risi global paper market trends session · the problem for the folding boxboard ... –creating...
TRANSCRIPT
RISI Global Paper Market Trends
Session
March 17, 2015
RISI Session
Ken Waghorne
Vice President
World Paper Packaging
Derek Mahlburg
Senior Economist
North American Graphic
Papers
Paper2015
US Boxboard Outlook
Ken Waghorne, VP World Paper Packaging
March 17, 2015
The RISI US Boxboard Outlook
• Overview of Consumer and Industrial Markets
• Boxboard Markets
– US domestic demand
– Global trade issues
• Select Information From RISI’s New World Recovered Paper Study
US Consumer Spending on Nondurable Goods
Accelerated During the Second Half of 2014
-8
-6
-4
-2
0
2
4
6
8
1,700
1,800
1,900
2,000
2,100
2,200
2,300
2,400
2,500
2,600
2,700
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Nondurable Goods Annualized Growth % (R)
The Problem for the Folding Boxboard Industry in
2014 was the Decline in At-Home Food
Consumption
-8
-6
-4
-2
0
2
4
6
8
450
500
550
600
650
700
750
800
850
900
950
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Nondurable Goods Annualized Growth % (R)
Away From Home Food Consumption Grew
Dramatically in 2014
-8
-6
-4
-2
0
2
4
6
8
250
300
350
400
450
500
550
600
650
700
750
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Nondurable Goods Annualized Growth % (R)
Away From Home Share of Total Food Spending
Has Trended Up Over The Last 45 Years
30%
32%
34%
36%
38%
40%
42%
44%
46%
48%
50%
70 74 78 82 86 90 94 98 02 06 10 14
US Consumer Spending on Foods Is Forecast to
Grow More Evenly in 2015-2016
-8
-6
-4
-2
0
2
4
6
8
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
At Home Away From Home Annualized Growth % (R)
The Purchasing Managers' Index Indicates the
Broad Manufacturing Sector Remains Healthy
30
34
38
42
46
50
54
58
62
66
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Light Bar Indicates Manufacturing Sector Contracting
Industrial Production Is Expected to Grow
Strongly in 2015-2016
0.85
0.90
0.95
1.00
1.05
1.10
1.15
J 04
M S J 05
M S J 06
M S J 07
M S J 08
M S J 09
M S J 10
M S J 11
M S J 12
M S J 13
M S J 14
M S J 15
M S J 16
M S
Nondurable Goods Processed Foods
The Domestic Boxboard Markets Have
Been Low Growth for Decades
• Heavy reliance on foods and persistent competition with other products
• The most difficult conditions have been in the folding cartonboard market
– Demand was 10% below the pre-recession peak in 2014
• Cup & plate stock is benefitting from shift in preferences away from plastic foam cups
– With 2014 demand 18% higher than the 2007 level
• Liquid packaging board demand has trended up steadily since 2010
• Demand prospects for all grades are positive in 2015-2016 – Recovery in consumer spending
– Potential for further wins versus plastic alternatives
5,600
5,800
6,000
6,200
6,400
6,600
6,800
7,000
7,200
7,400
20
05
Q1
Q3
20
06
Q1
Q3
20
07
Q1
Q3
20
08
Q1
Q3
20
09
Q1
Q3
20
10
Q1
Q3
20
11
Q1
Q3
20
12
Q1
Q3
20
13
Q1
Q3
20
14
Q1
Q3
20
15
Q1
Q3
20
16
Q1
Q3
US Folding Cartonboard Demand Has
Been Quite Flat Since 2010 (Thousand Tons, Annual Rate)
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
20
05
Q1
Q3
20
06
Q1
Q3
20
07
Q1
Q3
20
08
Q1
Q3
20
09
Q1
Q3
20
10
Q1
Q3
20
11
Q1
Q3
20
12
Q1
Q3
20
13
Q1
Q3
20
14
Q1
Q3
20
15
Q1
Q3
20
16
Q1
Q3
The Food Service Grades Recorded
Phenomenal Growth Since 2010 (Thousand Tons, Annual Rate)
Trade Issues Will Remain a Significant
Issue in 2015 and 2016
• A Massive Oversupply Situation Has
Developed in the Far East
– Creating disruptions in the global export
market
– Increasing the potential threat from imports
China: Announced Cartonboard Capacity
Expansion in 2014-2016 Thousand Tonnes
Company Capacity Date Grade
Foshan Huafeng Paper -150 2014:Q1 Coated Duplex
Ningbo APP 1,000 2014:Q2 Ivoryboard
Hangzhou Dongda Paper 250 2014:Q2 Coated Duplex
Henan Shangqiu Xinhao Paper 100 2014:Q2 Ivoryboard
Asia Symbol (Shandong) Pulp & Paper 350 2014:Q2 Liquid Packaging Board
Sichuan Yibin Paper Industry 350 2014:Q2 Cupstock
Jiangmen Xinghui Paper 300 2014:Q2 Coated Duplex
Henan Xinxiang Xinya Paper Co., Ltd. 400 2014:Q2 Ivoryboard
