Outlook for Global Recovered Paper (RCP or PfR) Markets

Transcription

1 Outlook for Global Recovered Paper (RCP or PfR) Markets European Conference March 217 Kurt Schaefer VP, Fiber Hannah Zhao Senior Economist, Recovered Paper

2 PMIs Booming in China and Globally Official (China), Caixin (China) and Global PMIs Official Caixin Global Official PMI: State-Owned Enterprises, Caixin PMI: Small and Medium-sized Enterprises, Global PMI Source: World Bank Global Economic Monitor 2

3 Sharp OCC Reversal Globally OCC Import/Export Prices US Dollars per Tonne Surging OCC prices in last few months, in line with PMIs Price increase in Europe was slower than in China and North America because Europe is less dependent on exports OCC China Import (CIF) OCC US West Export (FAS) OCC N. German Export (FAS) OCC N. German Export in 3

4 Sharp OCC Reversal Globally (Cont.) Domestic OCC Prices , 1,6 1, USA $/Tonne (L) German /Tonne (L) German $/Tonne (L) Chinese RMB/Tonne (R) Surging domestic prices in China and USA in 4Q16 and 1Q17 vs. relatively stable prices in Europe Much higher starting points for European OCC prices (compared to US and Chinese prices) Sharp devaluation of Chinese renminbi against US dollar Lower than expected US supply during the winter holiday season because of the Amazon effect Increasing transportation and labor costs for Chinese domestic RCP suppliers Strong rise in paper and board prices in China 4

5 The Amazon Effect on Corrugated Demand and OCC Supply Is Growing Multiple boxes, household collection stream 5

6 Chinese Containerboard and OCC Prices: An Upward Spiral Renminbi per Tonne 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, Testliner Price in East China Chinese Domestic OCC Price Surge in capacity closures tightened Chinese paper and board markets and pushed paper prices up strongly in the second half of 216 Positive feedback loop: higher testliner prices and higher OCC prices have been supporting each other on their way up 6

7 Global ONP Market Also Posting Gains, After Years of Stability China Import $/Tonne German $/Tonne German /Tonne USA $/Tonne Similar to OCC, US and Chinese ONP markets were much stronger than Europe in last few months The strong pricing in 216 was caused mainly by the constrained supply due to the continuous fall in newsprint consumption ONP demand from recycled cartonboard sector was healthy Prices for recycled cartonboard also jumped significantly in China 7

8 Falling Newsprint Consumption Can global ONP supply meet the demand from paper and board industry and other sectors? Million Tonnes Other Asia Western Europe North America

9 Global High Grades Market Seeing More Mixed Development China IM SOP $/tonne German 31 $/tonne US SOP $/tonne German 31 /tonne Prices for high grades also rebounded in China and USA in 216 due mostly to the limited supply (falling P&W consumption) Chinese imports of US high grades increased significantly by 2% European markets were fairly stable 9

10 World Tissue Output Trending Opposite of P&W Paper Consumption Million Tonnes per Year P&W Consumption (L) Tissue Production (R) Falling P&W paper consumption means shrinking supply of recycled high grades Growing tissue production Healthy demand for high grades, despite the slight drop in recycled fiber furnish share in the world tissue sector 1

11 Domestic RCP Strong in W. Europe Domestic Demand vs. Net Exports European net exports dropped in 216 despite the weak euro and British pound Strong domestic demand from the recycled paper packaging sector was the major factor supporting the strong European RCP market in 216 Very high recovery rates constrained supply and also helped tighten the market Million Tonnes Domestic Demand Net Exports Recovery Rate (R) % 9% 8% 7% 6% 5% 4% 3% 2% 1% % Net Export Share 2: 6% 24: 11% 28: 16% 212: 16% 214: 14% 215: 15% 216: 15% 11

