Transcript Slide 1

Global Paper and Board Outlook
Alejandro Mata
Economist, European Forest Products
October 2013
1
Alejandro Mata, Economist, European
Forest Products, RISI
• Bachelor degree in Engineering, MBA
degree earned in 2007
• Worked in Business and Market
Intelligence functions for one of
Europe’s leading paper producers
• Has been analyzing and forecasting
the industry since 2009
• Recently joined RISI team
• Author of the Paper Trader Europe,
the European Graphic Paper 5-Year
and 15-Year Forecasts
2
Tough Times?
Where is the industry right now?
... And where is it going?
3
World Paper & Board Demand…
Is the Global Market in Decline?
450
Million Tonnes
15%
400
10%
350
300
5%
250
0%
200
150
-5%
100
50
-10%
Volume (L)
Percent Change (R)
0
-15%
96 97 98 99
4
0
1
2
3
4
5
6
7
8
9
10 11 12
Global State of the Industry
Are there any regional differences?
Industry segment differences?
5
Paper & Board Markets – Global
Forecast Change, 2012-2014: +5%
• US economy accelerating
The global picture keeps growing!
• Euro area out of recession
Newsprint
-4%
Tissue
+9%
30 mt 32 mt
(8%) (8%)
Printing
& Writing
+1%
86 mt
(21%)
109 mt
(27%)
145 mt
(36%)
Containerboard
+7%
6
Cartonboard/
Other
+6%
• Emerging economies growing
slower than before
• Newsprint papers declining
globally
• Printing & writing: growth in
emerging markets, contraction
in mature markets
• Tissue and packaging driving
growth
Paper & Board Markets – Comparison
Paper & Board
P&W
Newsprint
Asia
L.Am.
N.A.
Europe
Tissue
Containerboard
Cartonboard
-10.0%
7
-5.0%
0.0%
5.0%
10.0%
15.0%
Paper & Board Markets – Europe
Forecast Change, 2012-2014: -0%
No growth for the P&B markets as a whole
Newsprint
-8%
Printing
& Writing
-5%
9 mt
(9%)
Tissue
+7%
Cartonboard/
Other
+3%
8 mt
(9%)
21 mt
(21%)
29 mt
(30%)
30 mt
(31%)
Containerboard
+3%
8
• Newsprint heavily impacted
by new media
• Printing & writing grades
showing mixed trends, UM
doing better than coated grades
• Containerboard and
cartonboard supported by
economic recovery and
inventory restocking
• Eastern Europe driving
growing trends
Paper & Board Markets – Europe
9
•
Mature vs. growing segments
•
Economy impacting segments differently
•
New technologies impacting segments differently
•
West vs. East
•
Saturated vs. unsaturated markets
Different Trends Emerging in the Region
Growing vs. Declining
• Demand growth in East vs. contraction in West
•This applies not only to graphic grades, but also
to packaging and tissue
• Capacity base shifting
• East will become more relevant in defining
trends going forward
* Percent change reflecting 2012 vs. 2011 apparent consumption levels for all paper and board grades.
10
While There Is Limited Growth in Western
Europe…
40,000
Western European Apparent Consumption
35,000
30,000
25,000
20,000
Newsprint
Other
Packaging
Tissue
2006
2008
P&W
15,000
10,000
5,000
0
2000
11
2002
2004
2010
2012
…Eastern Europe Keeps Showing Better
Trends
16,000
14,000
12,000
Eastern European Apparent Consumption
Newsprint
Other
Packaging
Tissue
P&W
10,000
8,000
6,000
4,000
2,000
0
2000
12
2002
2004
2006
2008
2010
2012
Graphic Papers
13
Total European Graphic Demand by Grade
Million Tonnes
60
Uncoated Woodfree
Uncoated Mechanical
Newsprint
Coated Woodfree
Coated Mechanical
50
40
30
Average Annual Growth
2013-2015
News
-3.8%
CWF
-3.6%
Cmec
-3.7%
UWF
-1.6%
Umec
-0.4%
20
10
0
2000
14
2002
2004
2006
2008
2010
2012
2014
Western European Profitability (All Grades)
Price/Total Delivered Costs
120%
110%
100%
90%
80%
Pre-Crisis Average
70%
Long-Term Average
Crisis Period Average
60%
Profitability
50%
07
08
09
10
11
12
Note: Total costs include mill operating costs, depreciation, interest, SG&A and delivery.
15
13
14
15
Western European Operating Rates
(All Grades)
Percent
100%
95%
90%
85%
80%
75%
Pre-Crisis Average
LT Average
70%
Crisis Period Average
OR (with Assumptions)
65%
OR (w/o Assumptions)
60%
07
16
08
09
10
11
12
13
14
15
Announced Net Newsprint Capacity
Changes for 2013-2014 vs RISI Forecast of
Demand Growth for the Same Period
Thousand Tonnes
600
400
Capacity Growth
Demand Growth
200
0
-200
-400
-600
-800
-1,000
-1,200
-1,400
Europe
17
N. America
Asia
Latin America
Global
Announced Net P&W Capacity Changes
for 2013-2014 vs. RISI Forecast of Demand
Growth for the Same Period
Thousand Tonnes
3000
2500
Capacity Growth
Demand Growth
2000
1500
1000
500
0
-500
-1000
-1500
-2000
Europe
18
N. America
Asia
Latin America
Global
Cash Manufacturing Costs* (Euro/Tonne)
2Q13 - Newsprint
450
Fiber
Chemicals
Fuels
Electricity
Labor
Materials
400
350
300
250
200
150
100
50
0
EU 27+2
*Capacity Weighted Average
19
China
Latin America
North America
Cash Manufacturing Costs* (Euro/Tonne)
2Q13 – Printing & Writing
600
Fiber
Chemicals
Fuels
Electricity
Labor
Materials
500
400
300
200
100
0
EU 27+2
*Capacity Weighted Average
20
China
Latin America
North America
Tough times?
21
Thank you for your attention!
For more information:
World Graphic Paper
5-Year Forecast
Global Newsprint Risk
of Closure Study
www.risi.com/gnr
China’s Influence on World
Graphic Paper Markets in the
Coming Decade
www.risi.com/chinagraphic