Fujian Liansheng Paper 300 2014:Q2 Coated Duplex
Hubei Paima Paper 200 2015:Q2 Ivoryboard (Cigarette Board)
Zhanjiang Chenming Paper Pulp Co., Ltd. 180 2015:Q3 Cupstock
Shandong Sun Honghe Paper 500 2015:Q4 Coreboard
Guangxi Stora Enso Forest 450 2016:Q1 Liquid Packaging Board
Virgin Grades
Recycled
Grades All Grades
Subtotal 2014 2,200 700 2,900
Subtotal 2015-2016 830 500 1,330
16 © Copyright 2015 RISI, Inc. All rights reserved.
China Has Become a Net Exporter of
Boxboard, and Its Surplus Will Grow Million Tonnes of Net Exports
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
17 © Copyright 2015 RISI, Inc. All rights reserved.
The Rest of Asia Can Provide a Home for Only
a Small Portion of China’s Net Exports Million Tonnes of Net Exports
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
China
Rest of Asia
18 © Copyright 2015 RISI, Inc. All rights reserved.
Western European Producers Export
Boxboard Around the World, Although
Europe Dominates Exports by Destination, Million Tonnes
19
0
2
4
6
8
10
12
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Western Europe Eastern Europe The Americas Africa
The Middle East Asia Oceania
© Copyright 2015 RISI, Inc. All rights reserved.
Latin America, Africa and the Middle East
Will Be the Battle Grounds for Virgin
Boxboard Exports Net Imports, Thousand Tonnes
0
100
200
300
400
500
600
700
800
900
1,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Latin America
Africa
Middle East
Oceania
20 © Copyright 2015 RISI, Inc. All rights reserved.
Displacement of North American Boxboard
Exports in Overseas Markets Is Likely to
Continue Million Tonnes
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
US SBS US CUK All Other NA Exports
21 © Copyright 2015 RISI, Inc. All rights reserved.
Will Imports Become a Bigger Factor in
the US Cartonboard Markets?
• Challenges faced by imports: – Lack of distribution system for overseas producers
– High transportation costs to converting plants
– Concerns about quality and market commitment
– Differences in performance characteristics of overseas board compared to US board
– High integration levels between mills and carton plants
• Can imports overcome these challenges? – Overseas producers are making an attempt
– Folding imports increased 11% in both 2013 and 2014
Overseas Imports Have Struggled to Gain
Share in the North American Market Import Share of Demand
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
US/Canadian Trade
All Others
23 © Copyright 2015 RISI, Inc. All rights reserved.
Imports Will Likely Capture Most of the Growth In
Apparent Consumption in 2015-2016
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Bleached Unbleached Recycled Import
Million Tons
RISI’s Conclusion: Folding Cartonboard Production is
Likely to Weaken Further in 2015-2016
(Annual Growth, 000 Short Tons)
-600
-500
-400
-300
-200
-100
0
100
200
0 2 4 6 8 10 12 14 16
Total Folding Cartonboard
A Significant Amount of Capacity Has Been Closed
Over the Last 15 Years Annual Change, Thousand Tons
-1000
-800
-600
-400
-200
0
200
400
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
SBS Removals
Recycled Removals
CUK Removals
Net Capacity Change
US Bleached Folding Boxboard Operating Rates
Are Expected to Trend Down Through 2016
80%
84%
88%
92%
96%
100%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
US Boxboard Summary
• US domestic demand will creep upward in 2015-2016
• But imports will capture most of the growth in the folding cartonboard segment
• Virgin producers are facing increased competition in the export
markets, but modest increases in costs
• Recycled producers are expected to be hit by rising recovered paper
costs, once paper and board demand in the developing world starts
to rebound
World RCP Demand
-15%
-10%
-5%
0%
5%
10%
15%
0
50
100
150
200
250
300
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Volume (L)
Percent Change (R)
Million Tonnes
29 © Copyright 2015 RISI, Inc. | Proprietary Information
Will RCP demand growth reaccelerate
after decelerating in recent years?
