Paper360 - January/February 2018 - 15
USA Will Be Significantly Impacted by
Net exports account for about 40% of total US RCP
Exports to China
2016: 29 Million Tonnes of
Fig. 3: Analysts expect US containerboard exports to reach about seven
million metric tons by 2018. Source, RISI.
Although he did not speak at the North
American conference, Esko Uutela, tissue
principal of RISI and renowned globally,
did speak at the TAPPI/RISI tissue event in
Miami, FL, which was held a couple of weeks
prior to the North American conference.
There, Uutela noted that China has now
surpassed Western Europe in market size.
North America is still the largest. China
has been the largest producer of tissue
since 2015. The global market is growing
by about one million tons per year. The
tissue sector is very dynamic and is now a
A new retailer entering the North
American market, Lidl, is a hard discounter.
Therefore, the pressure will be on other retailers to reduce their prices. This will put pressure on producers as well.
There is a danger of global overcapacity
as many new projects have been announced.
Some restructuring may be needed.
On the packaging end, global demand for
containerboard (kraftliner and medium,
recycled, and virgin) reached 162 million metric tons in 2016, according to Ken
Waghorne, vice president, global packaging
for RISI. Asia is the largest market by far, he
said; global capacity will grow, but mostly in
domestic recycled containerboard (Fig. 2).
North American prices have rallied since
August 2016. The US corrugated box market
accelerated in late 2016 and has stayed strong
through August 2017.
Exports to other
2016: 7 Million Tonnes of
Fig. 4: There have been drastic changes in Chinese RCP import policy.
US kraftliner exports have been more
resilient than expected between 2014 and
2016, almost five million metric tons.
Containerboard exports should increase from
2018 onwards to reach about seven million
metric tons (Fig. 3).
Globally, demand growth in Latin America
should increase as the Brazilian economy
improves. However, Asian capacity growth
should outstrip demand this year. It is the same
picture in Europe. But, demand growth in
emerging Europe will accelerate toward 2018.
North American operating rates should
improve through 2018 and stay above the rest
of the world.
Waghorne also spoke about recovered
paper and boxboard (all packaging papers
except containerboard). He said OCC prices
are on a roller coaster and the situation is even
worse in China. As already noted, there have
been some drastic changes in Chinese RCP
import policy. It has banned the import of
unsorted waste paper, it is trying to improve
its domestic recycling programs, and it is
revising its RCP import permit management
system. In 2016, China imported 28.5 million metric tons of RCP, of which OCC was 59
percent and mixed paper 20 percent. About 35
percent of Chinese RCP comes from the US,
which will be affected by the new Chinese
policies (Fig. 4). About 40 percent of US RCP
is exported, with China being the biggest customer by a long margin.
In the boxboard sector, the majority of the
demand is from Asia: 27.8 million metric tons.
It is a large and fast growing market. The North
American and Western European market are
mature, at 25.6 million metric tons total.
Overall, demand growth is restrained for
a few reasons, including a spend shift by
consumers. Capacity is growing faster than
demand and boxboard is one sector where
plastic substitution is a real threat, e.g., the
growth of cereal pouch bags.
In 2016, fluff pulp accounted for about 10
percent of the world's paper grade market pulp
supply. It is a growing segment of the pulp
industry thanks to favorable demographics
and economic factors.
In 2016, global consumption of fluff pulp
reached 5.9 million metric tons. In the next five
years annual growth should be in the range of
4.7 percent. Emerging markets will account
for most of the growth, although mature markets will still see some growth thanks to aging
Patrick Cavanagh, associate economist at
RISI, explained that per capita income drives
consumption of the hygienic products made
from fluff pulp. As incomes rise, more is spent
on convenience goods. There is a large consumer base in emerging markets where income
He noted that hardwood fluff pulp may be a
disruptive force in the market. Costs are lower
and if the product's quality is high enough, it
could put pressure on traditional producers.
NEWSPRINT AND GRAPHIC PAPER
RISI co-founder John Maine, vice president,
graphic papers, painted a dismal picture for
graphic paper. He noted that the decline for
P&W grades began in 2008 while that of newsprint started more than 15 years ago, in 2001.
Paper360º JANUARY/FEBRUARY 2018