2339 Har r i s Avenue , C inc innat i , Oh io 45212513-531 -3600 • www.zumbie lcpd .com

March 2011

Global Paperboard ConsiderationsU.S. packaging buyers have several viable choices in the specification of paperboard for folding carton applications. Substrates such as Solid Bleached Sulfate, Coated Unbleached Kraft, Uncoated Kraft Boxboard, and Coated Recycled Paperboard dominate the landscape. Each material tends to migrate toward certain market segments depending on the requirement for graphics, product protection, filling line performance, and end use.

Domestic manufacturers including International Paper Company, MeadWestvaco, Georgia Pacific, Graphic Packaging, RockTenn, Clearwater, Paperworks, and Caraustar currently supply these materials to converters who print, cut, fold, glue, and deliver finished cartons to consumer packaged goods manufacturers for filling and distribution.1 These suppliers are well endowed with capable manufacturing, sales, service, and support.

Could it be, however, that there’s a blade of greener grass on the other side? Occasionally there may be legitimate justification for considering global sources of paperboard. Thinking locally/sourcing globally can have its allure, but in considering the pros and cons of imported paperboard, it is important to gain an understanding of global substrates and how they compare to familiar domestic materials.

Paperboard Substrates

SOLID BLEACHED SULFATE In North America, Solid Bleached Sulfate (SBS) accommodates the highest quality graphics for personal care, medical, media, and tobacco packaging. This grade is known as SBB (Solid Bleached Boxboard) in Europe and elsewhere. The European grade code for this product is GZ as shown in Table 1. It is manufactured in a single ply in North America but in multiple plies elsewhere.

SBS and other virgin grades are common in North America but otherwise not so common. Slow growing fiber in Scandinavia and elsewhere in the world constrains the supply of wood for papermaking purposes. It may take 65 years or more to grow pulpwood in northern climes, yet with warmer weather and longer seasons in the U.S., a managed crop of trees can be grown in a fraction of that time. Consequently, Europe and other international markets favor a grade know as Folding Boxboard (FBB) as a pseudo substitute for SBS.

Global Paperboard Nomenclature

US GrADE FULL NAmE A.K.A. EUrO TITLE EUrO CODE VArIATIONS DESCrIpTION

SBS Solid Bleached Sulfate SBB GZ Coated Bleached Board,

C1S or C2S

CRB Coated Recycled Board

CCN, CCNB, Grey Back WLC GD (duplex

board) GD1, 2, 3 Coated White Lined Chip - Grey Back

" " " White Back GT GT (triplex) GT1, 2, 3 Coated White Lined Chip - Cream or White Back

CKB Coated Kraft Back CCKB Coated White Lined Chip - Kraft Back

CUK Coated Unbleached Kraft CNK, SUS Coated SUB GN GN4 Coated Unbleached Board

FBB Folding Boxboard GC GC GC1 Coated FBB - Mechanical Pulp, White Back

" " " Duplex, Manilla Back " " GC2 Coated FBB - Mechanical Pulp,

Cream Back

Euro Codes: G = coated Z = bleached virgin chemical pulp C = virgin mechanical pulp N = unbleached virgin chemical pulp T = recycled w/white or cream back D = recycled w/grey back

Table 1 – Folding Carton Paperboard Nomenclature

FOLDING BOxBOArDThe European grade code for FBB is GC. The print surface can be just as smooth and bright as SBS, yet rather than bleached chemically pulped hardwood fiber, FBB employs mechanical, semi-mechanical, or thermo-mechanical groundwood pulp beneath a white top liner. These fibers may be bleached or unbleached and the back may be white (GC1) or manila colored (GC2).

FBB has several advantages and a few disadvantages to SBS. The advantages may include density, brightness, and yield. Groundwood fiber is less dense (weighs less) than kraft chemical pulp. Therefore, at a given basis weight the sheet is thicker. This additional thickness enhances stiffness in the finished carton. European standards allow for optical brightening agents such as florescent dyes to be used in paperboard coatings for food grade paperboard packaging. This can result in exceptional brightness with some of the GC1 products. For the papermaker, there is a yield advantage in the manufacturing of FBB. Finally, with groundwood pulping, the natural adhesive found in trees stays with the cellulose fiber, so twice as much volume of raw material results from a given ton of wood as compared to the kraft chemical pulping process.