• Little or even negative demand growth from the developed regions – Constrained paper and board demand increase
– Exception: North America?
• Slowing demand growth in the developing world – Decelerating economic growth and therefore the paper
and board demand growth
– Fiber furnish change in certain paper and board grades: tissue and boxboard
• Recycled and virgin fiber balance – RCP vs. wood fiber
– Cost, availability, environmental concerns …
– How about non-wood fiber?
30 © Copyright 2015 RISI, Inc. |
Proprietary Information
Global Supply for RCP
• Rising world paper recovery rate – Has world recovery rate hit its plateau?
• Limited growth from the developed regions – Recovery rates in certain developed regions have reached their
plateau, such as Japan, Oceania, even Western Europe?
– There may still be room for higher recovery rate and more RCP supply in North America?
• The developing markets – Asia: most developing countries in Asia have quite low recovery
rates and fast-growing demand, such as India and Vietnam
– China: how much more can China improve its domestic supply?
– Latin America: demand/supply balanced? How about future?
31 © Copyright 2015 RISI, Inc. |
Proprietary Information
Paper Recovery Rates by World Region
20%
30%
40%
50%
60%
70%
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
World Europe North America Latin America Middle East Asia Asia
© Copyright 2015 RISI, Inc. |
Proprietary Information
Recovery Rates by RCP Grade
40%
50%
60%
70%
80%
90%
100%
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
ONP OCC Average
© Copyright 2015 RISI, Inc. |
Proprietary Information
World average recovery rate
for OCC should be very
close to its practical
maximum level.
RCP Demand and Supply by Region in
2013 (Million Tonnes)
0
10
20
30
40
50
60
70
80
Western Europe
North America
Japan China Other Far East
Eastern Europe
Latin America
Middle East
Demand
Supply
34 © Copyright 2015 RISI, Inc. | Proprietary Information
Chinese RCP Domestic
Collection vs. Imports
0.25
0.30
0.35
0.40
0.45
0.50
0
10
20
30
40
50
60
70
80
Mil
lio
n T
on
ne
s
Domestic Collection
Net Imports
Apparent Paper Recovery Rate
Import share
1995: 10%
2000: 20%
2005: 49%
2009: 44%
2013: 39%
Will the Chinese
import share
continue to
decline?
35 © Copyright 2015 RISI, Inc. |
Proprietary Information
Other Asia: RCP Domestic Collection vs.
Imports
35%
40%
45%
50%
55%
60%
0.0
10.0
20.0
30.0
40.0
50.0
Mil
lio
n T
on
ne
s
Domestic Consumption
Net Imports
Recovery Rate Net import share
2000: 22%
2005: 18%
2010: 15%
2013: 15%
Will the import
demand from Other
Asia grow further?
36 © Copyright 2015 RISI, Inc. |
Proprietary Information
North American RCP Domestic Demand
vs. Exports
20%
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Mil
lio
n T
on
ne
s
Domestic Consumption
Net Exports
Recovery Rate
Net export
share
2000: 18%
2005: 27%
2008: 33%
2012: 42%
2013: 40%
Any increase
in the
exports? USA
or Canada?
37 © Copyright 2015 RISI, Inc. |
Proprietary Information
Western European RCP Domestic
Demand vs. Exports
20%
30%
40%
50%
60%
70%
80%
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Mil
lio
n T
on
nes
Domestic Consumption
Net Exports
Recovery Rate
Net export share
1996: 2%
2000: 6%
2009: 19%
2013: 14%
Will net exports
continue to drop?
38 © Copyright 2015 RISI, Inc. All rights
reserved.
