Global Containerboard Outlook

Size: px

Start display at page:

Download "Global Containerboard Outlook"

Shavonne Baldwin
6 years ago
Views:

1 Global Containerboard Outlook With a focus on the Asian market RISI Asian Conference May 2017 Ken Waghorne VP, Global Packaging

Ken Waghorne VP Global Packaging kwaghorne@risi.com One of the original Resource Information Systems, Inc.

2 Ken Waghorne VP Global Packaging One of the original Resource Information Systems, Inc. economists With RISI since 1983 Developed RISI packaging models Works with more than 200 packaging paper clients worldwide Assisted by five local economists in RISI regional offices Directs numerous single- and multi-client studies on paper packaging materials Copyright 2016 RISI, Inc. Proprietary Information 2

3 Agenda Global Overview Asia Europe North America Latin America Africa, the Middle East, Oceania Conclusions 3

4 Global Containerboard Demand Asia has the largest market, followed by North America and Western Europe 162 Million Tonnes in % 5% Far East 14% 8% 47% North America Western Europe Latin America Emerging Europe 19% All Others 4

5 Share of Virgin Containerboard Demand Varies by Region 70% 60% 61% 50% 40% 30% 20% 21% 38% 21% 30% 10% 9% 0% Far East North America Western Europe Latin America Emerging Europe All Others 5

6 Global Capacity Will Grow Mostly in Recycled Containerboard Global Capacity, Thousand Tonnes 250, ,000 Virgin Containerboard Recycled Containerboard 150, ,000 50,000 27% 23%

7 Global Virgin Containerboard Demand Is Dominated by North America 40 Million Tonnes in % 6% 17% Far East 12% North America Western Europe Latin America 12% Emerging Europe 47% All Others 7

8 Asia 8

40,000 30,000 20,000 10,000 0 2012 2013 2014 2015 2016 2017 2018

9 China Continues to Account for More Than 60% of Asian Demand Apparent Consumption, Thousand Tonnes 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, Other Countries Vietnam Japan Thailand Indonesia India Taiwan South Korea China 9

10 Wave of Capacity Expansion Dominated by China China set for huge increase in capacity in with total of 7.8 MT at 23 projects Announcements of another 19 with 6.5 MT How much capacity will be shut? Due to new environmental regulations Forced temporary reductions will affect levels Outside of China, biggest development is capacity additions in Vietnam 5 projects (2 are small) in 2017 w/capacity of 1.2MT; 1 project in 2018 Thailand and Indonesia also have capacity additions in 2017 and 2018 No. of Projects 2016 China Other Asia H17 China Other Asia H17 China Other Asia China Tonnage (Million) Other Asia

11 Million Tonnes Capacity Growth in Asia Is Expected to Outpace Demand in Demand Capacity Operating Rates % 89% 88% 87% 86% 85% 84% 83% 82% 81% 80% 11

12 Net Exports of Recycled Containerboard in Asia Are Expected to Grow in 2017 Net Exports, Thousand Tonnes ,000-1,500-2,000 Virgin Containerboard Recycled Containerboard

13 Not a Lot of Room for Growth Since Most Recyled Trade Is Regional In 2016, 85% of Asian recycled linerboard exports and 91% of recycled medium exports went to Asia The Middle East and Africa were the next two leading destinations in 2016 The Middle East accounted for 12-18% in 2015, but then Indonesia pulled back exports Compete mostly with European suppliers in these markets Only 8-12% of Asia s recycled imports come from outside the region Mostly from Oceania and Western Europe There may be opportunities for recycled linerboard to displace kraftliner 2016 Recycled Linerboard Exports* Asia Middle East Africa Other 2016 Recycled Medium Exports* Asia Middle East Africa Other * Japan, South Korea, Taiwan, China, Indonesia and Thailand accounted for 96-98% of 2016 Asian exports 13

14 J-12 A-12 J-12 O-12 J-13 A-13 J-13 O-13 J-14 A-14 J-14 O-14 J-15 A-15 J-15 O-15 J-16 A-16 J-16 O-16 J-17 A-17 The Containerboard Price Surge in China Eased Off a Bit in March Renminbi per Tonne 5,000 4,500 4,000 Kraft Top Liner 170 g (Left Axis) OCC, Imports from the USA (Net) OCC, Post-consumer (Domestic, Net Price) 2,400 2,200 2,000 3,500 3,000 2,500 2,000 1,500 1,800 1,600 1,400 1,200 1,000 14

15 Will This Pattern Repeat in the Future? Anatomy of a Price Bubble Bubbles tend to follow periods of persistent oversupply and the inevitable price weakness Inventories far lower than normal Producers unable to pass through cost increases Unexpected shift in the demand/supply balance pushes prices upward At some point, panic buying sets in, driving prices through the roof Double ordering sets up sudden end to the bubble when inventories are overstocked Leading to eventual crash Prices find new equilibrium level Inventories are maintained slightly higher than before, just in case 15

