RISI News

The January edition of RISI's World Pulp Monthly includes details that we have developed about a very large greenfield market pulp mill that is currently in development in Indonesia. This news could take many in the industry by surprise, and it will have implications for the long list of companies that are developing their own plans for BHK market pulp mills, especially in South America.

Are things really so bad for print media that the companies we thought were victors of the competitive wars have now become victims? Dead Tree Edition isn't so sure, so we're turning to our readers to help us understand.

For years the paper industry has been discussing how to communicate effectively with the public and to change the traditional image of the industry as forest damaging, polluting, outdated and inefficient.

Paper machine quality systems (QCS) are built to last; they are a long-term value investment, to be sure. But, did the original designers really expect these systems would last for decades? Maybe that's a moot point considering the reality today. The lifespan of many of the so-called legacy QCS systems is often being stretched from fifteen to twenty years, or even longer. Data from Fisher International show that there are about 1200 systems fifteen years or older still operating worldwide and almost one third of the total installed base is between 15 and 20 years old. Isn't that a little long in the tooth for a high-technology product?

The aggressive capacity expansion that has taken place over the last 10 years in Asia for both containerboard and boxboard has raised many questions and concerns, especially in the case of China. Previously we looked into the historical capacity data, and employed both macro- and micro-level factors to explain the dramatic increases in capacity in Asia to provide some explanation as well as an outlook on Asian capacity expansion over 2012-2013.

Beginning in November 2011, another bastion of the Canadian pulp and paper industry fell by the wayside joining sulfite pulp and greenfield newsprint mills. The Bank of Canada began issuing polymer banknotes, beginning with the $100 bill. In March, the new $50 bill will be introduced. By late 2013, the last of the paper bills, $5, $10 and $20, will be phased out. The Bank phased out the $1 and $2 bills long ago in favor of the now famous metal "Loonie" ($1 coin) and "toonie" ($2 coin).

The European containerboard market in 2010 continued to grow from the second half of 2009 thanks to a combination of growing corrugated box shipments driven by healthy industrial production and low containerboard inventory levels. One of the segments that grew particularly well is white top liner, which represented only 12% of all containerboard consumed in Europe in 2010. White top liner usage has been increasing over the last 10 years from just 5% in the beginning of the last decade thanks to increased high quality printing requirements on corrugated boxes and the development of shelf-ready packaging. White top testliner and white top kraftliner were similarly sized into the beginning of the last decade at 1.1 million tonnes in Europe, but thanks to improvements in fiber recycling technology, the size of the white top testliner segment has increased to over 2.1 million tonnes in 2010.

For the 16th time in just under two years, the leaders of the eurozone concluded a summit that was billed as the one that will save Europe from the debt crisis that has been wracking it since the spring of 2010. And once again, the leaders of the largest economic entity in the world did not fail to disappoint. While there were some positive long-term measures that were agreed to by most of the European governments, serious questions still remain. What exactly is the plan? How will it be implemented and enforced? And does it, as promised, save the euro?

For the 16th time in just under two years, the leaders of the eurozone concluded a summit that was billed as the one that will save Europe from the debt crisis that has been wracking it since the spring of 2010. And once again, the leaders of the largest economic entity in the world did not fail to disappoint. While there were some positive long-term measures that were agreed to by most of the European governments, serious questions still remain. What exactly is the plan? How will it be implemented and enforced? And does it, as promised, save the euro?

The year of 2011 is called the "year of coated woodfree paper" by most Chinese producers due to the wave of capacity expansion and resulting flood of coated woodfree production in China. Producers and traders have felt quite pessimistic since the turn in market prices in July. Prices have dropped approximately RMB 1,000/tonne, or about 15% from their level in June, and are predicted to decline further in the coming months because of the continued imbalance in the market and declining cost pressures as pulp prices fall. Producers keep asking me what they should do to survive in this market. I can understand their worries and have to say that this imbalance was inevitable given the wave of new coated capacity. The slowing in demand growth for paper due to some slowing in economic growth and competition faced by print media from electronic media is not helping matters.

In the past, the North American newsprint market was subjected to the boom/bust cycle in pricing. Most notable was the wild rollercoaster ride in US newsprint prices of 2007-2010. The RISI US East Coast price index for 45 gram newsprint soared $227/tonne over a 13-month period to reach record highs in November 2008, before collapsing $359/tonne during the ensuing nine months to hit the lows seen in August 2009. US newsprint prices then entered recovery mode with the RISI price index advancing $219/tonne by October 2010. With the exception of some minor erosion in the West, US newsprint prices have remained unchanged since October 2010, despite decent capacity utilization, rising production costs and the persistent narrowing of producers' profit margins. This duration of US price stability has not been seen since the 14-month run of static pricing in 1985-1986.

One of the "joys" of traveling long distances on a busy holiday weekend is seeing how highway rest stops try to greenwash their way out of providing paper towels.

The economy is still the primary driver of demand for recovered paper. As economic globalization has reshaped the world to become a so-called earth village, we must always remember that the recovered paper market is a global one with all the important players linked to each other.

Global tissue consumption has returned onto its steady growth trend line of 4% per year after only a small bend on the growth curve caused by the global recession in 2009. The global tissue industry reacted surprisingly fast to the recovery and we have seen a vast quantity of new project announcements, not only in China but also in Latin America, North America and Europe. But having an analytical and objective view to the global project situation, one specific feature stands out: the expansion speed of the main Asian (Chinese) tissue suppliers by far exceeds that of the most other top 20 global tissue companies. Actually, CMPC Tissue seems to be the only non-Asian origin tissue company being able to keep up with the investment pace of the Asian suppliers.

Think of 3D and your first thought is probably of wearing funny glasses to watch films such as Avatar or the new Tintin movie. But it's not only the worlds of film and TV where 3D technology is the latest buzz. Declining costs and increasing portability of equipment mean that 3D laser scanning and data acquisition methods are being employed across an ever-wider spectrum of industries: from mining to wind power, medicine to golf course maintenance.

Note to RISI readers who may feel that we are becoming the "All China -- All the Time" channel: I really did have another subject in mind for this Viewpoint, on South America, but then I received an interesting email from Lithuania and got a bit side-tracked. Next time, I promise, something different! Final caveat to those who are currently discovering the joys of trying to export logs into a grossly over-supplied China market -- the following will probably not make you feel a whole lot better, but we suggest that this is a trend which also deserves your attention.

Nearly six months after last writing a Viewpoint on the world dissolving pulp market, the worm has turned with prices dropping sharply in advance of the initial phase of a huge round of capacity expansion. Nearly 1 million tonnes of per year of new capacity is set to start in the fourth quarter of this year, in a worldwide market that is around 5 million tonnes. The majority of this new capacity will be in China, where investors have been encouraged by the high spot prices achieved in the first part of this year, strong demand for pulp from viscose staple fiber producers in the country and the potential to displace imports of wood dissolving pulp.

According to the World Bank statistics database, Mexico is the 13th largest economy in the world in nominal terms and the 11th by purchasing power parity. In Latin America, the country ranks second, only after Brazil, which makes the country very important when we are discussing the developments of the region's paper industry.