History of Paper

Invented by Chinese court official in AD 105, using textile waste

7th century AD, papermaking spreads throughout eastern Asia, Arab empires

14th century AD, spreads to Western Europe

Mills were developed in the 16th century

Papermaking eventually grew into an industrial process

Some cultures still make paper by hand

http://www.paperonline.org/history/history_frame.html

Papermaking – Raw Materials

Wood is the most commong resource used to make

paper

Main source of cellulose fiber – main ingredient in

paper

Other sources:

Cotton

Cereal Crops (i.e., straw)

Not used as often; year-round access to wood &

greater variety of wood (and wood fibers) make it the

ideal material

http://www.paperonline.org/cycle/forestry/trees_frame.html

What Kind of Wood?

Traditionally, softwood lumber was primary resource

for paper production

Longer fibers than hardwoods, leading to stronger paper

Hardwood lumber being used more and more, both

for paper and other paper-based materials

fluting in cardboard

Eucalyptus used is warmer climates

http://www.paperonline.org/cycle/forestry/trees_frame.html

The Papermaking Process

http://www.paperonline.org/cycle/paperboard/paperboard_frame.html

The Papermaking Process

http://www.paperonline.org/cycle/paperboard/paperboard_frame.html

Paper Recycling

Used paper has become an important raw material

Relatively easy to recycle (but must be kept seperate)

Paper is 'slushed' and in some cases must be deinked

Fibers can be re-used 5 or 6 times before losing most of their strength

http://www.paperonline.org/cycle/recycling/recycling_frame.html

Paper Grades & Paper Products

Newsprint, for newspapers; often made from recycled and/or waster paper

Magazine paper; holds color and ink well, smooth to the touch

Writing and printing paper; typical office paper, good for writing, printing, and graphical purposes

Sanitary and household papers; paper towels, tissues, etc.

http://www.paperonline.org/grades/grades_frame.html

Paper Grades & Paper Prodcuts

Packaging Materials; case material and folding boxboard (cardboard)

Can also be used as a wrapping to protect item during transport/storage

Other; cigarette paper, wax paper, and other specialty papers

http://www.paperonline.org/grades/grades_frame.html

Production & Consumption of Paper

Products

Global Facts

600 billion pounds consumed annually

100 pounds per capita (CPBIS)

Domestic Facts

U.S. represents over 25% of global market (Standard &

Poor’s)

Total consumption over 100 million tons

700 pounds per capita every year

Less than 20% imported historically (USDA)

Compared to roughly 50% reliance on foreign oil

Domestic Production Cont.(In thousands of tons) (USDA)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

110,000

1990 1995 2000 2005 2010

Production

Concumption

Supplier Concentration(Standard & Poor’s)

Economies of Scale

Vertical Integration

High Capital

requirements

Forest ownership and

management

Facilities and

manufacturing equipment

International Paper Company

World’s largest paper company

Employs over 60,000 people worldwide

Operates in 20 countries Headquarters located in Memphis, Tennessee

Manages 1.5 million acres worldwide

Majority of operations within the U.S.

Domestic pulp/paper production capacity exceeds six million tons annually 18 operations located in U.S.

Six additional facilities globally

Future focus on packaging and uncoated paper (Datamonitor)

Boise Cascade Corporation

Headquarters in Boise, Idaho Mainly operates inside the U.S.

Nearly 100% of revenue from U.S. market

Employs over 10,000 people

Revenues of $5.7 Billion in 2006 25% obtained through paper segment

1.6 million tons annual paper/pulp capacity Four pulp/paper mills

Focus on value added products Trending away from commodity products

(Datamonitor)

How much paper does the average citizen use in a

year?

U.S. & Europe: 300kg

Africa: 1 kg

India: 4 kg Rates are dropping by 5%

every year in the U.S.

