RISI Global Tissue
Transcript of RISI Global Tissue
RISI Global Tissue OutlookOvercapacity Threat in Several Regions
Esko UutelaPrincipal, Tissue
RISI North American ConferenceSan Diego, USA, October 2016
© Copyright 2016 RISI, Inc. | Proprietary Information
• Educational background in forestry, economics and business studies
• In consulting business and information services for the forest industry since 1976
• Cooperating with RISI since 2007• Developed global tissue databases and
forecasting models• Previous experience in graphic papers,
packaging papers and recovered paper• Assisted by RISI Asian, European and
American colleagues and consultants• Produced more than 200 single‐client and
multi‐client tissue studies
Principal, Tissue
Esko Uutela
© Copyright 2016 RISI, Inc. | Proprietary Information 2
Agenda
• Recent Global Trends
• European Outlook
• Asian Outlook
• Latin American Outlook
• North American Outlook
• Summary of Global Outlook
• Concluding Remarks
© Copyright 2016 RISI, Inc. | Proprietary Information 3
RECENT GLOBAL TRENDS
© Copyright 2016 RISI, Inc. | Proprietary Information 4
World Tissue Consumption by Region, 2015China passed Western Europe in 2014 and is now the second‐largest tissue consuming region worldwide; Latin America is number four
Million Tonnes, Share (%) of the Global Total
Global Consumption: 34.8 Million Tonnes (2015)
1.4 (4.0%)
6.6 (18.9%)
1.9 (5.5%)
0.7 (2.1%)
1.9 (5.3%)
0.4 (1.2%)
8.8 (25.3%)
3.8 (11.0%)
7.2 (20.7%)
2.1 (5.9%)
© Copyright 2016 RISI, Inc. | Proprietary Information 5
Growth in the Global Tissue MarketRelatively stable growth until the Great Recession in 2009, volume growth slightly above 1.0 million tonnes per year, recovery took a few years but 2015 was a good year due to China, North America and Western Europe
0
1
2
3
4
5
6
0
200
400
600
800
1,000
1,200
1,400
1,600
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Rel
ativ
e G
row
th, P
erce
nt p
er Y
ear
Thou
sand
Ton
nes
Volume GrowthRelative Growth
© Copyright 2016 RISI, Inc. | Proprietary Information 6
Regional Volume Growth of Tissue Consumption, 2000‐2015
0
1,000
2,000
3,000
4,000
5,000
6,000
Thou
sand
Ton
nes More than
one‐third (36%) of
global growth in China!
Total Global Growth: 13.9 Million Tonnes (924,000 Tonnes per Year)
Latin America shows the second‐largest volume
growth
© Copyright 2016 RISI, Inc. | Proprietary Information 7
World Tissue Consumption by RegionMarket is dynamic: China has passed Western Europe in market size, while Asia Far East is now—and Eastern Europe soon will be—larger than Japan
N. America 25.3%
China20.7%
W. Europe18.9%
L. America11.0%
Asia Far East5.9%
Japan5.5%
E. Europe5.3%
N&M East4.0% Africa
2.1%
Oceania1.2%
Global Consumption: 34.8 Million Tonnes (2015)
© Copyright 2016 RISI, Inc. | Proprietary Information 8
EUROPEAN OUTLOOK
© Copyright 2016 RISI, Inc. | Proprietary Information 9
Main European Tissue Markets, 2015The four largest markets account for half of European tissue consumption
Germany17%
UK13%
France11%
Italy10%Iberian
Peninsula10%
Russia6%Nordic Countries
6%
Benelux5%
Poland5%
Greece2%
All Others15%
Total Market Size: 8.4 Million Tonnes © Copyright 2016 RISI, Inc. | Proprietary Information 10
Western European Tissue Market Showed Recovery in 2015, Outlook PositiveSouthern Europe finally returning to its pre‐recession level
-2.0
-1.5-1.0-0.5
0.00.51.0
1.52.0
2.53.03.5
4.0
Gro
wth
Rat
e, %
/a
Very long‐lasting recovery!
