paper prices will increase. Inventories of
BHK are low across the industry.
* Second, there have been some large pulp
capacity additions; but there has been
some unexpected downtime to offset the
new capacity. Suppliers may take more offsetting steps as more new capacity enters
the market.
* Third, there is a narrow price differential
between dissolving pulp and BHK, so some
swing capacity is going back to paper grade.
Young said that, in 2018, world production
of paper and board will increase-but very
slowly (Fig. 1). Most of the growth will be in the
packaging end. There will be little BHK expansion, but more BSK expansion. Pulp markets
will loosen in the first half of 2018 and the
current high prices will be vulnerable. Later
in the year, market conditions will tighten as
capacity expansion slows.

Fig. 2: Asia is the largest market for containerboard, say analysts.
Source, RISI.

www.tappi.org


http://www.tappi.org

Table of Contents for the Digital Edition of Paper360 - January/February 2018

Setpoint
Over the Wire
On the Journey to Injury-Free
2018 Outlook
Welcome to Scappoose
A Novel Synthetic Adsorbent for Pitch Control
TAPPI Journal Summaries
A New Resource for R&M Professionals
Reliability Interview: Steven Mjoen, Catalyst Paper
Leadership in Reliability & Maintenance
Global Trade and the Pulp and Paper Industry
TAPPI News
ASPI News
Advertisers’ Index
Paper360 - January/February 2018 - Intro
Paper360 - January/February 2018 - cover1
Paper360 - January/February 2018 - cover2
Paper360 - January/February 2018 - 3
Paper360 - January/February 2018 - 4
Paper360 - January/February 2018 - 5
Paper360 - January/February 2018 - Setpoint
Paper360 - January/February 2018 - 7
Paper360 - January/February 2018 - Over the Wire
Paper360 - January/February 2018 - 9
Paper360 - January/February 2018 - On the Journey to Injury-Free
Paper360 - January/February 2018 - 11
Paper360 - January/February 2018 - 12
Paper360 - January/February 2018 - 13
Paper360 - January/February 2018 - 2018 Outlook
Paper360 - January/February 2018 - 15
Paper360 - January/February 2018 - 16
Paper360 - January/February 2018 - 17
Paper360 - January/February 2018 - Welcome to Scappoose
Paper360 - January/February 2018 - 19
Paper360 - January/February 2018 - insert1
Paper360 - January/February 2018 - insert2
Paper360 - January/February 2018 - 20
Paper360 - January/February 2018 - 21
Paper360 - January/February 2018 - 22
Paper360 - January/February 2018 - 23
Paper360 - January/February 2018 - 24
Paper360 - January/February 2018 - 25
Paper360 - January/February 2018 - A Novel Synthetic Adsorbent for Pitch Control
Paper360 - January/February 2018 - 27
Paper360 - January/February 2018 - 28
Paper360 - January/February 2018 - 29
Paper360 - January/February 2018 - TAPPI Journal Summaries
Paper360 - January/February 2018 - 31
Paper360 - January/February 2018 - 32
Paper360 - January/February 2018 - Reliability Interview: Steven Mjoen, Catalyst Paper
Paper360 - January/February 2018 - Leadership in Reliability & Maintenance
Paper360 - January/February 2018 - insert3
Paper360 - January/February 2018 - insert4
Paper360 - January/February 2018 - 35
