Transcript Global Dynamics of the Pulp and Paper Industry

NC State University
Global Dynamics of the Pulp and Paper
Industry - 2013
Richard B. Phillips, PhD
North Carolina State University
[email protected]
NC State University
Three Main Points
1. Growing imbalance between where paper and
board are consumed and where wood fiber is
grown
2. Imbalance gives USA industry better options for
dealing with declining domestic demand …
exploits our low cost softwood
3. American industry can restructure to focus on
production of softwood products and bioenergy
for export and domestic consumption
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1. Global Imbalances
3
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Global Imbalances
Consumption of Paper & Board
• Only tissue not declining in the West
₋ Graphic Papers declining rapidly
₋ Packaging declining slowly
• All grades increasing in the Rest of World
₋ Especially packaging
Source: RISI
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Global Imbalances
Production of Fiber
•
•
•
•
Western World Wood Pulp Production declining
Global RCP production exceeds virgin fiber by 40%
Practical limit of ~70% recovery of domestic waste
Practical limit on number of times fiber can be recycled
Source: RISI
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Global Imbalances
China Packaging
• China produces no Linerboard from virgin fiber
• Consume ~ 50% of all World exports of Recovered Paper,
forecast to go to 60%
• How can P&B be recovered from Western Europe and
North America when regional demand is declining?
Source: RISI
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Global Imbalances
China Price for Recovered Packaging Papers & Pulp
Packaging Waste Prices
2.5 x Price Increase since 1996
Softwood Pulp Price
1.6 x Price Increase since 1996
Source: RISI
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Global Imbalances
Forecast Fiber Gaps in 2020
Recovered Paper
Bleached Softwood
Pulp
Phillips Forecast
• By 2020 Asia requires 110% of excess RCP in NA &WE
• … and 125% of Bleached Softwood available from West
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2. Dealing with Declining
Demand
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Dealing with Decline
Decline in American Consumption
Printing and Writing and Newsprint
Packaging
• Paper Consumption down 10 Million Tonnes from Peak
• Paper Production down 7 Million Tonnes …modest increase in exports
and decrease in imports
• Packaging down 7 Million Tonnes from Peak but stabilizing
• Packaging exports up 5 Million Tonnes
Source: RISI
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Dealing with Decline
USA Southeast very competitive on softwood
Source: FisherSolve® Q4 2012
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Dealing with Decline
Multiple Mill Options …None Easy
Graphic Papermills
1.
2.
3.
4.
5.
Shut down machines and write off assets
Convert hardwood to Viscose Dissolving Pulp
Convert assets to softwood Absorbent Pulp
Convert assets to softwood linerboard
Convert assets to biofuels and biomaterials
Dealing with Decline
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Conventional Options Illustrated
Hardwood
Softwood
Wood
Wood
Hardwood
Softwood
Pulp
Pulp
Papermachine
Papermachine
Paper
Paper
Dealing with Decline
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Shutdown
Hardwood
Softwood
Hardwood Chips
Softwood Chips
Hardwood
Softwood
Hardwood Pulp
Softwood Pulp
Papermachine
Papermachine
Paper
Paper
Dealing with Decline
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Viscose Pulp
Hardwood
Softwood
Hardwood Chips
Wood
Hydrolysate
Hardwood
High  Pulp
Pulp Dryer
Papermachine
Viscose Pulp
Paper
Dealing with Decline
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Absorbent Pulp
Hardwood
Softwood
Hardwood Chips
Softwood Chips
Softwood
Softwood Pulp
Papermachine
Pulp Dryer
Paper
Fluff Pulp
Dealing with Decline
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Liner Conversion
Softwood
Softwood
Softwood Chips
Softwood Chips
Softwood
Softwood
Softwood Pulp
Softwood Pulp
Papermachine
Board
Machine
Paper
Linerboard
Export
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Dealing with Decline
Total Cost and Cumulative
Production
Export Option Depends
on Production
Cost
1,000
900
Delivered to Beijing
Cost, USD per FMT
800
China
Japan
United States
700
600
500
510
464
400
300
200
China
OCC Japan
at $250 per Tonne
USA
100
0
0
5
10
15
20
25
30
35
40
Cumulative Production, FMT per Year (x1,000,000)
• Lowest cost American producers more competitive to
Beijing than 50% of Chinese producers, all Japanese
Source: FisherSolve® Q4 2012
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3. Biorefinery Options
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Integrating with Bioenergy
Absorbent Pulp + Pellets
Hardwood
Softwood
Wood
Wood
Pelletizer
Softwood
Wood Pellets
Pulp
Papermachine
Pulp Dryer
Paper
Fluff Pulp
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Integrating with Bioenergy
Bioproducts
Machine Shutdown
Hardwood
Softwood
Hardwood Chips
Autohydrolysis
Wood
Bioproducts
- Sugar
- Ethanol
Hardwood
Pellets
Pulp
Softwood
Pulp
Papermachine
Papermachine
Paper
Paper
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Integrating with Bioenergy
Wood Pellets
500,000 BDT
Drying - Milling Pelletizing
490,000 BDT
x $150 per Ton
120,000 T
x $900 per Ton
Wood Pellets
Bioethanol
500,000 BDT
Autohydrolysis ->
Enzyme
Hydrolysis
OR
250,000 T
x $500 per Ton
Biosugars
AND
Drying Pelletizing
Lignin Pellets
240,000 BDT
x $165 per Ton
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Integrating with Bioenergy
$5.00 per MMBTU
$35.00 per MMBTU
Lignin Fuel
Pellets
$8.00 per MMBTU
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Integrating with Bioenergy
Financial Analysis of Hardwood Autohydrolysis
Co-Located with Kraft Pulp Mill
2015 Projection
Co-lo Auto + Pellets
Quantity
Mixed Southern Hardwood
Cost per Unit
500,000 $
Annual Ethanol Production, Gallons
31,757,232
Ethanol Yield, Gallons per BDT
63.5
CAPEX, Total / per Annual Gallon $132,568,398
65.62
$4.17
Total Biomass Cost per Gallon
$1.12
Total Enzyme Cost per Gallon
$0.50
Total Energy Credit / Cost
($1.02)
Total Indirect Cost per Gallon
$1.10
Total Cash Cost per Gallon
$1.15
M.E.R., $ per Gallon
$1.73
IRR, %
12%
Source: Nebraska Energy Office
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Summary and Conclusions
• Asia has become overly – dependent on
cheap Recovered Paper that will become
scarce and expensive in the future
• New softwood capacity will be needed to
provide fiber to Asia
• American papermills have some good but
difficult options … bioproducts may be an
answer
Questions?
25