Fastmarkets RISI MENA Containerboard Market Outlook...East Asian averages 5 0 10 20 30 40 50 60 70...
Transcript of Fastmarkets RISI MENA Containerboard Market Outlook...East Asian averages 5 0 10 20 30 40 50 60 70...
Fastmarkets RISI MENA Containerboard Market Outlook
Abdulla ZaidEconomist, Paper Packaging
Forces shaping the containerboard industry
2019 | Fastmarkets | MENA Containerboard Market Outlook 1
All forecasts and statistics contained in this presentation are based on public information and Fastmarkets RISI proprietary market analysis.
Agenda
• Paper packaging overview• Containerboard trends• Recycled demand outlook• Recycled supply outlook • Market overview and costs
2019 | Fastmarkets | MENA Containerboard Market Outlook 2
2019 | Fastmarkets | MENA Containerboard Market Outlook
Paper packaging growth outlook
Containerboard: 56%Boxboard: 30%
Kraft and specialty paper: 14%
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Substitution effect
Income effect-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000
CAG
R (2
014
-201
8)
Consumption (thousand tonnes)
Boxboard
Kraft and specialty paper
Early movers
Infancy
Expansion
Saturated
ContainerboardPaper packaging grades
Where are we in the business cycle?• Deceleration in the global economy• Containerboard demand slowing • Markets becoming oversupplied
42019 | Fastmarkets | MENA Containerboard Market Outlook
2019 | Fastmarkets | MENA Containerboard Market Outlook
Growth potential is strong
Kilo
gram
s pe
r cap
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Containerboard regional demand
12 kg lower than global, Latin American and Far
East Asian averages5
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Kilo
gram
s pe
r cap
ita
GDP per capita
North America Latin AmericaEurope Sub-Saharan AfricaOceania Far East AsiaWorld MENA
Substitution effect
Income effect
2019 | Fastmarkets | MENA Containerboard Market Outlook
Demand outlook is different within MENAContainerboard regional demand
1. Israel: 48 kg / person2. UAE: 41 kg / person3. Saudi Arabia: 26 kg /
person...
12. Egypt: 9 kg / person
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Substitution effect
Income effect
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s pe
r cap
ita
GDP per capita
Saudi Arabia United Arab Emirates
Egypt GCC
North Africa Other Middle East
Substitution effect
Income effect
Top performers
2019 | Fastmarkets | MENA Containerboard Market Outlook
MENA containerboard substrates KraftlinerFurnish not less than 80% chemical pulp
526,000 tonnes, 12% of total containerboard demand
Semichemcial mediumContains semichemical pulp, neutral sulphite semichemical pulp
215,000 tonnes, 5% of total containerboard demand
Recycled mediumProduced using mostly recycled fibers
1.5 million tonnes, 35% of total containerboard demand
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12%
47%5%
35%
Kraftliner Recycled liner Semichemical medium Recycled medium
Recycled linerFurnish less than 80% chemical pulp
2 million tonnes, 47% of total containerboard demand
2019 | Fastmarkets | MENA Containerboard Market Outlook
70%
72%
74%
76%
78%
80%
82%
84%
86%
88%
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1,000
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3,000
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5,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Thou
sand
tons
Kraftliner Recycled liner Semichemical medium Recycled medium Recycled share
An accelerating trend to replace virgin with recycled
Milli
on to
nnes
Containerboard demand and substrates
Total tonnage growth in apparent consumption
between 2019 and 20218
A deep dive into recycled demand outlook
2019 | Fastmarkets | MENA Containerboard Market Outlook 9
Imports still provide headwinds for domestic producers of recycled linerboard
32%
2019 | Fastmarkets | MENA Containerboard Market Outlook
0%
5%
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15%
20%
25%
30%
35%
40%
45%
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Thou
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Imports Domestic production Imports share (R)
Imports share of demand
Import waves in 2012 and 2016
Expected import wave in 2020: Imports share of demand = 40%
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Imports and domestic production as shares of demand
Europe dominates the MENA imports market for recycled linerboard
90%
2019 | Fastmarkets | MENA Containerboard Market Outlook
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Thou
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Asia Rest of world Europe
European share of imports
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European exports account for an average of 91% of MENA imports from 2008-2018
Asian exports maintained an average of 7%
The lion’s share of MENA recycled liner imports in 2016 came from Spain
48%
2019 | Fastmarkets | MENA Containerboard Market Outlook
Spanish share of European imports
Spanish recycled liner exports to MENA reached 330,000 tonnes in 2016, or 48% of European LNR exports to MENA
Polish recycled liner exports to MENA peaked in 2016 at 61,000 tonnes, or a 9% share
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
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Spain Poland Italy Belgium Germany Turkey Rest of Europe
Brace yourselves for another import wave
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Weak European demand and growing capacity signal acceleration in recycled liner net exports
6.4%
2019 | Fastmarkets | MENA Containerboard Market Outlook
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Change in European capacity Change in European demand Change in European net exports
European capacity-demandgap growth (2019-2021)
European capacity will grow faster than demand (2.8% vs 3.3%) annually
Weak European demand should widen demand-capacity gap and increase recycled liner net exports
A portion of the European exports will find its way to the MENA markets
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Musical chairs dynamic: unloading excess recycled liner tonnage during weak European demand environment
2019 | Fastmarkets | MENA Containerboard Market Outlook
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European recycled liner exports to MENA European recycled liner market condition index (R)
When growth music stops
European market condition index gives indication of market strengthening and weakening (2008 = 1.0)
Weak recycled liner demand and oversupply in Europe are the catalyst of MENA market volatility
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Excess MENAimports
Algeria and Saudi Arabia absorbed most of the European recycled exports
Less than 15,000 tonnes / year15,000–50,000 tonnes / year50,000–100,000 tonnes / yearMore than 100,000 tonnes / year
2019 | Fastmarkets | MENA Containerboard Market Outlook 16
GCC-TSAIP antidumping investigation and results: reshaping MENA trade outlook
2019 | Fastmarkets | MENA Containerboard Market Outlook
Grades under investigation HS Code Definition Result: GCC antidumping duties?