© Copyright 2016 RISI, Inc. | Proprietary Information 11
Eastern European Market Growth Suffering from Political and Economic ProblemsThe conflict between Russia and Ukraine continues to cast a pall over tissue market expansion
© Copyright 2016 RISI, Inc. | Proprietary Information 12
-4
-2
0
2
4
6
8
10
12
14
Gro
wth
Rat
e, P
erce
nt p
er Y
ear
Forecast European Volume Growth of Tissue Consumption by Main Country, 2015‐2018Russian growth is stunted by the poor economic outlook, but still positive, and recovery expected in 2017‐2018
0
20
40
60
80
100
120
Thou
sand
Ton
nes
Total Expected Growth: 272,000 Tonnes
© Copyright 2016 RISI, Inc. | Proprietary Information 13
Net Capacity Change* and Tissue Capacity Utilization in Europe until 2018European investments will push capacity utilization down in 2014‐2017 and several planned projects indicate this trend could continue
8485868788899091929394
0
50
100
150
200
250
300
350
Cap
acity
Util
izat
ion,
Per
cent
Thou
sand
Ton
nes
Capacity ChangeCapacity Utilization
* Based on committed projects only
© Copyright 2016 RISI, Inc. | Proprietary Information 14
ASIAN OUTLOOK
© Copyright 2016 RISI, Inc. | Proprietary Information 15
Main Asian Tissue Markets, 2015China dominant, Asia Far East now larger than Japan
China57%Asia Far East
17%
Japan15%
N&M East11%
Total Market Size: 12.6 Million Tonnes
© Copyright 2016 RISI, Inc. | Proprietary Information 16
7.97.0
7.8 8.0
6.96.2
8.5 8.2
9.9 10.0
9.0
6.7 7.1
10.5
0
2
4
6
8
10
12
14
02/01 03/02 04/03 05/04 06/05 07/06 08/07 09/08 10/09 11/10 12/11 13/12 14/13 15/14
Gro
wth
Rat
e, P
erce
nt p
er Y
ear
Recent Growth Rates of Chinese Tissue Consumption The Chinese tissue market has been in a very strong growth phase, but since 2011 market growth has slowed substantially
Average growth: 7.9% per year
Recently, growth has been slowing, but 2015 was an exception
© Copyright 2016 RISI, Inc. | Proprietary Information 17
Chinese Tissue Exports Growth, 2008‐2015Chinese tissue exports exploded in 2011‐2014 and went to nearly every corner of the world—with Asia Far East, North America and Japan being the largest buyers, followed by Oceania—but no growth in 2015
0100200300400500600700800900
1,000
2008 2009 2010 2011 2012 2013 2014 2015
Tissue
Exports, Tho
usan
d Tonn
es
Asia Far East North America JapanOceania Middle East Western EuropeAfrica Latin America Eastern Europe
Average growth rate, 2011‐2014 +20%/a
© Copyright 2016 RISI, Inc. | Proprietary Information 18
Expected Growth Rates of Asian Tissue Consumption, 2015‐2018 Strong growth in major markets, with Japan, South Korea and Taiwan the exceptions, India to gradually take off, China slowing
0
2
4
6
8
10
Gro
wth
Rat
e, P
erce
nt p
er Y
ear
Average Growth: 5.1% per year
© Copyright 2016 RISI, Inc. | Proprietary Information 19
Chinese Investments Exploding, but Closures and Project Delays Expected There is a real investment peak with too much capacity being built, but currently also a wave of capacity closures in the industry
‐1,500
‐1,000
‐500
0
500
1,000
1,500
2,000
2,500
2012 2013 2014 2015 2016 2017 2018
Thou
sand
Ton
nes pe
r Year
Effective Capacity Change*New Projects Closures Net Capacity Change
* PM start‐up/learning curves considered
© Copyright 2016 RISI, Inc. | Proprietary Information 20
Net Capacity Change* and Capacity Utilization in the Asian Tissue IndustryOvercapacity is obvious, although project delays may help
70
75
80
85
90
95
100
0
500
1,000
1,500
2,000
2,500
Capa
city Utilization, Percent
Thou
sand
Ton
nes
Capacity Change
Capacity Utilization
*Based on committed projects only, learning curves considered
© Copyright 2016 RISI, Inc. | Proprietary Information 21
LATIN AMERICAN OUTLOOK
© Copyright 2016 RISI, Inc. | Proprietary Information 22
Main Latin American Tissue Markets, 2015The five largest markets accounted for 77% of total consumption
Brazil29%
Mexico28%
Argentina8%
Colombia6%
Chile6%
Peru4%
Venezuela4%
Guatemala2%
Ecuador2%
Costa Rica2% All Others
9%