16.6 MT
10.5 MT
4.9 MT
1.6 MT
Global RCP Trade Flow in 2013
© Copyright 2015 RISI, Inc. |
Proprietary Information
Impacts of Trade in World RCP Markets
• Change of recovery rates in different regions – North America, Western Europe, Japan and Oceania
– Developing regions
• Price developments worldwide – Net exporting regions
– Net importing regions
• Structure developments of recovered paper business – Consumers, suppliers, and traders
• Regulations – Limit exports
– Quality controls on imports
40 © Copyright 2015 RISI, Inc. |
Proprietary Information
Global RCP Market
0
40
80
120
160
200
240
280
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
US
Do
lla
rs p
er
To
nn
e
OCC China Import (CIF)-$
OCC US (FOB)-$
1.04 Germany (FOB)-€
41
OCC Prices in Different Regions
© Copyright 2015 RISI, Inc. |
Proprietary Information
25
75
125
175
225
275
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
US
$ p
er
To
nn
e
SOP-Germany-€ SOP-US-$
Data sources: RISI and Letsrecycle.com
© Copyright 2015 RISI, Inc. |
Proprietary Information 42
Global RCP Market
SOP Prices in Different Regions
Fast-rising Chinese RCP Imports,
Changing Sources
0
4
8
12
16
20
24
28
32
1992 1995 1998 2001 2004 2007 2010 2013
Mil
lio
n T
on
ne
s
58%
14%
2%
4%
1%
9%
2% 1% 2%
1%
6%
USA Japan UK Holland
Canada Hong Kong Australia Italy
Belgium France Other 45%
12%
11%
5%
5%
3%
4%
3%
2% 2%
8%
2002
6.9 MT
2013
29.2 MT
43 © Copyright 2015 RISI, Inc. |
Proprietary Information
Future Trends Covered in RISI’s
Recovered Paper Study
• Will the demand/supply balance tighten?
• What are RISI’s price projections?
• Emerging new buyers
• Potential new sellers
• Regulations
44
Outlook for Global Recovered
Paper Markets
www.risi.com/recoveredpaper
Email: [email protected]
Thank you for your attention! For more information:
45
Derek Mahlburg, Senior Economist
March 2015
Global Graphic Paper Outlook
© Copyright 2015 RISI, Inc. | Proprietary Information
Derek Mahlburg, Senior
Economist,
North American Graphic Paper • Has covered North American graphic
paper markets with RISI since 2008
• Co-author of the monthly Paper
Trader and North American graphic
paper forecasts
• Special studies include Global
Newsprint Risk of Closure Study and
The Impact of Media Tablets on
Publication Paper Markets
© Copyright 2014 RISI, Inc. |
Proprietary Information 47
World Printing & Writing Paper Demand Is the global market in decline? Yes, its just a matter of degree.
-12%
-6%
0%
6%
12%
80
90
100
110
120
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Volume (L)
Percent Change (R)
Million Tonnes
© Copyright 2015 RISI, Inc. | Proprietary Information
Yet, Global UFS May Still Be
Growing… Mechanical grades appear to be flat or declining
globally
10
20
30
40
50
60
99 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
UFS CFS
Cme Ume
Global Demand, Million Tonnes
© Copyright 2015 RISI, Inc. | Proprietary Information
Global UFS Demand Growth for 2015 and 2016
Varies by Region Thousand Tonnes, Percent per Year
Global: 211 (0.2%)
76 (2.9%)
-140 (-1.0%) 576 (1.0%)
138 (4.3%)
-42 (-0.7%)
-21 (-2.3%)
-478 (-2.9%)
102 (1.4%)
© Copyright 2015 RISI, Inc. | Proprietary Information
Newsprint Demand Now Declining in Most
Global Markets for 2015 and 2016 Thousand Tonnes, Percent per Year
Global: -1,893 (-3.6%)
-2 (-0.2%)
-658 (-5.5%)
-382(-1.7%)
14 (+1.0%)
-155 (-4.5%)
-39 (-4.3%)
-592 (-7.5%)
-80 (-2.8%)
© Copyright 2015 RISI, Inc. | Proprietary Information
2
7
12
17
22
27
32
00 02 04 06 08 10 12 14 16
Mil
lio
n T
on
ne
s
UFS 1.0%*
CFS 0.4%*
Cme 1.1%*
Ume 2.5%*
Asia: Growth Is Slowing
Remarkably from Past Trends
Freesheet grades dominate
the region
• Mechanical paper needs
softwood and is often
imported
P&W paper growth rate has
slowed considerably…1% in
2012 and 2013, -0.8% in 2014
• Average growth had been 4%
China slowing, Japan decline
accelerating * Annual growth rate, 2015-2016
© Copyright 2015 RISI, Inc. | Proprietary Information
Europe…Moderating Rate of Decline;
UFS Outperforming Other Grades •Annual growth rate, 2015-2016 (Combined Western and Eastern Europe)
4
5
6
7
8
9
10
11