16 Europe 16

7% 1.8% 94% 93% 92% 91% 90% 89% 88% 18 2011 2012 2013 2014 2015

17 Million Tonnes Total Containerboard, Western Europe Demand Growth Is Slowing Down in 2016 and % % 2.5% 1.7% 1.8% 94% 93% 92% 91% 90% 89% 88% Capacity Demand (APC) Production Operating Rate 87% 17

18 Million Tonnes Trade Trends in Western Europe Virgin Containerboard Imports to Decline in Net Exports of Containerboard Virgin Containerboard Recycled Containerboard

Million Tonnes Containerboard Demand Growth in Emerging Europe to Accelerate Toward 2018 13.5 12.5 11.5 10.

19 Million Tonnes Containerboard Demand Growth in Emerging Europe to Accelerate Toward Capacity Demand (APC) Production 3.4% 3.8% 3.9% 4.5%

20 Dynamic Changes in Regional Net Imports in Emerging Europe Net Imports, Thousand Tonnes 1, Eastern Europe Central Europe Southeastern Europe

21 North America 21

22 Recycled Containerboard Is Gaining Market Share in North America Over Time Apparent Consumption, Thousand Tonnes 35,000 30,000 25,000 20,000 15,000 10,000 5, Kraftliner Semichemical Medium Testliner Recycled Medium 22

600 400 200 0-200 -400-600 Demand Capacity Operating Rates 2011

23 Demand Is Currently Outpacing Capacity Growthin North America Change in Thousand Tonnes, Percent 1,600 1,400 1,200 1, Demand Capacity Operating Rates % 98% 97% 96% 95% 94% 93% 92% 23

Accident at International Paper s Pensacola Mill in Cantonment, Florida An explosion on the evening of January 22, 2017, caused significant structural damage to the pulp digester and the power house

24 Accident at International Paper s Pensacola Mill in Cantonment, Florida An explosion on the evening of January 22, 2017, caused significant structural damage to the pulp digester and the power house Paper capacity is 486,000 metric tons per year of lightweight fully virgin kraft linerboard Machine was down a little over two months, leading to a reduction in capacity of roughly 100,000 tonnes The consequences were a significant tightening of the global kraftliner supply/demand balances in the first half of

North American Net Exports of Virgin Containerboard Should Drop in 2017 Change in Net Exports, Million Tonnes 0.30 0.25 0.

25 North American Net Exports of Virgin Containerboard Should Drop in 2017 Change in Net Exports, Million Tonnes Virgin Containerboard Recycled Containerboard

26 Latin America 26

Demand Growth in Latin America Accelerates as Brazilian Economy Recovers Change in Thousand Tonnes, Percent 500 400 300 200

27 Demand Growth in Latin America Accelerates as Brazilian Economy Recovers Change in Thousand Tonnes, Percent Demand Capacity Operating Rates % 89% 88% 87% 86% 85% 84% 83% 82% 27

28 Thousand Tonnes Brazil and Mexico Account for More Than 70% of Latin American Demand Mexico will outpace Brazil in ,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Brazil Argentina Chile Mexico Rest of Latin America

Net Imports in Latin America Are Set to Grow in the Future Change in Net Imports, Thousand Tonnes 140 120

29 Net Imports in Latin America Are Set to Grow in the Future Change in Net Imports, Thousand Tonnes Virgin Containerboard Recycled Containerboard

30 Africa, the Middle East and Oceania 30

31 African Demand Has the Best Outlook Apparent Consumption, Thousand Tonnes 4,000 3,500 Middle East Africa Oceania 3,000 2,500 2,000 1,500 1,

32 Net Imports to Grow for Both the Middle East and Africa, Oceania to Export More Net Imports, Thousand Tonnes 1,100 Middle East Africa Oceania

33 Conclusions 33

34 Global Demand Growth to Accelerate in 2018 After Slowdown in 2017 Apparent Consumption, Thousand Tonnes 180, , , , ,000 80,000 60,000 40,000 20, Kraftliner Sem. Medium Rec. Liner Rec. Medium Demand Growth, % 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 34

35 Take Home Points on Global Containerboard Global demand growth will slow in 2017, but will improve in 2018 Emerging markets will accelerate toward 2018 Massive capacity expansions to happen in recycled containerboard across the globe Putting pressure on fiber costs Globally tighter supply/demand balances in virgin containerboard in the near term Higher operating rates in this segment 35

36 Thank you! Any questions? For more information on RISI s global paper packaging and containerboard coverage, visit 36

Global Containerboard Outlook

Global Containerboard Outlook With a focus on the European market RISI European Conference March 2017 Gleb Sinavskis Associate Economist, European Paper Packaging Gleb Sinavskis Associate Economist, European