The Implications of a Changing Raw Material Outlook and its Effects on Containerboard Production, Products and Manufacturing in the Future ICCA/WCO GLOBAL SUMMIT 22-25 May, 2011 Outi Juntti, Pöyry Management Consulting
ICCA/WCO GLOBAL SUMMIT 2011 PRESENTATION CONTENTS Containerboard trends and outlook Global Fiber Challenges Containerboard Technology Development Nanotechnologies Conclusions ICCA 2
PÖYRY INTRODUCTION ICCA 3
GLOBAL EXPERTS IN CONSULTING AND ENGINEERING Pöyry is a global consulting and engineering company dedicated to balanced sustainability and responsible business 7 000 experts in about 50 countries Project experience in over 100 countries 15 000 projects annually Net sales in 2010 EUR 682 million Listed on the NASDAQ OMX Helsinki ICCA 4
WIDE RANGE OF DEEP EXPERTISE URBAN & MOBILITY Urban planning Real estate development Transport planning Rail infrastructure Road infrastructure Construction management Building design WATER & ENVIRONMENT Water Wastewater Waste Environment INDUSTRY Pulp and paper Chemicals Minerals processing ENERGY Hydropower Thermal power Bio-renewables Oil and gas Nuclear energy Transmission and distribution ICCA 5
CONTAINERBOARD TRENDS AND OUTLOOK Market Development and Characteristics ICCA 6
DEVELOPMENT OF GLOBAL CONTAINERBOARD MARKETS BY REGION BY GRADE 140 120 100 80 60 40 20 Mt Latin America China Japan Western Europe North America Rest of the World Other Asia Eastern Europe Emerging markets Mature markets 40% 140 120 100 80 60 40 20 Mt Recycled Semi-chem 60% Kraftliner 70% 30% 0 1990 1995 2000 2005 0 1990 1995 2000 2005 ICCA 7
CONTAINERBOARD MARKETS BY REGION IN 2009 27 % 20 % 4 % 4 % 7 % 66 % 68 % 12 % North America 28 million tons Europe 25 million tons 92 % China 32 million tons 7 % Virgin White-top 59 % 36 % 52 % 42 % 3 % Recycled 5 % 6 % 90 % Latin America 9 million tons Rest of the world 5 million tons Rest of Asia Pacific 25 million tons ICCA 8
MARKET AND INDUSTRY CHARACTERISTICS NORTH AMERICA Dominance of traditional products Virgin fibre based still close to 70% of the market High basis weights 40 Mt Capacity development Crusial role in the global markets/ industry Kraftliner exports to Asia and Europe 20 White-top Recycled Fibre source for the Chinese Role of corrugated Higher share of transportation packaging 0 1990 2000 2010 Virgin Lower share of white-top ICCA 9
MARKET AND INDUSTRY CHARACTERISTICS EUROPE Rapid industry development since mid 1990 s Capacity development New recovered fibre based machines, shut down of old capacity Development in corrugating technology Clear trend towards higher quality and consumer packaging 40 20 Mt + 6,1 mt + 6,3 mt White-top Recycled White-top and coated products, Micro-flutes, light-weighting and multi-wall structures 0 Virgin Environmental and sustainability awareness 1990 2000 2010 Packaging reduction Recycability ICCA 10
MARKET AND INDUSTRY CHARACTERISTICS ASIA Massive industry boom 200 new machines built since 2000 Capacity development Fibre is the key industry challenge Impact on global trade flows Product development driven by export industry Large share of transport packaging Light-weigting and higher quality packaging in development phase 80 60 40 20 0 Mt + 12 mt + 32 mt White-top Recycled Virgin Domestic consumption expected to pick-up 1990 2000 2010 ICCA 11
CONTAINERBOARD TRENDS AND OUTLOOK Trends and Outlook ICCA 12
KEY TRENDS LIGHT-WEIGHTING Containerboard & Corrugated Estimated RCF-fluting grammage breakdown in EU25 Corrugated board basis weight 100 % Share of total 33 % 25 % >110 100-105 800 750 Average weight g/m 2 China 75 % 50 % 25 % 50 % 40 % 35 % <100 700 650 600 550 USA Europe Japan 0 % 17 % 2005 2015E 500 Germany 1996 1998 2000 2002 2004 2006 2008 ICCA 13
KEY TRENDS SMALL FLUTE AND MULTIWALL Tightly linked to light-weighting. Single-wall still dominating structure, but the other constructions grow faster. Double wall 25 % Triple wall 1 % B-flute 37 % E, F, G, N Small flute 10 % C-flute 24 % A-flute 3 % ICCA 14