12
13
14
0 2 4 6 8 10 12 14 16
Mil
lio
n T
on
ne
s
UFS -0.9%*
CFS -2.6%*
Cme -2.8%*
Ume -2.1%*
Eastern Europe buffering sharp
decline in the West
UFS usage rates per capita
starting at much lower level
than N. America and have less
room to fall
Region slightly more protected
from new technologies, but
equally exposed to mature
economies
© Copyright 2015 RISI, Inc. | Proprietary Information
US P&W Demand Accelerated
Down as Expected in 2014 US Apparent Consumption, Thousand Tons, Seasonally Adjusted
Coated
Freesheet
Coated
Mechanical
Uncoated
Freesheet
Uncoated
Mechanical
2013 3,927 3,526 8,832 3,991
% Change -0.6% -7.9% +0.2% +4.8%
2014 3,900 3,252 8,339 3,884
% Change -0.7% -7.8% -5.6% -2.7%
© Copyright 2015 RISI, Inc. | Proprietary Information
2
4
6
8
10
12
14
16
00 02 04 06 08 10 12 14 16
Mil
lio
n T
on
nes
UFS -2.9%*
CFS -0.6%*
Cme -4.4%*
Ume -2.5%*
North America Decline Is
Here for the Long Term
UFS and Cme are the most
impacted grades
Main declining threats are
new technologies,
exacerbated at times by a
weak economy
UFS seesaw of 2013/2014 to
stabilize at 2.9% decline in
2015/2016
* Annual growth rate, 2015-2016
© Copyright 2015 RISI, Inc. | Proprietary Information
US Publisher Sales of Books Digital stabilizing at 21% of all sales of books in dollars, 2014 preliminary
numbers show good growth
0%
5%
10%
15%
20%
$0
$5
$10
$15
$20
$25
$30
2008 2009 2010 2011 2012 2013 2014 (e)
Billio
n D
ollars
Physical Digital Bundled % Digital (R)
5.5%
Source: Bookstats/AAP
-0.5% -0.8% -2.5% +3.3%
+2.3%
© Copyright 2015 RISI, Inc. | Proprietary Information
Net Uncoated Woodfree Capacity
Changes for 2011-2013 vs.
Demand Growth for the Same
Period Thousand Tonnes
-1,000
0
1,000
2,000
3,000
4,000
5,000
Europe N. America Asia, ME, OCE, Afr
Latin America Global
Capacity Growth
Demand Growth
© Copyright 2015 RISI, Inc. | Proprietary Information
Note: Asian capacity expansions exclude the offsetting effect of government mandated closures of small, old, polluting mills
Leading to a Rise in Exports from
Asia While Brazil’s Net Exports of
Uncoated Freesheet Stagnate
-500
0
500
1,000
1,500
2,000
2,500
3,000
1999 2001 2003 2005 2007 2009 2011 2013 2015
Th
ou
sa
nd
To
nn
es
of
Ne
t E
xp
ort
s
Brazil
Indonesia
China
© Copyright 2015 RISI, Inc. |
Proprietary Information
Shipments of Cut Size Uncoated
Freesheet to the North American
Market Imports now supply over 20% of demand
0%
5%
10%
15%
20%
25%
30%
0
50
100
150
200
250
300
350
400
450
2009 2010 2011 2012 2013 2014 2015
Imp
ort
Sh
are
, P
erc
en
t
Th
ou
sa
nd
To
ns
pe
r M
on
th
Import
Domestic
Import Share (R)
© Copyright 2015 RISI, Inc. | Proprietary Information
UFS Demand and Capacity
Changes for 2015-2016 Announced Net Uncoated Woodfree Capacity Changes for 2015-2016 vs. RISI
Forecast of Demand Growth for the Same Period,
Thousand Tonnes
-1,000
0
1,000
2,000
3,000
4,000
5,000
Europe N. America Asia, ME, OCE, AFR
Latin America Global
Capacity Growth
Demand Growth
© Copyright 2015 RISI, Inc. | Proprietary Information
Note: includes prorated capacity changes for 2014
Uncoated Woodfree Operating
Rates Import pressures and strong dollar pressuring North American shipments
83% 84% 85% 86% 87% 88% 89% 90% 91% 92% 93% 94% 95% 96% 97% 98% 99%
100%
2008 2009 2010 2011 2012 2013 2014 2015 2016
N. America
W. Europe
Asia
Brazil
© Copyright 2015 RISI, Inc. | Proprietary Information
Tariff Suit Against Offshore
Importers of Cut Size Paper into
the USA
© Copyright 2015 RISI, Inc. |
Proprietary Information
Country 2012 2013 2014 2012 2013 2014
China/Hong Kong 52 89 141 40 74 117
Indonesia 108 118 231 104 112 227
Brazil 141 199 221 138 197 218
Portugal 142 160 158 141 160 157
Australia 50 52 83 46 49 76
Totals 493 618 834 469 592 795
Percentage Growth 25% 35% 26% 34%
US Imports of Uncoated Freesheet from Selected Offshore Countries
Thousand Tonnes
Total Uncoated Freesheet Only Cut Size and Folio Sheets
Notes: Classification of grades into uncoated freesheet, cut size and folio sheets are RISI estimates
and are not necessarily the exact categories to be used by the ITC in this investigation.
