Paper360 - January/February 2010 - (Page 37)

BWPA/HAWKINS WRIGHT SYMPOSIUM IN TOUCH Dateline: LONDON WHAT DOES THE FUTURE HOLD FOR PULP AND PAPER PRODUCERS? Here’s a snapshot of ideas from the BWPA/ Hawkins Wright Symposium held in November. AMANDA MARCUS THE THIRD “P” — PULP, PAPER, POWER One way to survive in a shifting market would be to form BioCombines or integrated production of pulp/paper and bio energy/products, suggested Stig Anderson. This is a long-term option involving huge setup costs which work best for “greenfield” sites. “Brownfield” BioCombines could be linked with other options such as niche, Stig Andersen Senior industry analyst value-added products. But in the longer Nordea CMB, Norway term, it will be hard for them to compete against greenfield combines, Andersen feels. Huge pulp mills will be built where competitive advantages are best. Over the next 10 years, he expects to see a lot of these models, some in partnership with energy, oil and chemical companies—though maybe not in Europe. MARKET PULP: AN OUTLOOK In looking at the supply/demand balance of the pulp industry, Oliver Lansdell reiterated the sentiment that old macro drivers are on their way out, discounting the likelihood of a rebound in P&W demand in mature markets to historical levels. While economic indicators for 2010 are largely optimistic, they are starting Oliver Lansdell Research manager from a very low comparative base. A lot Hawkins Wright Ltd., UK of cheap money has found its way into commodities and equities and bubbles are forming. The “big unknown” for next year is what happens in Indonesia. Its pulp capacity has grown by 1.2 million tonnes in the last few years but that tonnage hasn’t yet hit the market due to problems with fiber procurement. These issues have now been resolved, but with producer stocks at six-year lows, it will take a long time to fill the pipeline. “We are quite bearish about demand prospects in North America and Europe,” says Landsdell who sees an L-shaped recovery at best. “On the plus side, while half the world’s bleached chemical market pulp still goes to P&W, half goes into tissue and fluff and these markets should be growing at trend again by 2011,” he says. CANADA: SPEND IT WISELY In Joe Nemeth’s view, the industry in general—and Canada in particular— must choose to invest wisely. An average ROCE of 4% is not exactly enviable and for Canadian producers, four of the last five years’ results have actually been negative. At their peak in 2000, softwood market pulp mills in Canada were producing nearly eight million tonnes per Joe Nemeth VP Sales & Marketing year, some 65% of the world’s capacity. Canfor Pulp Limited Today, that figure is down to only about Partnership, Canada five million tonnes. From 2016, Canadian producers are likely to face a large deficit of residual chips as competition for biomass increases. One of the challenges in Canada is the lack of clear regulation for carbon trading, for example, and of hard targets on green energy. Much of Canada is driven by regional monopolies which discourage investment. “However, in the future, energy will become a real opportunity for the industry,” says Nemeth. “The brownfield model is exciting. Mills have the existing infrastructure and the expertise and there are lots of possibilities out there to drive a competitive advantage in green energy.” WHY WE NEED TO THINK OUTSIDE THE BOX “Is the party over for pulp producers in Europe?” questioned Ulf Edman. It needn’t be if they can move away from being a commodity product, and then link the R&D department with the sales department to get things happening. Pulp is a renewable product and that’s a huge opportunity. The industry has done so much to Ulf Edman President, Södra Cell avoid environmental problems but still International, Sweden doesn’t talk about it, said Edman. Carbon footprinting will probably be the next big issue and the industry needs to promote its advantages as a whole on this. Pulp suppliers have a strong environmental position, so use it, before someone else does. Amanda Marcus is a freelance journalist living in the U.K. She can be reached at: Paper360º January/February 2010

Table of Contents for the Digital Edition of Paper360 - January/February 2010

Paper360 - January/February 2010
Over the Wire
Outlook: North America 2010
Confronting the Carbon Challenge
Improve Your Energy Efficiency
Feature: Paper Machine Clothing
Around the Industry
Association News
Improving Print Performance
Tracking Tension
Dateline: London
Index of Advertisers

Paper360 - January/February 2010