Market OUTLOOK
Paper industry embraces the potential of sustainable packaging Article by John Nelson, Editor, Smithers
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he following article explores some of the fundamental trends within the paper industry, and the opportunities for suppliers, printers and converters. While the outbreak of coronavirus continues to disrupt global supply chains and financial markets, the underlying trends within the paper look set to continue. In the short-term looking at China there was a shutdown of paper mills in Hubei for several weeks as the province went into a lockdown. Given its role in global manufacturing and logistics there has been a rise in demand for recovered paper (RCP) in China, and Beijing has already removed tariffs on imports of recycled paper pulp shipments from the US for this year. It is likely that as other states go into lockdown paper mills will be slowed or idled. In the longer term there is likely to be a global recession and the evidence of the 2008 Great Recession is that this will affect different paper segments differently. In developed markets demand for packaging is generally fairly resilient to economic downturns, though the expansion of consumption of packaged goods in developing markets is liable to slow. Publication and graphic grades are likely to feel more of an impact, and advertising print will certainly see a drop in demand as marketing budgets get squeezed.
At the dawn of the 2020s the global paper industry is having to adjust to an evolving set of market conditions. Demand for printing papers continues to drop. As a result paper firms are being challenged to diversify into other markets, such as specialty papers; and expand their fibre-based packaging portfolios.
NEW DYNAMICS IN PAPER SUPPLY Volumes of printed papers are progressively being eroded by the digitisation of information. From 2018-2019 woodfree paper shipments in Europe dropped by roughly 1.3 million tonnes, with around two thirds of this in coated grades. Data from the latest Smithers report – The Future of Global Printing to 2024 [1] – shows that in 2019 overall demand for woodfree and newsprint was 72.1 million tonnes worldwide, having dropped from 86.7 million tonnes in 2010. The decline has been sharpest in newsprint as total volumes of printed newspapers fell from 17.3 trillion A4 print or equivalents in 2010 to 13.5 trillion in 2019. This has prompted multiple mill closures or refits to produce papers for new applications. The closing or repurposing of these assets has barely kept pace with the decline in demand however and future machine changes are likely. For example, in Q4 2019: ■R esolute Forest Products stopped production of its 215,000 tonnes per year newsprint line paper machine at Augusta Georgia
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PAPERFIRST MAG SPRING 2020