Rates are increasing in India

and could target 100 kg

per person

Newsprint health

Newsprint under pressure in developed nations, U.S. revenue

fell 9.4% in 2006-07

Global prices up from $425/ton to up to $800/ton from 2002-

08

Drop in demand

Balance of supply and Demand

Prices in an overall uptrend

Less demand

Shut downs in some grades

Forecast of pulping growth

Kraft pulping: increase of 1.4% per year

Semi-chemical pulping: increase of 0.7%

Mechanical pulping: steep decline of >20%

Waste pulping: Increase of 2%

Overall output projected to grow 1.5% per year

From 2003 to 2025

Projected growth of paper

2% increase Globally, but…

Average growth rates by nation:

China: 7.6%

India: 5%

U.S.: 1.3%

322121 Paper (except Newsprint) Mills

This U.S. industry comprises establishments primarily

engaged in manufacturing paper (except newsprint

and uncoated groundwood paper) from pulp. These

establishments may manufacture or purchase pulp.

In addition, the establishments may also convert the

paper they make.

Source: http://www.census.gov/eos/www/naics/htmls/3/322121.htm

Absorbent paper stock manufacturing

Asphalt paper made in paper mills

Bond paper made in paper mills

Book paper, coated, made in paper mills

Bristols paper stock manufacturing

Building paper stock manufacturing

Cigarette paper made in paper mills

Construction paper, school and art, made in paper mills

Cotton fiber paper stock manufacturing

Diapers, disposable, made in paper mills

Facial tissues made in paper mills

Felts, asphalt, made in paper mills

Glassine wrapping paper made in paper mills

Groundwood paper, coated, laminated, or treated in paper mills

Groundwood paper, coated, made in paper mills

Kraft paper stock manufacturing

Looseleaf fillers and paper made in paper mills

Napkins, table, made in paper mills

Office paper (e.g., computer printer, photocopy, plain paper) made in paper mills

Paper (except newsprint, uncoated groundwood) manufacturing

Paper (except newsprint, uncoated groundwood) products made in paper mills

Paper (except newsprint, uncoated groundwood), coated, laminated or treated, made in paper

mills

Paper mills (except newsprint, uncoated groundwood paper mills)

Paper stock for conversion into paper products (e.g., bag and sack stock, envelope stock, tissue

stock, wallpaper stock) manufacturing

Paper towels made in paper mills

Paper, asphalt, made in paper mills

Pulp and paper (except groundwood, newsprint) combined manufacturing

Pulp mills producing paper (except groundwood, newsprint)

Sanitary napkins and tampons made in paper mills

Sanitary paper products (except newsprint, uncoated groundwood) made in paper mills

Sanitary paper stock manufacturing

Sanitary products made in paper mills

Saturated felts made in paper mills

Sheathing paper (except newsprint, uncoated groundwood) made in paper mills

Tablets (e.g., memo, note, writing) made in paper mills

Tar paper, building and roofing, made in paper mills

Tissue paper stock manufacturing

Toilet paper made in paper mills

Towels, paper, made in paper mills

Writing paper made in paper mills

MARKET SIZE

IBISWorld expects that during 2008 (in constant 2008 prices), the US Paper Mills industry will generate:

revenue totaling $54.15 billion, a 1% decrease from the previous year;

value added totaling $28.84 billion, a 3% decrease from the previous year;

domestic demand totaling $57.5 billion, a 2.7% decrease from the previous year;

employment totaling 79,155 workers, a 4% decrease from the previous year.

Source: IBISWorld

Paper Mills in the U.S.

Market Segment Share

Publishers 25.6%

Paper bag and coated/treated paper

manufacturers 18.7%

Stationery product manufacturers 18.2%

Paper wholesalers 18.0%

Export 15.0%

Other 4.5%

Source: IBISWorld

Products and Service Segmentation

Product/Services Share

Packaging and industrial papers 44.4%

Non-newsprint communications papers 25.4%

Printing and writing papers 18.2%

Newsprint 7.8%

Other papers 4.2%

Source: IBISWorld

Number of Establishments by Region (2008)

Region Units

South East 95.0

Great Lakes 85.0

Mid East 64.0

Far West 45.0

New England 44.0

Plains 17.0

South West 15.0

Rocky Mountains 3.0

Source: IBISWorlSource: IBISWorld

“A pulp and paper company’s purchasing, materials

management, and logistics network makes up more

than 70% of its operating revenue.”

Source: Bnet