Kraftliner48041100 Kraftliner, uncoated, unbleached, rolls/sheets No
48041900 Kraftliner, uncoated, bleached, rolls/sheets No
Kraft and specialty paper
48043100 Kraft paper uncoated, unbleached, wt nov 150 g/m², NESOI No
48043900 Kraft paper, uncoated, bleached, wt nov 150 g/m², NESOI No
48044100 Kraft paper/paperboard, uncoated, unbleached, wt 150 g/m² or ov, nov 225 g/m², rolls/sheets, NESOI No
Semichemical medium 48051100 Semichemical fluting paper (corrugating medium), uncoated, rolls/sheets YES
Recycled medium
48051910 Fluting paper of recycled liner board weighing150 g/m² or less
YES, except fluting paper of recycled liner board weighed less than 105 g/m²
48051920 Fluting paper, NESOI, weighing over 150 g/m², uncoated, in rolls/sheets, YES
48051990 Other fluting paper YES
Testliner48052400 Testliner, uncoated, wt nov 150 g/m², rolls/sheets, spec ch48-
note3YES, except testliner paper of recycled liner
board weighed less than 105 g/m²
48052500 Testliner, uncoated, wt ov 150 g/m², rolls/sheets, spec ch48-note4 YES
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Final dumping margin as a percentage of the CIF value
2019 | Fastmarkets | MENA Containerboard Market Outlook
Country Company Final dumping margin
SpainSociedad Anonima Industrias Celulosa Aragonesa (SAICA) 24.6%
Other companies 31%
Poland All companies 34%
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Resurfacing:Supply outlook & market overview
European imports are the main driver in MENA production volatility
68.8%
2019 | Fastmarkets | MENA Containerboard Market Outlook
60%
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Capacity Production Operating rates (R)
Average operating rate (2019-2021)
Capacity growth is expected to surpass demand, leading to lower operating rates
Imports are expected to increase its share of demand from 31% in 2018 to 41% in 2020, providing further downward pressure on operating rates
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Recycled containerboard production, capacity and operating rates
Tight demand capacity gap, pushing for capacity expansion
5.3%
2019 | Fastmarkets | MENA Containerboard Market Outlook
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Capacity Demand Imports (R)
Capacity growth (2018-2021)
Capacity expansion fuelled by
• Growing future demand potentials
• GCC antidumping duties
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Recycled containerboard Imports, demand and capacity
2019 | Fastmarkets | MENA Containerboard Market Outlook
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GCC NorthAfrica
OtherMiddleEast
SouthernEurope
EasternEurope
WesternEurope
GCC NorthAfrica
OtherMiddleEast
SouthernEurope
EasternEurope
WesternEurope
US
dolla
rs p
er to
nne
Total fiber Chemicals Energy Labor Other Cash cost to Dubai, UAE Cash cost to Port Said, Egypt
Recycled medium
Cost of production: how competitive are the MENA producers?
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Recycled linerboard
Take home points
Containerboard demand growth is slowingDeceleration in the global economy
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2019 | Fastmarkets | MENA Containerboard Market Outlook
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European market sets the tone in MENAMusical chairs: MENA markets witnessed waves of excess importsGCC-TSAIP imposed antidumping duties on Spanish and Polish producers
Tight capacity-demand gap opening door for capacity expansionOperating rates are expected to decline due to imports growth
MENA producers are competitive in the global marketGCC has an advantage in energy costs, while labor costs are lower in North Africa
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Thank you
2019 | Fastmarkets | MENA Containerboard Market Outlook 24
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