Total Market Size: 3.8 Million Tonnes
© Copyright 2016 RISI, Inc. | Proprietary Information 23
Latin American Tissue Market Shows Varying Annual Growth, Trend Positive Economic turbulences and political instability causing problems, disappointing growth in 2014 and 2015
© Copyright 2016 RISI, Inc. | Proprietary Information
-2
0
2
4
6
8
10
12
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Gro
wth
Rat
e, P
erce
nt p
er Y
ear
Average Growth, 4.3%/a
24© Copyright 2016 RISI, Inc. | Proprietary Information
Volume Growth of LA Tissue Markets by Main Country, 2005‐2015In the past 10 years, growth has been strongest in Brazil, followed by Mexico and Argentina
050
100150200250300350400
Thou
sand
Ton
nes
© Copyright 2016 RISI, Inc. | Proprietary Information25© Copyright 2016 RISI, Inc. | Proprietary Information
Recent Growth of Tissue Consumption in the Five Largest Latin American MarketsMajor annual variation in annual growth rates of apparent consumption typical in all main countries
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
Brazil Mexico Argentina Colombia Chile
Market Growth, Percent from the Previous Year
2012 2013 2014 2015
© Copyright 2016 RISI, Inc. | Proprietary Information26© Copyright 2016 RISI, Inc. | Proprietary Information
Expected Volume Growth of Latin American Tissue Demand by Main Country, 2015‐2018Mexico takes the lead in expansion as Brazil in recession
0
20
40
60
80
100
120
Thou
sand
Ton
nes
© Copyright 2016 RISI, Inc. | Proprietary Information 27
Major Capacity Changes (>10,000 t/a) in the Latin American Tissue Industry2015• Procter & Gamble de Mexico, Apizaco, Tlaxcala ‐58,000 t/a• Celulosa Argentina, Capitán Bermudez, Argentina 30,000 t/a• K‐C de Centroamerica, Sitio del Nino, El Salvador 11,000 t/a • Forestal y Papelera Conception, Coronel, Chile 70,000 t/a• Claramax, Paulo Bento, RG, Brazil 19,000 t/a• Absormex/CMPC, Altamira, Tamaulipas, Mexico 60,000 t/a• Fábricas de Papel Potosi, San Luis Potosi, Mexico 16,000 t/a• Braswell/Samtai/Samseng, Paulinia City, SP, Brazil 35,000 t/a• Grupo Corporativo Papelera, Tepetlaoxtoc, Mexico 30,000 t/a
213,000 t/a
© Copyright 2016 RISI, Inc. | Proprietary Information28© Copyright 2016 RISI, Inc. | Proprietary Information
Major Capacity Changes (>10,000 t/a) in the Latin American Tissue Industry2016• Papelera Nicaragua (Grupo Vual), Pilar, Argentina 14,000 t/a• Mili, Tres Barras, SC, Brazil 34,000 t/a• Cia. Canoinhas, Canoinhas, SC, Brazil 30,000 t/a• Papelera Samseng, Pilar, Argentina 38,000 t/a• Papelera Reyes, Callao, Lima, Peru 27,000 t/a• SEPAC, Mallet, PR, Brazil 35,000 t/a• COPAPA, Callao, Lima, Peru 25,000 t/a• CVG Group, Rio Negrinho, SC, Brazil 25,000 t/a
228,000 t/a
© Copyright 2016 RISI, Inc. | Proprietary Information29© Copyright 2016 RISI, Inc. | Proprietary Information
Major Capacity Changes (>10,000 t/a) in the Latin American Tissue Industry2017• Celulosa Campana, Lima, Buenos Aires, Argentina 30,000 t/a• Convertipap, Atlantagatepec, Mexico 25,000 t/a• Suzano Pulp and Paper, Imperaritz, Maranhao, Brazil 60,000 t/a
2017‐2018• K‐C de Mexico, unrevealed location, Mexico 60,000 t/a• Papelera San Francisco, Mexicali, Mexico 30,000 t/a• Confidential, Brazil 60,000 t/a• Suzano Pulp and Paper, Mucuri, Bahia, Brazil 60,000 t/a• CMPC Tissue, Canete, Lima, Peru 25,000 t/a
350,000 t/a
© Copyright 2016 RISI, Inc. | Proprietary Information30© Copyright 2016 RISI, Inc. | Proprietary Information
Net Capacity Change* and Tissue Capacity Utilization in Latin America Project delays and stronger demand could helping a lot, but currently the outlook is not encouraging for new investments
60
65
70
75
80
85
90
95
100
0
50
100
150
200
250
300
350
Cap
acity
Util
izat
ion,
Per
cent
Thou
sand
Ton
nes
Capacity Change
Capacity Utilization
* Based on committed projects only
© Copyright 2016 RISI, Inc. | Proprietary Information 31
NORTH AMERICAN OUTLOOK
© Copyright 2016 RISI, Inc. | Proprietary Information 32
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Gro