Tariff Suit Against Offshore
Importers of Cut Size Paper into
the USA • CVD against China and Indonesia
– To offset government subsidies
• Preferential lending
• Income tax rebates
• VAT tax rebates
• Government provision of goods or services, including electricity, chemicals and land, at less than adequate remuneration
• Provision of standing timber at low prices
• Government prohibition of log exports
• Debt forgiveness by the government
– Likely to be in place by June/July 2015
– Could be around 18% if similar subsidies given to UFS mills compared with calculations for CFS mills in 2010 CVD
© Copyright 2015 RISI, Inc. |
Proprietary Information
Tariff Suit Against Offshore
Importers of Cut Size Paper into
the USA • ADD against China, Indonesia, Brazil,
Portugal and Australia – Much less clear what the result will be
• Are these companies selling at “less than fair
market value”?
• These mills are not losing money on US sales
• Did these companies fill a gap left by Courtland or
did they cause the Courtland shut?
– RISI’s guess is that no significant ADD will be imposed
© Copyright 2015 RISI, Inc. |
Proprietary Information
Circulation of Printed Magazines in N. America (Includes consumer, farm, and religious, paid & verified and analyzed nonpaid;
Excludes digital)
-8%
-6%
-4%
-2%
0%
2%
4%
300
320
340
360
380
400
420 2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Mil
lio
ns
Circulation
Source: Alliance for Audited Media & RISI
65
-30.0%
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
2008Q
1
2009Q
1
20
10
Q1
2011Q
1
2012Q
1
2013Q
1
2014Q
1
Percentage Change in PIB Magazine Ad Pages
%Ch Year Ago
Annual
2012 -8.2%
2013 -4.1%
2014 -10.4%
2015 -5.8%
2016 -2.5%
66
US Magazine Ad Pages Accelerating
Downward…Year-over-year declines of 11-12% in final
three quarters of 2014 when including magazines that have shut
or switched to digital
US Catalog Mailings Showing Only Moderate
Declines
-20%
-15%
-10%
-5%
0%
5%
10%
2007Q
1
2008Q
1
2009Q
1
20
10
Q1
2011Q
1
2012Q
1
2013Q
1
2014Q
1
Percentage Change in Catalogs Mailed
%Ch Year Ago
Annual
2012 -4.7%
2013 -4.6%
2014 -1.1%
2015 -1.0%
67
US Postal Mail Volumes Standard mail surprisingly flat, periodicals falling
5
6
7
8
9
10
11
60
65
70
75
80
85
90
95
100
105
110
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
20
11
2012
2013
2014
2015*
Bil
lio
n P
iec
es
Postal Fiscal Years
First Class
Std A Mail
Periodicals (R)
* 2015=USPS forecast from operating plan
USPS
Forecast
2015
Pieces of
First Class -5.2%
Standard
+1.2%
Periodicals -9.8%
Total Mail -1.4%
68
Coated Woodfree Demand Holding
Up Much Better than Coated
Mechanical Demand for Coated Paper in Magazines & Catalogs, Thousand Tonnes
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Coated Freesheet
Coated Mechanical
© Copyright 2015 RISI, Inc. | Proprietary Information
Announced Net Coated Woodfree
Capacity Changes for 2015-2016 vs.