12 China RCP Imports: Changing Sources 216/215 Percent Change Chinese imports decreased by 3% in 216 thanks to improving domestic collection Chinese imports from W. Europe increased only marginally even with the help of weak euro and British pound because strong domestic demand left limited volume available to be exported from Europe 12

13 Chinese RCP: Rising Domestic Supply Domestic Collection vs. Imports China has been trying hard to improve its domestic collection, but is still far from being self efficient in terms of RCP, and Chinese imports still play a critical role in global RCP markets Million Tonnes Net Imports Domestic Collection Apparent Recovery Rate (R) Import Share (R) Import Share 1995: 1% 2: 2% 25: 49% 29: 44% 213: 39% 215: 38% 216: 36% 13

14 US RCP Exports: Changing Destination 216/215 Percent Total US exports showed no change in 216 US exports to China dropped by 3% in 216, with most of the drop being posted in the first half of 216 US exports to most other Asian countries and Mexico increased significantly 1

15 US RCP Market: Recovery Rate Rising Domestic Demand vs. Net Exports Net exports took about 4% of total US RCP collection, much higher than the share for Europe. So, the US RCP market has been and will continue to be significantly impacted by the export sector. Million Tonnes Domestic Demand Net Exports Recovery Rate (R) 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % Net Export Share 2: 22% 24: 27% 28: 36% 212: 41% 214: 39% 215: 4% 216:4%

16 Other Asia RCP Demand Rising Domestic Collection vs. Imports 5 4 Domestic Recovery Net Imports Recovery Rate 7% 65% 6% Net Import Share 2: 29% 21: 18% 215: 18% Million Tonnes % 5% 45% 4% 35% 3% 216: 19% Net imports rose again in 216, together with growing demand from India, Vietnam, Thailand and other developing countries in this region The less efficient recycling systems in these countries means that they will import more RCP in the future 16

17 World RCP Markets in Western Europe RCP demand will remain strong in Expanding containerboard output and increasing recycled capacity will be the major driving factor for more RCP usage About 8, tonnes of recycled containerboard capacity started up in million tonnes of new recycled capacity is scheduled to come on stream in 2H17 Developments of other PAB sector, however, will limit the total RCP consumption increase 17

18 Western European PAB Production and RCP Usage Rate Growing containerboard and cartonboard output and gradually rising RCP usage rate will keep European domestic demand strong Million Tonnes Newsprint P&W Containerboard Tissue Other RCP Usage Rate (R)

19 World RCP Markets in Asian demand China Higher environmental standard more capacity closures and consolidation in paper and board industry growing RCP usage Continued expansion in recycled containerboard capacity Beijing has been trying hard to improve the domestic paper recycling system Regulation Control on RCP imports will continue, on both quality and quantity 19

20 World RCP Markets in Asian demand Other Asia Faster PAB output and RCP demand growth than China, especially in the emerging economies Paper packaging sector will post major RCP consumption gain More than 2 million tonnes of new recycled containerboard capacity to be added in , mostly in Vietnam, Indonesia, Thailand and India 2

21 International Trade China will continue to import a lot of RCP Slowing but still growing RCP demand Domestic collection growth Growing e commerce More packaging materials circulated and collected domestically Domestic RCP Improving quality, better control and stable supply Potential support from governments Beijing will continue to control RCP imports, both quality and quantity 21

22 International Trade New big importers: Other Asia India, Thailand, Vietnam and Indonesia Fast growing demand and relatively low paper recovery rates Suppliers Western European exports are likely to decline due to the strengthening domestic demand North America may export more RCP Still relatively low recovery rates and growing PAB consumption Japan and Oceania will see little export increase Already very high recovery rates 22

23 Thank you! For more information: OCC/UKP Market Analysis and Outlook ukp Outlook for Global Recovered Paper Markets The China Recovered Paper Market: A Comprehensive Analysis and Outlook World Pulp and Recovered Paper 5 Year & 15 Year Forecasts World Recovered Paper Monitor 23