wth
Rat
e, P
erce
nt p
er Y
ear
North American Tissue Business Exceptionally Strong in 2015Strong economy helped the AfH sector growth
Average growth back on a 1.5% per year track
© Copyright 2016 RISI, Inc. | Proprietary Information 33
US Tissue Imports Growth, 2008‐2015Canada continues to be the main US import source for tissue, but China has jumped into second position ahead of Mexico and Indonesia
0100200300400500600700800900
2008 2009 2010 2011 2012 2013 2014 2015
Tiss
ue Im
port
s, T
hous
and
Tonn
es
Canada China Mexico Indonesia Germany Italy All Others
Average growth rate, 2008‐2015: 3.7% per year
© Copyright 2016 RISI, Inc. | Proprietary Information 34
Main US Tissue Import Sources Relative Shares of Total Imports, 2014
Canada41.2%
Indonesia
23.8%
Mexico21.9%
China3.2%
Italy2.6%
Germany1.9% Others
5.3%
Parent Rolls
China44.2%
Canada41.5%
Mexico7.9%
Indonesia1.8%
Italy0.5%
Others4.1%
Converted Products
Total Imports: 340,400 Tonnes Total Imports: 546,100 Tonnes
© Copyright 2016 RISI, Inc. | Proprietary Information 35
Retailer Labels Down in Canada, PL Share Recently Stabilizing in the USA Major fight going on between private labels and brands in the USA, with brand owners increasingly using special price promotions, while in Canada brands continue to rebound through "half‐price" actions
0
5
10
15
20
25
30
35
40
2007 2008 2009 2010 2011 2012 2013 2014 2015
Volu
me
Shar
e, %
of
Con
sum
er T
issu
e
USA Canada
© Copyright 2016 RISI, Inc. | Proprietary Information36© Copyright 2016 RISI, Inc. | Proprietary Information
Expected Growth in US Tissue Consumption by Business SectorAway‐from‐Home retailer labels will show strong growth of about 520,000 tonnes in 2010‐2018, while At‐Home branded volume growth will remain moderate (0.3% per year)
0.00.51.01.52.02.53.03.54.04.5
AH Brands Retailer Labels AfH
Mill
ion
Tonn
es
2010 2011 2012 2013 20142015 2016 2017 2018
Market Volume
Growth of 5.2% per year
Minor Growth
Growth of 1.9% per year
© Copyright 2016 RISI, Inc. | Proprietary Information 37
Major Tissue Capacity Changes*in North America, 2015‐20162015• Double Tree Paper/Royal Paper, Gila Bend, AZ, USA 29,000 t/a• Orchids Paper, Pryor, OK, USA 27,000 t/a• Nippon Paper Industries USA Co., Port Angeles, WA 18,000 t/a• Lincoln Paper & Tissue, Lincoln, ME, USA ‐69,000 t/a
5,000 t/a2016• First Quality Tissue, Anderson, SC (new TAD PM) 64,000 t/a• Von Drehle Corp., Natchez, MS, USA (NTT PM) 32,000 t/a• St. Croix Tissue (APP), Baileyville, ME, USA 120,000 t/a
216,000 t/a
© Copyright 2016 RISI, Inc. | Proprietary Information 38
* in metric tons
Major Tissue Capacity Changes*in North America, 2017‐20192017‐2019• Orchids Paper Products, Barnwell, SC, USA (NTT PM) 32,000 t/a• Resolute Forest Products, Calhoun, TN, USA (NTT PM) 60,000 t/a• Confidential, USA ??? 64,000 t/a• Kruger Products, Crabtree, QC, Canada 20,000 t/a• First Quality Tissue, Anderson, SC, USA (ATMOS PM) ??? 68,000 t/a• Little Rapids Corporation, Shawano, WI, USA (replacement) 10,000 t/a• ST Tissue, Franklin, VA, USA 45,000 t/a• First Quality Tissue, Lock Haven, PA, USA (TAD PM) 64,000 t/a
363,000 t/aPotential Projects• Kruger Tissue, Memphis, TN or Canada (TAD PM) 60,000 t/a• Sofidel North America, Circleville, OH, USA (NTT + Conv.?) 65,000 t/a• Sofidel North America, Oklahoma or Florida, USA 65,000 t/a• Procter & Gamble, Box Elder, UT, USA (TAD PM) 72,000 t/a
262,000 t/a
© Copyright 2016 RISI, Inc. | Proprietary Information 39* in metric tons
Net Capacity Change* and Tissue Capacity Utilization in North AmericaThis year is looking good as some projects have been delayed, but any new expansion for 2017 or 2018 adding to the committed capacity would change the current outlook from positive to negative; potential closures could help
80
82
84
86
88
90
92
94
96
98
100
-200
-100
0
100
200
300
400
Cap
acity
Util
izat
ion,
Per
cent
Thou
sand
Ton
nes
Capacity Change Capacity Utilization
*Based on committed projects only
