Russia’s increasing capacity: a spotlight on Ilim’s ......Alexei Maslikov. Product Management...
Transcript of Russia’s increasing capacity: a spotlight on Ilim’s ......Alexei Maslikov. Product Management...
Alexei Maslikov
Product Management Containerboard
November 2019
Russia’s increasing capacity: a spotlight on Ilim’s containerboard projects’
Fastmarkets RISI conference
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Ilim is the largest pulp, board and paper producer in Russia, with assets in Northwestern and Central Russia and Siberia
Bratsk
Ust-Ilimsk
KoryazhmaKommunar
Dmitrov
• Export oriented company
• Geographically dispersed
• Value chain dispersed
Corrugated packaging plant
Pulp and paper millHead office in Saint-Petersburg
>3 Mt
~17k
>90
• Production
• Personnel
• Destination countries
Key facts and figuresIlim’s assets
>1 Mt• Sales to China
Representative office in China
Beijing
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Production volumes: total pulp, board and paper production volumes across Ilim exceed 3.4 Mt, incl. 0.8Mt of packaging materials
Packaging materials White papers Market pulp
Corrugated packaging
0.0
0.6
0.2
0.4
0.8
1.0
0.1
0.5
Mt
0.2
Kraftliner
Fluting
OtherSack Kraft Paper
~0.8 Mt
0.0
0.4
0.2
0,06
Mt
0.12
0.13
~0.4 Mt
Cut-size
Offset paper
Coated papers
Other
0.4
1.2
1.6
0.80.6
0.20.0
1.0
1.4
1.82.02.2
Mt
0.3
0.5
1.2
~2.1 Mt
Bleached softwood kraft pulp
Bleached hardwood kraft pulp
Unbleached kraft pulp
~0.1 Mt
Pine chemicals
~0.1 Mt
Round wood
~2.7 Mm3
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Ilim is the 8th largest virgin containerboard producer globally and #1 in Russia
Source: RISI, Russian Federal State Statistic
TOP-10 virgin containerboard capacity in the world
TOP-10 virgin containerboard capacity in Europe
Containerboardcapacity in Russia
Total >40 players
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Containerboard portfolio
BratskUst-IlimskKoryazhma
Koryazhma:• PM1 – SCF (100% virgin medium)• PM3 – KLB (100% virgin kraftliner)• PM4 – KLB (100% virgin kraftliner)
Main Markets: Russia, EMEA
Bratsk: • PM1 – KLB (100% virgin kraftliner)
Main markets: China and Rest of Asia
… benefiting from the geographical location of its mills to serve the markets in Russia, EMEA and Asia
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Markets are marked for indicative purpose
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Global demand for pulp and paper products will continue growing. Containerboard demand growth contributes the largest increase
Global trendsPaper and board consumption structure
CAGR
+1,9%
+2,4%
-1,2%
+3,5%
-4,8%
X %
0
100
200
300
400
500
600
700
2000 2005
Mt
2010
505
395
2015 2020 2025 2030
4301,9%0,9%
1,5%
Newsprint Containerboard
P&P papersTissue Specialty Service economy
Digitalization
Urbanization
Population growth
E-commercePlastic
substitution
Environmental footprint
GDP growth
Retail growth
Source: RISI
Actual Forecast
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In Russia, P&B consumption is still below the level of developed and some comparable emerging markets
Paper and board consumption per capita International benchmarks
23
4549 50
0
50
P&B consumption,Kg per capita
2000 20132008 20180
60
120
180
240
300
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70
Poland
GDP per capita, $k
United States
China
France
P&B consumption,Kg per capita
Brazil RussiaSouth Africa
India
Germany
Italy
Hungary
Sources: RISI, IMF, UN
Size of the bubble corresponds to overall P&P demand in the country
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Demand for containerboard in Russia will grow driven by increasing private consumption
Russian GDP dynamics
-3
-2
-1
0
1
2
3
4
5
1.5
-2.320142010
%
2016201520132011 2012 2017 2018 2019 2020 2021
1.8
2022
4.5 4.33.7
0.70.3
1.72.2
1.11.7 1.8
Contribution to GDP growth
0.75
1.00
0.00
0.25
0.50 0.20.8 0.2
%
0.4-0.2
0.9
-0.1
2019
1.10.3
1.7
0.7-0.4
2020
0.5
1.5
-0.6
2021
1.50.1 0.4
2022
1.7 1.8
Government consumptionPrivate consumption Gross fixed investments
Net exportGDP Growth (actual), %GDP Growth (forecast), %
Source: EIU, Central bank of Russia
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Despite overall containerboard consumption increase incremental demand is met by recycled grades
Virgin containerboard continues losing market share to recycled grades
0,0
3,0
4,5
2,5
1,5
4,0
0,5
2,0
3,5
1,0
2012 2013 2014 2016 …2018 2019 2024
3,2
2,5
2015
3,6
2,83,0
3,4
2,52,8
2017
2,6
2011
4,3
+5%
+4%
Recycled grades Virgin gradesMt
As virgin grades consumption is expected to be flat, Ilim virgin containerboard projects is export-oriented
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Source: Russian Federal Customs
10
90
70
100
0
50
30
60
40
10
20
80
5
96
1
81
97
9
Bn m3
0
38
24
58
5
9
17
23
27 32 113 2 12 04
2
10
4741
16
6 5 5 5 3 3 2
Papua New
Guinea
Woodstocks
Brazil Russia Canada USA China Indonesia Cameroon Gabon Mexico Japan Malaysia Germany Sweden Poland Finland
HW speciesSW species
Russia – #1 position in the World in SW and
#2 in HW
Due to SW availability in Russia, Ilim can expand its kraftliner capacities
Source: McKinsey
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Ilim is implementing several strategic projects to almost double its containerboard capacity by 2024
Major projects
0,0
0,7
1,4
2018 2024
+0,1
+0,6
New KLB Line(Ust-Ilimsk)
PM1 Upgrade(Bratsk)
0,7
1,4
x2Mt
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Virgin containerboard capacityRecycled containerboard capacity
IlimKoryazhma
IlimBratsk
The new KLB mill in Ust-Ilimsk will be the largest containerboard capacity in Russia
IlimUst-Ilimsk
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Upgraded PM line was launched in October 2019
PM1 debottlenecking
CAPEX: $120M
Grade: 100% virgin-based kraftliner
Species: SW and HW species (no OCC)
Capacity: 200kt
Speed: 5 m/min
Productivity: +30% 830 t/day
Basis weight : 90-225gsm
Quality: excellent printing properties
Start-up: 2H 2019
Great team effort to launch PM
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Big Ust-Ilimsk project: a completely new KLB mill using state-of-the-art innovative technologies
New KLB line
CAPEX: $1,2Bn
Grade: 100% virgin-based kraftliner
Species: SW and HW species (no OCC)
Capacity: 600kt
Speed: 1200 m/min
Productivity: 2150 t/day
Basis weight: 80-175gsm
Start-up: 2021
New KLB mill layout in Ust-Ilimsk
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Construction in Ust-Ilimsk has already been started including piling of a foundation for PM
August 2019
September 2019
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After completion of the projects, Ilim will become #7 virgin containerboard producer globally
TOP-10 virgin containerboard capacity in the world in 2018
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Sources: RISI
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Other producers
TOP-10 virgin containerboard capacity in the world in 2024
Capacity expansion ’19-24
Other producers
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