Disadvantages include a loss of tear strength, internal strength, and colorfastness. Even though an FBB carton of similar weight is thicker and stiffer, it tends to be more brittle and less elastic. The residual lignin in groundwood fiber tends to rapidly yellow with exposure to UV light, therefore these grades may not be suitable for outdoor applications. FBB compression strength can be quite good, however, and with the proper cutting, creasing, and gluing, successful results can be achieved.

COATED UNBLEACHED KrAFT AND UNCOATED KrAFT BOxBOArDCoated Unbleached Kraft (CUK) isn’t widely manufactured outside of the U.S., however competitive products may be sourced from Scandinavia and South America. The European grade code for this product is GN. Uncoated Kraft Boxboard (UKB) is a niche product, truly unique to North America. The closest approximation outside the U.S. is uncoated recycled board, made from 100% old corrugated containers.

COATED rECyCLED BOArDCoated Recycled Board (CRB), a.k.a. CCNB, is a dominant product worldwide. It is known internationally as White Lined Chip, Grey Back, and Duplex Board. The European grade code for this product is GD and a white backed version of this grade is known as Triplex, or GT. As in North America, recycled paperboard is formed on a wide variety of forming equipment at varied speeds and sizes, from narrow cylinder forming machines to wide, high speed multi-fourdrinier systems. Some of the products are quite impressive in quality, others are rather poor.

GLOBAL pApErBOArD SpECIFICATIONSGlobal paperboard specifications differ from those in North America using a combination of ISO, ASTM, CEN, BS, DIN, and TAPPI test standards.2 Regardless of the caliper or grade, basis weight is expressed in grams per square meter (gsm) and caliper is expressed as “thickness,” measured in microns. In Europe, smoothness is often measured with a Bendtsen instrument and/or the Parker Print Surf Test. Stiffness may be expressed as “Bending Stiffness” as measured by DIN standards,

“Bending Moment” as measured by the Taber test, or “Bending Resistance” as measured by the L&W test. Color is expressed with CIE standard vs. L.a.b. for domestic products. These tests don’t always correlate with U.S. standard test practices. Fortunately, many board manufacturers publish product specifications with U.S. and metric values, and most supplier websites offer English as an alternative to the native language.

Terminology differences go beyond caliper vs. thickness. In the U.K., rolls of paperboard are called “reels” and reels from the paper machine are known as “rolls.” In Latin America small rolls are referred to as “spools” and in China, they are “bobbins.” In Asia, any coated paperboard product is referred to as “white board.”

Advantages and Disadvantages

An advantage of working with global supplies of paperboard under the right conditions may be an opportunity for true cost savings. International products are often certified by the Forest Sustainability Council (FSC) which is preferred in some markets and geographic locations over SFI certification, more common to North America. Fortunately, multiple chain-of-custody certification of paperboard products that include FSC is increasing in the United States.

When exchange rates are favorable, paperboard can be delivered to U.S. locations at truly competitive prices. The quality can be as good as and sometimes superior to that of U.S. counterparts. The manufacturing tolerances are often tight and print surfaces can be quite good. Many global paperboard products are manufactured to a lower density than American counterparts, thus providing a weight advantage and stiffness benefit. Finally, fibers from Scandinavia and tropical fibers from South America and Indonesia may contribute unique appearance and performance attributes to the finished carton.

The downside risks of importing paperboard include source of supply, long lead times, large minimum orders, potential service issues, and exchange rate volatility. There can be a fear of the unknown and the uncertainties of transacting with an overseas supplier. Some international manufacturers have U.S. representation, others broker their products through domestic merchants, and some North American producers have mill operations in other countries. Replacement of defective paperboard is often swift with domestic products but could be problematic with global substrates. Websites are improving but are often still not intuitive enough or user-friendly. Changing capacity rates, prices, backlogs, and product allocation are challenges to the entire industry, yet viable alternative sources of supply can and do exist.

This background serves as a framework for introducing some specific global sources of coated paperboard supply on a regional/country-wide basis. The list is not all-inclusive but does identify the most significant producers of coated paperboard for folding carton applications.

