outlook for boxboard - fastmarkets risi · should remain stable through 2016 challenging external...
TRANSCRIPT
© Copyright 2016 RISI, Inc. | Proprietary Information
Outlook for Global Boxboard
São Paulo Conference, August 2016
Dustin JalbertEconomist, Paper Packaging
Can new capacity additions be absorbed in a weak global economy?
• Overview of global markets• Regional boxboard markets
• Asia (with a focus on China)• Europe• North America• Latin America• Rest of the World
• Global summary
2
Today’s Agenda
© Copyright 2016 RISI, Inc. | Proprietary Information
Boxboard Definition = All Paperboard Except Containerboard
• Confusion arises at the global level; each region has its own grade structure and naming conventions
• Western Europe = cartonboard grades broken out by construction
• US grades = converted products
• Asia = grey areas for products such as artboard or coated white top linerboard
• RISI’s solution: entirely new classification system based on available trade data
3© Copyright 2016 RISI, Inc. | Proprietary Information
World Boxboard Demand Approached 57 Million Tonnes in 2015
4© Copyright 2016 RISI, Inc. | Proprietary Information
0
5
10
15
20
Boxboa
rd Dem
and (M
illion Tonn
es)
Coated Virgin:23 Million Tonnes
Coated Recycled:21 Million Tonnes
Uncoated:13 Million Tonnes
Boxboard Demand in Key Regions, 2015Nearly a majority of world demand comes from Asia
5© Copyright 2016 RISI, Inc. | Proprietary Information
26.5
11.7
9.2
4.13.0
1.2 1.1 0.30
5
10
15
20
25
30
Asia NorthAmerica
WesternEurope
EasternEurope
LatinAmerica
MiddleEast
Africa Oceania
Box
boar
d D
eman
d (M
illio
n To
nnes
)
Large markets, fast growthLarge markets, fast growth
Large, mature marketsLarge, mature markets
Lower consumption levels, high growthLower consumption levels, high growth
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
Box
boar
d D
eman
d G
row
th (T
hous
and
Tonn
es)
Demand Change
% Change
Near‐Term Headwinds Will Keep Boxboard Demand Growth RestrainedApproximately 2.4 million tonnes of demand growth in 2016‐2017
6© Copyright 2016 RISI, Inc. | Proprietary Information
FORECAST
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Box
boar
d D
eman
d G
row
th
(M
illio
n To
nnes
)
Rest of Asia China Percent (R)
Asian Boxboard Demand Growth Has Been Slowing Since 2013Sub‐4% growth in 2016 and 2017
7© Copyright 2016 RISI, Inc. | Proprietary Information 7
© Copyright 2016 RISI, Inc. | Proprietary Information
Chinese Capacity Growth Increasingly Concentrated in IvoryboardSurge in virgin capacity in 2013‐2015
8
-2,000
-1,000
0
1,000
2,000
3,000
4,000
Cap
acity
Gro
wth
(Tho
usan
d To
nnes
)
RecycledVirginGlobal Demand Growth
The Rest of Asia Can Provide a Home for Only a Portion of China’s ExportsIn 2016, Asia will be a net exporter of boxboard
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
Net
Exp
orts
(Mill
ion
Tonn
es)
China
Rest of Asia
9© Copyright 2016 RISI, Inc. | Proprietary Information
© Copyright 2016 RISI, Inc. | Proprietary Information
Latin American Virgin Boxboard Firmly in the First Quartile for Cash CostsMill Cash Costs, First Quarter 2016, US Dollars per Tonne
10
Western European Producers Export Boxboard Around the WorldAlthough shipments within Europe dominate
11© Copyright 2016 RISI, Inc. | Proprietary Information
0
2
4
6
8
10
12
14
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
WE Expo
rts, M
illion Tonn
es
The Americas Oceania AfricaThe Middle East Asia Eastern EuropeWestern Europe
Western European Exports Outside of Europe at Risk for DisplacementIvoryboard taking share in high‐growth markets
12© Copyright 2016 RISI, Inc. | Proprietary Information
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
WE Expo
rts, M
illion Tonn
es
The AmericasOceaniaAfricaThe Middle EastAsia
38%
16%
15%
29%
42%
17%
14%
24%22%
14%
17%
44%
Boxboard Demand Across Europe Will Remain SubduedAnnual Demand Growth less than 100,000 Tonnes in 2015‐2017
0.78
0.80
0.82
0.84
0.86
0.88
0.90
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Ope
ratin
g R
ate
Gro
wth
in M
illio
ns o
f Ton
nes
Capacity (Total Europe)Eastern Europe DemandWestern European DemandOperating Rate (Total Europe)
Major 2016‐2017 Boxboard Projects
13© Copyright 2016 RISI, Inc. | Proprietary Information
© Copyright 2016 RISI, Inc. | Proprietary Information
FBB Projects Planned for 2016‐2017Over 1.1 million tonnes of capacity in two years
Company Mill Country Capacity Thousand MTPY
Startup Details
Metsä Board Husum Sweden 400 2016 Q1 New machine
Holmen Workington United Kingdom 20 2016 Rebuild
Kotkamills Oy Kotka Finland 400 2016 Q3 Conversion
BillerudKorsnäs Frövi Sweden 130 2017 Investment
Bellesbumprom Dobrush Belarus 200 2017 Greenfield
Total 1,150
1414
The Overall Trade Balance for Europe Should Remain Stable Through 2016Challenging external environment for exporters
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Net
Impo
rts,
Mill
ion
Tonn
es
Eastern Europe Western Europe Total Europe