KEY TRENDS WHITE-TOP, HIGH-QUALITY PRINTING, SHELF- READY PACKAGING Shelf-ready packaging provides new opportunities for corrugated and has brought it closer to the consumers. Required high-quality printing has increased used of white-top linerboards. White-top Liners by End Use 100 75 Fresh food Beverages Nonfood Consumer durables Paper good, direct mail Industrial 50 Processed food 25 0 Share of total corrugated markets ICCA 15
MARKET OUTLOOK UNTIL 2020 Healthy growth prospects globally Demand in Asia and other emerging markets still growing New packaging solutions provide opportunities in mature markets Prevailing product trends will continue Increasing demand on white-top grades Increasing demand on recycled based grades Increasing demand on lightweight grades Good growth prospects; CAGR 3 %/a Increasing quality requirements ICCA 16
FIBRE CHALLENGES ICCA 17
DEVELOPMENT OF GLOBAL FIBRE MARKETS 450 400 million t/a Total Fibre Demand Total CAGR 1980-2009 2.2 %/a 100 % RCP Share of Total Fibre 350 300 Pulp 0.3 %/a 75 % Pulp 250 200 150 50 % 53 % 100 50 RCP 4.7 %/a 25 % RCP 0 1980 1985 1990 1995 2000 2005 0 % 1980 1985 1990 1995 2000 2005 ICCA 18
RCP USE IN PAPERMAKING Consumption of RCP Grades RCP Consumption by Paper Grades High grades 10 % Mixed 18 % OCC 50 % Other Tissue Newsprint Cartonboard 16 % 16 % 17 % 15 % 7 % 13 % 7 % 3 % 9 % 13 % 10 % 18 % 19 % 13 % 11 % 12 % 51 % 50 % 46 % 54 % Deinking 22 % Containerboard Global North America Europe China ICCA 19
DEVELOPMENT OF GLOBAL RCP TRADE FLOWS IMPORTERS EXPORTERS North America Europe China Other Asia Rest of World 1990 2005 2009-30 -20-10 0 10 20 30 Million ton/a ICCA 20
COLLECTION RATE BY MAIN REGION 1995-2020 90 80 % Forecast W. Europe 70 N. America 60 50 World average Asia E. Europe 40 Latin America 30 20 10 0 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 ICCA 21
IMPLICATIONS ON CONTAINERBOARD INDUSTRY Better products from lower quality raw material Increasing collection rates impact on both production process and technolgy as well as on production efficiency and economics Lower yield, more fibre needed More fines lower strenght, more chemicals needed Quality fluctuations, focus on stock preparation Increasing global competition affect on local availability Price pressure Volatility Larger sourcing areas Middlemen ICCA 22
NEXT GENERATION CONTAINERBOARD MILL MEETING THE NEEDS AND EXPECTATIONS ICCA 23
CONTAINERBOARD PRODUCT DEVELOPMENT IN EUROPE -LINERBOARD UNBLEACHED Trend from testliner 2 to testliner 3 Typical basis weights: 90 g/m 2 onwards Increasing share of mixed paper Kraftliner substitutes WHITE-TOPS Trend towards better print quality 1-2 layer coating Cartonboard liners ICCA 24
CONTAINERBOARD PRODUCT DEVELOPMENT IN EUROPE -MEDIUM LIGHT-WEIGHT RECYCLED From light weight (below 100 g/m2) to ultra light-weight down to 65 g/m 2 Furnish up to 100% mixed paper (EU 1.02) SEMI-CHEMICAL SUBSTITUTES Diminshing share of virgin fibre based production - >Semi-chemical substitutes for eg. Frozen food Furnish: pre-consumer (kraftliner) clippings ICCA 25
DEVELOPMENT OF CONTAINERBOARD MACHINE CONCEPTS IN EUROPE Start-up Year 1980 1990 2000 2010 Technical concept W-type HB 2 Foudriniers Conv 3 nip press Converflo Bel Baie (horizontal double wire) Extended nip Dilution control HB Gap former Shoe press Hydraulic HB two ply High speed gap former Double press shoe Dimensions Trim Design speed Capacity 4 900mm 450 m/min 75 000 t/a 7 460 mm 1000 m/min 230 000 t/a 7 600 mm 1 500 m/min 350 000 t/a 10 100 mm 1 900 m/min 650 000 t/a Typical weight basis 130-150 g/m 2 110-120 g/m 2 90- g/m 2 65 - g/m 2 ICCA 26
CURRENT STATE- OF- THE-ART CONCEPT STOCK PREPARATION Fractionation Better yield, lower contaminants HB & FORMING Hydraulic HB and Gap Former Formation, runnability PRESS SECTION Two Shoe presses Dry content, productivity SIZE PRESS Film sizer Higher speed, better control ICCA 27
RECENT PROJECTS AND FUTURE OUTLOOK ICCA 28
A FEW RECENT PROJECTS GLOBALLY PROPAPIER Germany 2010 SAICA UK 2012 VISY Australia 2009 ICCA 29