NORTH AMERICA

CANADA AND mExICOCascades and Strathcona produce CRB, and Tembec operates the only North American FBB mill from Quebec, Canada. Fiber supplies for Canadian mills are provided by sources of Black Spruce,3 White Spruce, Jack Pine, Hemlock, and Aspen. Recycled paperboard is produced by two sizeable mills in Mexico – Ponderosa and Smurfit Kappa. These mills procure old corrugated containers, old newsprint, and mixed waste from varied sources as raw material.

ASIA

CHINANo paper industry in the world has exploded quite like that in China. Since 2000, China’s paper production has tripled and in 2008, China overtook the U.S. to become the world’s largest producer. 88% of the companies are small, yet three major players stand apart from the rest. Despite global overcapacity, China’s paper industry has added an average of 26% new capacity every year since 2004.4 Sources of fiber to fuel this growth originate largely from imported recycled fiber and pulp, although the Chinese government has been investing heavily in new plantation projects over the past decade such that China’s plantation forest area has increased from 46.7 million hectares to 64.5 million hectares from 2000-2010.5

Dominant paperboard producers include Nine Dragons (CRB), Asia Pulp & Paper (SBS, CRB & FBB), Sun Paper/International Paper Company (CRB & FBB), and Chenming (FBB). A multitude of medium and small local companies in 12 provinces contribute the balance of mostly CRB products.

TAIwANTaiwan has five mills producing CRB paperboard. These include Yueng Foong Yu, Kuan Yuan, Shihlin, Tung Chi, and Cheng Loong.

Global Folding Carton Paperboard

ExCLUDING USAp r O D U C T S

SBS CrB CUK FBB

pr

OD

UC

Er

LOC

AT

ION

GZ

GD

DU

pLE

x

GT

Tr

IpLE

x

GN

4

GC

1

GC

2

N. A

mE

rIC

A Cascades Canada X X

Strathcona Canada X

Tembec Canada X

Ponderosa Mexico X X

Smurfit Kappa Mexico X XA

SIA

Nine Dragons China X

Asia Pulp & Paper China X X X X

Sun Paper / IP China X X

Chenming China X

Yuen Foong Yu Taiwan X X

Kuan Yuan Taiwan X

Shihlin Taiwan X X

Tung Chi Taiwan X

Cheng Loong Taiwan X X

SOUTH KOrEACRB suppliers in South Korea include Hansol, Daehan, Seha, and Shinpoong. Additionally, Hanchang has some SBS capacity as well as CRB.

JApANJapan mills provide a mix of grades. By far, the largest conglomerate is Oji Specialty Paper (SBS & CRB). Additional coated cartonboard comes from Mitsubishi (SBS), Nippon Daishowa (SBS & CRB), and Rengo (CRB & FBB).

INDIANotable board producers in India include NR Agarwal (CRB), ITC (CRB & FBB), JK Paper (CRB), Gayatrishaki (CRB), Murli Industries (SBS, CRB & FBB), Rainbow (CRB), and West Coast (CRB). Adding to the mix are many tiny, locally owned paper mills entirely dedicated to CRB production, some with as few as 3 or 4 metric tons of annual capacity.6 INDONESIA & THAILANDUnlike other Asian countries with few fiber sources of virgin fiber, Indonesia has the potential for abundant forest lands. Tragically, huge tracts of the old growth forest land have been destroyed through illegal logging and deforestation. There are fourteen mills in this region manufacturing SBS, FBB, and varied capacities of CRB. The dominant producers are Asia Pulp and Paper (CRB & FBB), Fajar Surya Wisesa (CRB), and Papyrus Sakti (CRB). Thailand has one notable mill producing CRB, Thai Union Paper - SCG.

OCEANIA

AUSTrALIA & NEw ZEALANDTwo organizations producing coated paperboard supplies in this region include Amcor in Australia (CRB & FBB) and Carter Holt Harvey, New Zealand (CRB & FBB).