15© Copyright 2016 RISI, Inc. | Proprietary Information
North American Boxboard Demand Contracting on Net for Last Decade …But so has capacity
78%
80%
82%
84%
86%
88%
90%
92%
94%
96%
98%
-1.2
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Ope
ratin
g R
ate
Cha
nge
in M
illio
n To
nnes
Capacity (Total North America)
US Demand
Canadian Demand
Operating Rate (Total North America)
© Copyright 2016 RISI, Inc. | Proprietary Information 16
Boxboard Closures Affecting North American Market in Near TermSmaller expansions expected later this year
Company Mill Country Capacity Thousand MTPY
Startup/ Closure
Grade Details
Graphic Packaging Jonquière Canada ‐146 2015 Q3 Hybrid Closure
International Paper Riegelwood USA ‐181 2016 Q1 SBS Conversion
Graphic Packaging West Monroe
USA 27 2016 Q2 CUK Investment
WestRock Evadale USA 181* 2016 Bristols, SBS
Conversion
Clearwater Lewiston USA 60 2016 SBS, Bristols
Investment
17
*Mostly dedicated to bristols, but PM capable of SBS production
© Copyright 2016 RISI, Inc. | Proprietary Information 17
© Copyright 2016 RISI, Inc. | Proprietary Information
North American Exporters Continue to Feel Competitive PressuresSBS producers competing with FBB and ivoryboard
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
2003 2005 2007 2009 2011 2013 2015 2017
Nor
th A
mer
ican
Exp
orts
, Mill
ion
Tonn
es
Coated Bleached Virgin Coated Unbleached All Other NA Exports
1818
© Copyright 2016 RISI, Inc. | Proprietary Information
Clay Coated Multi‐Ply Imports Have Struggled to Gain Share in the USAHowever, pressures are mounting…
19
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
US
Impo
rts
of C
lay
Coa
ted
Mul
ti-Pl
y B
oard
, To
nnes
Rest of World South Korea Chile Sweden Finland China Canada
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
$0
$500
$1,000
$1,500
$2,000
02 03 04 05 06 07 08 09 10 11 12 13 14 15 US
Dol
lar T
rade
Wei
ghte
d Ex
chan
ge R
ate
Net
-Net
US
Dol
lar P
rice
per T
onne
US SBS European FBBChinese Ivoryboard Premium Brazilian Virgin DuplexUSD Trade Weighted Exchange Rate
p pStrengthening of the US dollar changing the competitive landscape of boxboard
Brazilian Board Very Competitive Given Recent Exchange Rate MovesStrong dollar aiding European producers as well
20© Copyright 2016 RISI, Inc. | Proprietary Information
Latin America Has Strong Long‐Term Prospects for Boxboard DemandHowever, growth varies across the major economies…
21© Copyright 2016 RISI, Inc. | Proprietary Information
Country Consumption(Tonnes)
10‐Year CAGR History
2‐Year CAGR Forecast
Brazil 1,001 3.8% -0.9%
Mexico 950 3.7% 3.1%
Chile 180 7.0% 1.2%
Colombia 182 3.8% 2.9%
Argentina 139 -1.7% 0.3%
Venezuela 114 2.6% -0.4%
Peru 93 10.3% 2.8%
Ecuador 75 11.9% -4.7%
Rest of Latin America 304 6.2% 1.8%
Total 3,037 4.1% 1.1%
Latin America Imports a Significant Volume of Boxboard However, a weakened outlook through 2017
22© Copyright 2016 RISI, Inc. | Proprietary Information
20%
30%
40%
50%
-600
-400
-200
0
200
400
600
800
1,000
1,200
Net
Impo
rts,
Tho
usan
d To
nnes
Brazilian and Chilean Net ImportsRest of Latin American Net ImportsNet Imports/APC
Most of Brazil’s Boxboard Exports Stay Within South AmericaExports serve as safety valve when domestic demand is weak
23© Copyright 2016 RISI, Inc. | Proprietary Information
0
50
100
150
200
250
300
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Boxboa
rd Exports (T
housan
d Tonn
es) SouthAmerica Europe Central America North America Asia All Other
Rest of World Demand Continues to Show StrengthAnnual demand growth of ≈126,000 tonnes in 2016‐2017
24© Copyright 2016 RISI, Inc. | Proprietary Information
-
500
1,000
1,500
2,000
2,500
3,000
3,50020
02
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Dem
and
(Tho
usan
d To
nnes
)
Middle EastOceaniaAfrica
Global Operating Rates Have Come Under Pressure Since 2010
25© Copyright 2016 RISI, Inc. | Proprietary Information
78%
80%
82%
84%
86%
88%
90%
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
Ope
ratin
g R
ate
Gro
wth
in T
hous
nad
Tonn
es
DemandCapacityOperating Rate
Conclusion: Take Home Points on the Outlook for Global Boxboard
• Headwinds will keep global boxboard demand growth restrained in 2016‐2017
• Slowing China, low commodity prices, soft consumer spending data
• The capacity overbuild in China and now Europe will continue to impact global trade
• Especially for virgin boxboard (SBS and FBB)• Chinese ivoryboard is competing in neighboring markets, particularly commodity grades
• Near‐Term outlook mixed in Latin America• Export markets will be a key outlet for producers• More competition from European FBB seeking a home in the region
26© Copyright 2016 RISI, Inc. | Proprietary Information
2015 World Boxboard Studywww.risi.com/worldboxboard
China Boxboard Study –2014 Updatewww.risi.com/chinaboxboard
27
Thank you for your attention!For more information:
To Order or Request InformationContact your account manager or follow the links shown!
© Copyright 2016 RISI, Inc. | Proprietary Information