Paper360 - January/February 2018 - 36
Paper360 - January/February 2018 - Global Trade and the Pulp and Paper Industry
Paper360 - January/February 2018 - 38
Paper360 - January/February 2018 - 39
Paper360 - January/February 2018 - 40
Paper360 - January/February 2018 - 41
Paper360 - January/February 2018 - 42
Paper360 - January/February 2018 - TAPPI News
Paper360 - January/February 2018 - 44
Paper360 - January/February 2018 - ASPI News
Paper360 - January/February 2018 - Advertisers’ Index
Paper360 - January/February 2018 - cover3
Paper360 - January/February 2018 - cover4
http://www.nxtbook.com/naylor/PPID/PPID0018
http://www.nxtbook.com/naylor/PPIS/PPIS0218
http://www.nxtbook.com/naylor/PPIS/PPIS0118
http://www.nxtbook.com/naylor/PPIS/PPIS0617
http://www.nxtbook.com/naylor/PPIS/PPIS0517
http://www.nxtbook.com/naylor/PPIS/PPIS0417
http://www.nxtbook.com/naylor/PPIS/PPIS0317
http://www.nxtbook.com/naylor/PPID/PPID0017
http://www.nxtbook.com/naylor/PPIS/PPIS0217
http://www.nxtbook.com/naylor/PPIS/PPIS0117
http://www.nxtbook.com/naylor/PPIS/PPIS0616
http://www.nxtbook.com/naylor/PPIS/PPIS0516
http://www.nxtbook.com/naylor/PPIS/PPIS0416
http://www.nxtbook.com/naylor/PPIS/PPIS0316
http://www.nxtbook.com/naylor/PPID/PPID0016
http://www.nxtbook.com/naylor/PPIS/PPIS0216
http://www.nxtbook.com/naylor/PPIS/PPIS0116
http://www.nxtbook.com/naylor/PPIS/PPIS0615
http://www.nxtbook.com/naylor/PPIS/PPIS0515
http://www.nxtbook.com/naylor/PPIS/PPIS0415
http://www.nxtbook.com/naylor/PPID/PPID0014
http://www.nxtbook.com/naylor/PPIS/PPIS0315
http://www.nxtbook.com/naylor/PPIS/PPIS0215
http://www.nxtbook.com/naylor/PPIS/PPIS0714
http://www.nxtbook.com/naylor/PPIS/PPIS0614
http://www.nxtbook.com/naylor/PPIS/PPIS0514
http://www.nxtbook.com/naylor/PPIS/PPIS0414
http://www.nxtbook.com/naylor/PPID/PPID0013
http://www.nxtbook.com/naylor/PPIS/PPIS0314
http://www.nxtbook.com/naylor/PPIS/PPIS0214
http://www.nxtbook.com/naylor/PPIS/PPIS0713
http://www.nxtbook.com/naylor/PPIS/PPIS0613
http://www.nxtbook.com/naylor/PPIS/PPIS0513
http://www.nxtbook.com/naylor/PPIS/PPIS0413
http://www.nxtbook.com/naylor/PPIS/PPID0012
http://www.nxtbook.com/naylor/PPIS/PPIS0313
http://www.nxtbook.com/naylor/PPIS/PPIS0213
http://www.nxtbook.com/nxtbooks/naylor/PPIS0712
http://www.nxtbook.com/nxtbooks/naylor/PPIS0612
http://www.nxtbook.com/nxtbooks/naylor/PPIS0512
http://www.nxtbook.com/nxtbooks/naylor/PPIS0412
http://www.nxtbook.com/nxtbooks/naylor/PPIS0312
http://www.nxtbook.com/nxtbooks/naylor/PPIS0212
http://www.nxtbook.com/nxtbooks/naylor/PPIS0711
http://www.nxtbook.com/nxtbooks/naylor/PPIS0611
http://www.nxtbook.com/nxtbooks/naylor/PPIS0511
http://www.nxtbook.com/nxtbooks/naylor/PPIS0411
http://www.nxtbook.com/nxtbooks/naylor/PPIS0311
http://www.nxtbook.com/nxtbooks/naylor/PPIS0211
http://www.nxtbook.com/nxtbooks/naylor/PPIS0710
http://www.nxtbook.com/nxtbooks/naylor/PPIS0610
http://www.nxtbook.com/nxtbooks/naylor/PPIS0510
http://www.nxtbook.com/nxtbooks/naylor/PPIS0410
http://www.nxtbook.com/nxtbooks/naylor/PPIS0310
http://www.nxtbook.com/nxtbooks/naylor/PPIS0210
http://www.nxtbook.com/nxtbooks/naylor/PPIS0110
http://www.nxtbook.com/nxtbooks/naylor/PPIS0609
http://www.nxtbookMEDIA.com