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WORLD FIBRE OUTLOOK UP TO 2030 / 21 Jan 2019

How future will reshape global pulp and recovered paper demand and supply

Pöyry’s World Fibre Outlook up to 2030 provides in-depth analysis and long-term forecasts of major economic and market trends affecting the demand, supply and pricing of papermaking fibre and specialty pulps in all key regions of the world. The main focus of the study is on pulp and recovered paper demand and changes in papermaking furnish patterns, supply, trade and pricing. Specific issues include the role of new constraints on global fibre trade, new innovative ways to overcome these constraints, role of substitution, future of specialty pulps and new drivers of price formation, to mention but a few.

STRONG TAILWIND FOR VIRGIN FIBRE

The pulp industry has maintained a strong tailwind for a few years now, and for many reasons. Steady growth of the global tissue paper market, exacerbated by tightening supply of recovered paper, dramatic changes in China’s papermaking fibre furnish, and most recently, the strong global economic recovery along with the enforced recyclables ban in China have all contributed to the present state of the pulp market.

At the moment, the fundamentals of the papermaking and specialty pulp markets look solid – earnings keep growing and market imbalances have not distorted the overall positive sentiment of the industry. The macroeconomic environment is still extremely positive and investor optimism remains high, especially in the West, but the economic horizon is getting cloudier with various risks rising, including trade conflicts between the US and China, Brexit, economic instability in some of the leading emerging markets, etc. Risks of deteriorating market balances for the pulp industry have not materialized due to still growing demand and coincidental and intentional downtime.

CHINA IS SWAYING THE GLOBAL FIBRE BALANCES

China, which is the world’s biggest importer of solid waste has stopped accepting any recycled plastic and unsorted recovered paper from abroad. By banning waste imports, China is hoping to improve the quality of imported recyclables. Imports of mixed paper have been forbidden since the beginning of 2018, and an all-out ban will be enforced in 2020.

This will have enormous implications on global fibre balances. Out of the 115 million tons of recovered paper collected and 46 million tons exported from North America and Europe in 2017, some 21 million tons were shipped to China. First, where will this surplus be used? Second, what will happen to the Chinese paper industry – mainly recycled containerboard and cartonboard mills - as domestic collection rates cannot be substantially increased? Will they run out of fibre? Third, how is the Chinese paper industry going to respond to this challenge – via investment in containerboard or OCC pulp mills outside China, or would this lead to increased demand for OCC and mixed paper by non-Chinese players aiming to serve the Chinese paperboard markets from North America, Europe or Southeast Asian platforms? Fourth, would all this trigger furnish changes towards virgin fiber pulps inside and outside China?

HOW TO SUPPLY GROWING NEEDS FOR FIBRE?

While the consumption of fossil-based materials has continued to rapidly pick up globally – plastics in particular – environmental concerns have emerged and brought the opportunities of circular bio-based economy into discussion. Products based on renewable raw materials are increasingly perceived as a more sustainable solution to substitute fossil-based plastics, fuels and chemicals. Even though the market entrance of novel bio-products has taken longer than expected, major upside potential for both conventional and new forest industry products exists. What are the bio-products and applications with near- and medium-term potential?

Wood supply from plantation forests will provide an increasing share of the overall fibre supply in the future. What is the role of various geographies in the supply of and demand for plantation-grown wood in the future? What are the pulpwood surplus and deficit regions, and how is this affecting the future pulp supply volumes? And what is the role of natural forests in the global pulpwood market?

Concerns about climate change and sustainability have also spurred interest in non-wood fibre. The long-term trend in utilization of non-wood fibre raw materials has been downward, but there is renewed interest in annual crops as raw material for pulp and paper use, e.g. moulded fibre products, tissue, packaging. What will be the role of non-wood fibres in the global fibre markets in the future?

Pöyry has published long-term forecasts of global pulp and recovered paper supply and demand since mid-1980s at three-year intervals. Over all these years, Pöyry’s World Fibre Outlook has become an essential reference report for all business participants, including pulp and paper companies, various suppliers and solution providers, investors, financiers, institutions, pulp traders, logistics companies and other interest groups.  The latest update of the study has been published in December 2018.

Editors:

Mr. Timo Suhonen, Principal, Pöyry Management Consulting
Tel + 358 10 33 22600
e-mail

Mr. Tomi Amberla, Principal, Pöyry Management Consulting
Tel +358 10 3323627
e-mail

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Contact information

Timo Suhonen
Principal, Management Consulting
Tomi Amberla
Principal