PROPAPIER, EISENHÜTTENSTADT PM2, GERMANY Largest RCP based machine in the world 650 000 t/a DIMENSIONS Testliner and fluting in the grammage 70-130 g/m 2 100 % recycled fiber Trim width after winder 10 000 mm Design speed 1 900 m/min CONCEPT Dilution HB (OptiFlo) High Speed Gap Former (OptiFormer) Double Shoe Press (OptiPress) Film Sizer (OptiSizer) On July 23, 2010 PM2 produced 2,099 tonnes of corrugating medium and testliner 3 at an average basis weight of 109 g/m2. Machine efficiency reached 99.2 %. ICCA 30
SAICA PARTINGTON PM11, UK A greenfield mill of 425 000 t/a with a CHP DIMENSIONS Testliner and fluting in the grammage 75-125 g/m 2 Raw material: Recovered fibre Trim width after winder 7 500 mm Design speed 1 700 m/min, operating speed 1600 m/min CONCEPT Dilution HB (OptiFlo) High Speed Gap Former (OptiFormer) Trinip with shoe Film Sizer (OptiSizer) Lower energy and water consumption Start-up scheduled beginning of 2012. ICCA 31
VISY, TUMUT PM10, AUSTRALIA - KRAFTLINER Most recently started kraftliner machine started in the end of a year 2009. DIMENSIONS Unbleached and white surface kraftliner; 150-400 g/m 2 Raw material: virgin (plantation softwood) and recovered fiber Trim width 7 490 mm Design speed 1 200 m/min CONCEPT Hydraulic HB 3 Fourdriniers 2 shoe presses ICCA 32
WHAT CAN WE EXPECT FROM THE FUTURE DIMENSIONS Width: Four corrugator roll machine a maximum; Speed: Size press and fiber quality are limiting going forward from 1600 m/min onwards CONCEPTS - NO MAJOR CHANGES Gap former Shoe press Film sizer ICCA 33
WHAT CAN WE EXPECT FROM THE FUTURE (CONT.) PRODUCTS Light-weighting will grow, BUT New machines eaching the limits around 60 g/m 2 Limited capabilities of the existing machines Better printability White-top Coating, 1-2 layers Fibre furnish: Deterioration of fibre quality; focus on stock preparation Flexibility Sizing helps but strenght properties can not be compensated Need for kraft ICCA 34
NEW TECHNOLOGIES NANOTECHNOLOGY ICCA 35
R&D IN FOREST CLUSTER RELATED TO NANOTECHNOLOGY Main drivers Cost effectiveness Application areas Pulp/fibre Chemicals Improved product quality, i.e. value-added products Pulping and paper machine technology Paper, packaging and tissue Completely new products including different by-products Wood processing and products Specialties ICCA 36
TIMELINE FOR NANO-ENHANCED FIBER BASED PRODUCTS Printability, e.g. control of surface structure, printing ink consumption Optical properties Dimensional stability, homogenous structure Thinner/lighter paper Strength/stiffness properties 2030+ 2020+ Speciality papers Self-adhesive labels Smart packaging, e.g. food packaging, use of visible indicators Barrier properties Replacement of unit operations Odour and taste properties Antibacterial papers Integration of new materials into paper web Catalytic properties Self-release papers Printing surface, which learns 2010+ 2010+ 2020+ 2030+ Mouldability Sandwich structure Active packaging Active barriers Value-added and quality New products Cost effectiveness/ process improvements ICCA 37
NANOTECHNOLOGY A FEW EXAMPLES OF APPLICATIONS Papermaking machinery Reinforced composites Nano-structured surfaces Nano-sensors Pulp and paper Nano-fibres to form extraordinary properties Nano-sensors for enhanced recycling Functional paper coating Smart paper Metso Packaging Active packaging Security applications ICCA 38
CONCLUSIONS ICCA 39
INDUSTRY OPPORTUNITIES AND CHALLENGES Healthy growth opportunities Industrial production and retail development on emerging markets New packaging solutions in mature markets Fibre challenges vs. quality requirements Increasing recovery rates and lowering RCP quality Inreasing containerboard quality requirements -> need for kraft Focus on margin improvement Capacity and capex optimisation Efficiency throughout the value chain Other costs: energy, fixed Sustainability a Key Succes Factor Against Plastics ICCA 40
Thank You! CONTACT: NAME: OUTI JUNTTI TITLE: PRINCIPAL MAIL: OUTI.JUNTTI@POYRY.COM PHONE: +358 10 33 22994 ICCA 41