A lot of new capacity coming on stream that will effect 2017‐2018; utilization rate will head south if no further closures occur
© Copyright 2016 RISI, Inc. | Proprietary Information 40
SUMMARY OF GLOBAL OUTLOOK
© Copyright 2016 RISI, Inc. | Proprietary Information 41
Anticipated Growth in the Global Tissue MarketTissue consumption benefitting from improving global economic growth
0
1
2
3
4
5
6
0200400600800
1,0001,2001,4001,6001,800
Rel
ativ
e G
row
th, P
erce
nt p
er
Year
Thou
sand
Ton
nes
Volume Growth
Relative Growth
© Copyright 2016 RISI, Inc. | Proprietary Information 42
Expected Regional Volume Growth of Tissue Consumption, 2015‐2018Volume growth dominated by China, followed by Latin America
0
500
1,000
1,500
2,000
Thou
sand
Ton
nes
North America expected to have very positive trend, Latin America down due to Brazil
39% of global
growth in China!
Total Expected Global Growth: 3.7 Million Tonnes
© Copyright 2016 RISI, Inc. | Proprietary Information 43
Net Capacity Change* and Capacity Utilization in the Global Tissue IndustryMajor capacity closures could improve outlook, but only marginally. Global overcapacity is the name of the game!
767880828486889092
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Capa
city Utilization, Percent
Thou
sand
Ton
nes
Capacity Change
Capacity Utilization
* Based on committed projects only
© Copyright 2016 RISI, Inc. | Proprietary Information 44
Concluding Remarks• China's growth is slowing and also cutting average global
growth to 3.5% per year, which is still good, although down from 4.0% earlier. But China will continue to be the main driving force of global tissue industry expansion, although overcapacity is the threat in nearly every region. Project delays will be common.
• North American developments are characterized by steady and encouraging growth with many new developments and technological and raw material considerations, but also continuing fights between brands and private labels.
• In Europe, the tissue business had a rather quiet phase, but is now seeing some more positive developments, and many new plans are currently moving forward. Russian‐Ukrainian conflict continues to cast a pall over the European outlook.
© Copyright 2016 RISI, Inc. | Proprietary Information 45
• Latin America is suffering from economic instability, Brazil is in a deep recession and Venezuela will remain in its current desperate situation as long as everything is controlled by the government. But Mexico is back on a growth track again.
• In Asia, last year was a positive surprise for China, and although the economy is slowing, the longer‐term prospects continue to be good. Given the country’s huge population, tissue has great future there. In China, major restructuring is going on and we expect even more mills to be shut down, not only due to environmental concerns, but also increasingly for financial reasons.
Concluding Remarks
© Copyright 2016 RISI, Inc. | Proprietary Information 46
• APP's expansion now has partly moved from China to Indonesia due to integrated pulp mills, and seems to have no limit. However, it has already been impacted by the simple problem of where to sell all this extra supply. Consequently, we expect delays in the company's expansion program.
• In general, overcapacity has hit the global tissue business, so major new investments and export‐oriented tissue capacity will not be needed for the next two to three years. But the industry attracts investors and even more plans are in the pipeline, although time schedules may change.
Concluding Remarks
© Copyright 2016 RISI, Inc. | Proprietary Information 47
Thank you for your attention!For more information:
Outlook for World Tissue Businesswww.risi.com/OWTB
World Tissue Business Monitorwww.risi.com/WTBM
US Tissue Monthly Datawww.risi.com/USTM
Recently Published Special Study:Exploding Chinese Tissue Business –Opportunities and Challengeswww.risi.com/chinatissue
© Copyright 2016 RISI, Inc. | Proprietary Information 48