Global Folding Carton Paperboard

ExCLUDING USAp r O D U C T S

SBS CrB CUK FBB

pr

OD

UC

Er

LOC

AT

ION

GZ

GD

DU

pLE

x

GT

Tr

IpLE

x

GN

4

GC

1

GC

2

AS

IA

Hansol S. Korea X

Daehan S. Korea X X

Hanchang S. Korea X X

Seha S. Korea X

Shinpoong S. Korea X

Oji Japan X X

Mitsubishi Japan X

Nippon Daishowa Japan X X

Rengo Japan X X

Asia Pulp & Paper Indonesia X

Fajar Surya Wisesa Indonesia X

Papyrus Sakti Indonesia X

Thai Union (SCG) Thailand X X

Gayatrishaki India X X

ITC India X X X X

JK India X X

Murli Industries India X X

NR Agarwal India X X

Rainbow India X X

West Coast India X X

OC

EA

NIA

Amcor Australia X X X

Carter Holt Harvey NZ X X X

EUROPE

SCANDINAVIALarge quantities of all coated paperboard grades originate from Scandinavia, for regional consumption and global export. Sizeable conglomerates include Stora Enso (SBS, CRB and FBB), M-real (FBB), Korsnäs (SBS, CUK & FBB), Iggesund (SBS), and Billerud (SBS). Others include Fiskeby (CRB), Cascades (FBB), Pankaboard (SBS & FBB), and Glomma Papp (SBS).

GErmANy, AUSTrIA, & SwITZErLANDGermany, Austria, and Switzerland have five notable suppliers including Mayr-Melnhoff (CRB & FBB), Weig (CRB), Smurfit Kappa (CRB), Reno de Medici (CRB), and Buchmann (CRB & FBB).

FrANCE, U.K., & NETHErLANDSCoated board mills in France, U.K. and the Netherlands include Iggesund (FBB), Cascades (FBB), Kaysersberg (CRB), and Mayr-Melnhoff (FBB).

ITALyReno de Medici (CRB) is the dominant player in Italy, also served by Cartiera (CRB & FBB) and Mel S.A. (CRB).

pOLAND, SLOVENIA, SErBIA, UKrAINE, & rUSSIAInternational Paper Company has a formidable presence in Poland producing FBB, Mayr-Melnhoff manufactures in Slovenia (CRB, FBB) and Umka operates a CRB mill in Serbia. Three smaller mills manufacture FBB and CRB in Poland and the Ukraine. KPK and Kamenskaya produce CRB in Russia.

SpAIN AND pOrTUGALStora Enso, Paprinsa, and Reno de Medici have CRB mills in the Iberian Peninsula in Spain and Prado operates a mill in Portugal producing small quantities of SBS, CRB, and FBB.

Global Folding Carton Paperboard

ExCLUDING USAp r O D U C T S

SBS CrB CUK FBB

pr

OD

UC

Er

LOC

AT

ION

GZ

GD

DU

pLE

x

GT

Tr

IpLE

x

GN

4

GC

1

GC

2

EU

rO

pE

Stora Enso Sweden, Finland X X X X

M-real Finland X X

Iggesund Sweden X

Korsnäs Sweden X X X

Fiskeby Sweden X

Cascades Sweden X X

Pankaboard Oy Finland X X

Glomma Papp Norway X

Billerud Sweden X

Mayr-MelnhoffGermany,

Switzerland, Austria

X X X X

Weig Germany X X

Smurfit Kappa Germany X X

Reno de Medici Germany X X

Buchmann Germany X X

Iggesund U.K. X X

Cascades France X X

Kaysersberg France X

Mayr-Melnhoff Netherlands X X

Reno de Medici Italy X X X X

Cartiera Italy X X X

Mel S.A. Greece X X

International Paper Poland X X

Mayr-Melnhoff Slovenia X X X

Umka Serbia X X

KPK Russia X

Kamenskaya Russia X

Stora Enso Spain X X

Reno de Medici Spain X X X X X

Prado Portugal X X X X X

SOUTH AMERICA

BrAZILBrazil has an active paper industry fueled by abundant sources of water and fast growing species of Eucalyptus, South American Pine, and Araucaria. On a six-year rotation, trees to fuel the paper industry growth are planted. Suzano is developing a plantation base of 250,000 hectare in the states of Piauí and Tocantins in northeast Brazil. In Mato Grosso do Sul there is a major plantation expansion and two other pulp producers are also planting to support future mills.7 Notable SBS and FBB producers include Suzano and Klabin; Papirus and IBEMA produce CRB and FBB, and a set of smaller mills producing CRB include Miguel Forte, Bonet, Cibrapel, and Ramenzoni.

