Paper360 - January/February 2018 - 38

Source: FisherSolve™ © 2018 Fisher International, Inc.

Figure 4

Figure 5

Source: UN Comtrade, FisherSolve™ © 2018 Fisher International, Inc.

Figure 6

Source: FisherSolve™ © 2018 Fisher International, Inc.

Figure 7

38

Paper360º

JANUARY/FEBRUARY 2018

continent's needs. Italy must compete with other countries in Europe and
Asia for a limited supply of board.
Of the world's main grades of paper, coated mechanical is by far the most
widely traded. Figure 5 shows that only about 30 percent of coated mechanical is sold in the country of manufacture. A large portion of production is
exported outside its region of origin.
The four biggest producers-Finland, Japan, Germany and the US-have
similar production volume at 2-2.5 million tons, but very different consumption and distribution patterns as shown in Figure 6. At one extreme is
Finland, which exports almost all its production, much of it inter-regionally.
At the other extreme, Japan has a relatively closed system, with a small
export tonnage and somewhat larger imports. In the US, most production
is consumed locally, but both exports and imports are shared between
intra- and inter-regional trade.
Germany has similar production to the other three countries, but a small
percentage is consumed within Germany itself. Exports and imports-
almost all within Europe-are both far greater than domestic tonnage
consumed locally. This prompts the question: Could producers outside
Europe capture part of the German domestic market?
Fisher's Cost Benchmarking data and analytics show that there are indeed
both Asian and North American producers in the lowest-cost quartile for
coated mechanical delivered to Berlin. Why would they not export? One
reason may be that they can be more profitable selling at home. Still, there
may be opportunities for improvement.
Let us assume that prices for coated mechanical are on the floor-i.e.,
at about the mid-point of the fourth quartile of production costs. Typically,
higher-cost mills tend to shut down if prices fall below this floor price and
market forces push prices back up.
Figure 7 shows that for coated mechanical delivered to Tokyo, the floor
price is significantly lower than the floor price in Berlin. This suggests that
some Asian producers might be able to divert some of their output to Berlin
and earn higher margins, even with the added freight costs.
WHAT ABOUT EXCHANGE RATES?
It seems logical to assume that a strong home currency will make a country
vulnerable to imports. Some time ago, we asked whether the strengthening
US dollar might make it very attractive for European producers to ship coated
freesheet products to the US.
Yet, as the US dollar strengthened from 2014 through 2016, the 12-month
moving average of coated freesheet imports from Eurozone countries
remained remarkably flat. In fact, our analysis shows very little relationship between exchange rates and imports over time. Statisticians look to the
coefficient of determination (R2) as a measure of how much a change in one
variable is causing a change in another. Between 2010 and 2016, the R2 was .08,
meaning only 8 percent of the change in imports of coated freesheet could be
explained by changes in exchange rates. This is considered to be statistically
insignificant and likely comes as a surprise to many industry observers.
So we see that different grades of pulp and paper display quite different
global trade patterns. Factors such as raw material availability, home market
dynamics, transportation costs as a percentage of value, and competition for
supply all play important roles in explaining why some grades are traded so
much more regularly than others.
Tedd Powers is senior consultant for Fisher International; reach him at tpowers@fisheri.com. The information and analyses for this article are drawn
from FisherSolve™, the industry's premier market intelligence database and
analytics resource. Visit www.fisheri.com.
www.tappi.org


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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
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http://www.nxtbook.com/naylor/PPID/PPID0017
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http://www.nxtbook.com/naylor/PPIS/PPIS0316
http://www.nxtbook.com/naylor/PPID/PPID0016
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http://www.nxtbook.com/naylor/PPIS/PPIS0215
http://www.nxtbook.com/naylor/PPIS/PPIS0714
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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
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http://www.nxtbook.com/naylor/PPIS/PPIS0713
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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