RISI Forecast of Demand Growth for
the Same Period Thousand Tonnes
-1,000
-800
-600
-400
-200
0
200
Europe N. America Asia, ME, OCE, AFR
Latin America Global
Capacity Growth
Demand Growth
© Copyright 2015 RISI, Inc. | Proprietary Information
Note: includes prorated capacity changes for 2014
Coated Woodfree Operating Rates
80%
82%
84%
86%
88%
90%
92%
94%
2008 2009 2010 2011 2012 2013 2014 2015 2016
N. America
W. Europe
Asia
© Copyright 2015 RISI, Inc. | Proprietary Information
Announced Net Coated Mechanical
Capacity Changes for 2015-2016
vs. RISI Forecast of Demand
Growth for the Same Period Thousand Tonnes
-800
-600
-400
-200
0
200
400
Europe N. America Asia, ME, OCE, Afr
Latin America Global
Capacity Growth
Demand Growth
© Copyright 2015 RISI, Inc. | Proprietary Information
Note: includes prorated capacity changes for 2014
Coated Mechanical Operating
Rates
75%
77%
79%
81%
83%
85%
87%
89%
91%
93%
95%
97%
2008 2009 2010 2011 2012 2013 2014 2015 2016
N. America
W. Europe
© Copyright 2015 RISI, Inc. | Proprietary Information
Announced Net Uncoated
Mechanical Capacity Changes for
2015-2016 vs. RISI Forecast of
Demand Growth for the Same
Period Thousand Tonnes
-400
-300
-200
-100
0
100
200
300
400
Europe N. America Asia, ME, OCE, Africa
Latin America Global
Capacity Growth
Demand Growth
© Copyright 2015 RISI, Inc. | Proprietary Information
Note: includes prorated capacity changes for 2014
Uncoated Mechanical Operating
Rates Massive shuts in Europe; recent shuts also announced in Canada
75%
80%
85%
90%
95%
100%
2008 2009 2010 2011 2012 2013 2014 2015 2016
N. America
W. Europe
© Copyright 2015 RISI, Inc. | Proprietary Information
US Dollar Has Sharply
Appreciated Against Most
Currencies…
Index Jan-13 = 1.00
40%
50%
60%
70%
80%
90%
100%
110%
Chinese Yuan
Euro
Canadian Dollar
© Copyright 2015 RISI, Inc. | Proprietary Information
…Which is Pressuring North
American Net Exports of Printing &
Writing Paper Thousand Tonnes
1,600
1,800
2,000
2,200
2,400
2,600
2,800
2010 2011 2012 2013 2014 2015 2016
Imports Exports
© Copyright 2015 RISI, Inc. | Proprietary Information
US Newspaper Circulation…Total
circulation holds steady at -1% in 2014, while print circulation forecast to lose
another -5.9%
50
60
70
80
90
100
110
Total Circulation
Print Only
Source: Editor & Publisher, AAM, RISI
78
US Newspaper Circulation Index, 1985=1
North American Newsprint
Shipments… As North American demand slides 9-10% annually, US mills lose share domestically and
abroad due to strong currency
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
North American Exports
Domestic Shipments
US Share of Total Shipments
79
Thousand Tonnes
Announced Net Newsprint Capacity
Changes for 2015-2016 vs. RISI
Forecast of Demand Growth for the
Same Period Thousand Tonnes
-2,000
-1,800
-1,600
-1,400
-1,200
-1,000
-800
-600
-400
-200
0
Europe N. America Asia, ME, OCE, Africa
Latin America Global
Capacity Growth
Demand Growth
© Copyright 2015 RISI, Inc. | Proprietary Information
Note: includes prorated capacity changes for 2014
Newsprint Operating Rates Stable North American Operating Rates Since 2010
75%
80%
85%
90%
95%
100%
2008 2009 2010 2011 2012 2013 2014 2015 2016
N. America
W. Europe
Asia
© Copyright 2015 RISI, Inc. | Proprietary Information
World Graphic Paper
5-Year Forecast
www.risi.com/worldgraphic
Global Cut Size Uncoated Freesheet
Study
www.risi.com/cutsize
China’s Influence on World
Graphic Paper Markets in the
Coming Decade
www.risi.com/chinagraphic
Thank you for your attention! For more information:
© Copyright 2015 RISI, Inc. |
Proprietary Information
RISI Global Paper Market Trends
Session
March 17, 2015