CHILE, ArGENTINA, VENEZUELA, & pErUChile has a major presence in SBS and FBB markets with Cartulinas CMPC. Others include CRB board producers Interpack in Argentina, Smurfit Kappa in Venezuela, and Panasa in Peru.

AFRICA

S. AFrICA, mOrOCCO, EGypT, TUNESIA, & ZImBABwEAs a continent, Africa generally lacks primary resources for papermaking; however, two exceptions are Mondi in South Africa (CRB & FBB) and International Paper Company in Morocco (CRB). Additional CRB mills exist in Egypt, Tunesia, and Zimbabwe.

Global Folding Carton Paperboard

ExCLUDING USAp r O D U C T S

SBS CrB CUK FBB

pr

OD

UC

Er

LOC

AT

ION

GZ

GD

DU

pLE

x

GT

Tr

IpLE

x

GN

4

GC

1

GC

2

SO

UT

H A

mE

rIC

A

Suzano Brazil X X

Klabin Brazil X X

Papirus Brazil X X X X

IBEMA Brazil X X X

Miguel Forte Brazil X X

Bonet Brazil X

Cibrapel Brazil X

Ramenzoni Brazil X X

Cartulinas CMPC Chile X X X

Interpack Argentina X

Smurfit Kappa Venezuela X

Panasa Peru X X X

AFr

ICA

Mondi S.A. X X

International Paper Morocco X X

Table 2 – Global Folding Carton Paperboard

Searching for alternative sources of raw material can be challenging but the potential rewards are worthwhile. It is especially exciting when the research and investigation culminate in a successful solution.

2339 Har r i s Avenue , C inc innat i , Oh io 45212513-531 -3600 • www.zumbie lcpd .com

wrITTEN By: DAN mALENKEDan Malenke is an accomplished training manager with extensive coast-to-coast and international experience in developing and directing technical seminars for the printing and packaging industries. His career includes 20+ years with a Fortune 500 company, 9 years university teaching experience, and accumulated work in production.

ABOUT ZUmBIEL CONSUmEr pACKAGING DIVISIONWe are Zumbiel Packaging, one of the largest privately held paperboard packaging producers in the United States. In our $400 billion industry, we know that your package is often the most important contact with your customers; it must convey your values as well as inspire and energize your brand.

Our team of skilled and extensively trained associates is dedicated to providing you with unique packaging solutions that meet your needs and your budget. With over 167 years of experience, ZCPD stands ready to meet your packaging challenges.

For more information please contact Zumbiel Consumer Packaging Divisionat sales@zumbiel.com or 513-531-3600.

References1) Malenke, Daniel G., “A Comparison of Folding Carton Substrates and Appropriate Applications”, Brand Packaging, April, 2010 http://www.brand packaging.com/Articles/Case_Studies/BNP_GUID_9-5-2006_A_10000000000000805552

2) Kirwan, Mark J., “Paper and Paperboard Packaging Technology”, Blackwell Publishing, 2005, pg. 313.

3) Staff, “Black Spruce, The Pulpwood of Choice”, The Working Forest, March, 2009 http://www.workingforest.com/black-spruce-the-pulpwood-of- choice/

4) Haley, Usha C.V., “No Paper Tiger – Subsidies to China’s Paper Industry from 2002-09”, EPI Briefing Paper #264, June, 2010 http://epi.3cdn.net/ c443db127fe143cdb9_obm6iidwt.pdf

5) Skilton, David, “The Changing Landscape of China’s Domestic Forestry Section”, Market Outlook, New Forests Pty. Limited, Dec., 2010

6) RISI, Lockwood-Post Directory, 2009

7) Flynn, Bob, “Pulpwood Plantations in Brazil: the Key to the Future”, RISI, http://www.risiinfo.com/blogs/Pulpwood-plantations-in-Brazil-the- key-to-the-future.html