outlook for boxboard - fastmarkets risi · should remain stable through 2016 challenging external...

© Copyright 2016 RISI, Inc. | Proprietary Information

Outlook for Global Boxboard

São Paulo Conference, August 2016

Dustin JalbertEconomist, Paper Packaging

Can new capacity additions be absorbed in a weak global economy?

• Overview of global markets• Regional boxboard markets

• Asia (with a focus on China)• Europe• North America• Latin America• Rest of the World

• Global summary

2

Today’s Agenda


Boxboard Definition = All Paperboard Except Containerboard

• Confusion arises at the global level; each region has its own grade structure and naming conventions

• Western Europe = cartonboard grades broken out by construction

• US grades = converted products

• Asia = grey areas for products such as artboard or coated white top linerboard

• RISI’s solution: entirely new classification system based on available trade data

3© Copyright 2016 RISI, Inc. | Proprietary Information

World Boxboard Demand Approached 57 Million Tonnes in 2015


0

5

10

15

20

Boxboa

rd Dem

and (M

illion Tonn

es)

Coated Virgin:23 Million Tonnes

Coated Recycled:21 Million Tonnes

Uncoated:13 Million Tonnes

Boxboard Demand in Key Regions, 2015Nearly a majority of world demand comes from Asia


26.5

11.7

9.2

4.13.0

1.2 1.1 0.30

5

10

15

20

25

30

Asia NorthAmerica

WesternEurope

EasternEurope

LatinAmerica

MiddleEast

Africa Oceania

Box

boar

d D

eman

d (M

illio

n To

nnes

)

Large markets, fast growthLarge markets, fast growth

Large, mature marketsLarge, mature markets

Lower consumption levels, high growthLower consumption levels, high growth

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

-2,000

-1,000

0

1,000

2,000

3,000

4,000

5,000

Box

boar

d D

eman

d G

row

th (T

hous

and

Tonn

es)

Demand Change

% Change

Near‐Term Headwinds Will Keep Boxboard Demand Growth RestrainedApproximately 2.4 million tonnes of demand growth in 2016‐2017


FORECAST

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

Box

boar

d D

eman

d G

row

th

(M

illio

n To

nnes

)

Rest of Asia China Percent (R)

Asian Boxboard Demand Growth Has Been Slowing Since 2013Sub‐4% growth in 2016 and 2017

7© Copyright 2016 RISI, Inc. | Proprietary Information 7


Chinese Capacity Growth Increasingly Concentrated in IvoryboardSurge in virgin capacity in 2013‐2015

8

-2,000

-1,000

0

1,000

2,000

3,000

4,000

Cap

acity

Gro

wth

(Tho

usan

d To

nnes

)

RecycledVirginGlobal Demand Growth

The Rest of Asia Can Provide a Home for Only a Portion of China’s ExportsIn 2016, Asia will be a net exporter of boxboard

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

Net

Exp

orts

(Mill

ion

Tonn

es)

China

Rest of Asia



Latin American Virgin Boxboard Firmly in the First Quartile for Cash CostsMill Cash Costs, First Quarter 2016, US Dollars per Tonne

10

Western European Producers Export Boxboard Around the WorldAlthough shipments within Europe dominate


0

2

4

6

8

10

12

14

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

WE Expo

rts, M

illion Tonn

es

The Americas Oceania AfricaThe Middle East Asia Eastern EuropeWestern Europe

Western European Exports Outside of Europe at Risk for DisplacementIvoryboard taking share in high‐growth markets


0.0

0.5

1.0

1.5

2.0

2.5

3.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

WE Expo

rts, M

illion Tonn

es

The AmericasOceaniaAfricaThe Middle EastAsia

38%

16%

15%

29%

42%

17%

14%

24%22%

14%

17%

44%

Boxboard Demand Across Europe Will Remain SubduedAnnual Demand Growth less than 100,000 Tonnes in 2015‐2017

0.78

0.80

0.82

0.84

0.86

0.88

0.90

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Ope

ratin

g R

ate

Gro

wth

in M

illio

ns o

f Ton

nes

Capacity (Total Europe)Eastern Europe DemandWestern European DemandOperating Rate (Total Europe)

Major 2016‐2017 Boxboard Projects



FBB Projects Planned for 2016‐2017Over 1.1 million tonnes of capacity in two years

Company Mill Country Capacity Thousand MTPY

Startup Details

Metsä Board Husum Sweden 400 2016 Q1 New machine

Holmen Workington United Kingdom 20 2016 Rebuild

Kotkamills Oy Kotka Finland 400 2016 Q3 Conversion

BillerudKorsnäs Frövi Sweden 130 2017 Investment

Bellesbumprom Dobrush Belarus 200 2017 Greenfield

Total 1,150

1414

The Overall Trade Balance for Europe Should Remain Stable Through 2016Challenging external environment for exporters

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Net

Impo

rts,

Mill

ion

Tonn

es

Eastern Europe Western Europe Total Europe


North American Boxboard Demand Contracting on Net for Last Decade …But so has capacity

78%

80%

82%

84%

86%

88%

90%

92%

94%

96%

98%

-1.2

-1.0

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Ope

ratin

g R

ate

Cha

nge

in M

illio

n To

nnes

Capacity (Total North America)

US Demand

Canadian Demand

Operating Rate (Total North America)

© Copyright 2016 RISI, Inc. | Proprietary Information 16

Boxboard Closures Affecting North American Market in Near TermSmaller expansions expected later this year

Company Mill Country Capacity Thousand MTPY

Startup/ Closure

Grade Details

Graphic Packaging Jonquière Canada ‐146 2015 Q3 Hybrid Closure

International Paper Riegelwood USA ‐181 2016 Q1 SBS Conversion

Graphic Packaging West Monroe

USA 27 2016 Q2 CUK Investment

WestRock Evadale USA 181* 2016 Bristols, SBS

Conversion

Clearwater Lewiston USA 60 2016 SBS, Bristols

Investment

17

*Mostly dedicated to bristols, but PM capable of SBS production

© Copyright 2016 RISI, Inc. | Proprietary Information 17


North American Exporters Continue to Feel Competitive PressuresSBS producers competing with FBB and ivoryboard

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2003 2005 2007 2009 2011 2013 2015 2017

Nor

th A

mer

ican

Exp

orts

, Mill

ion

Tonn

es

Coated Bleached Virgin Coated Unbleached All Other NA Exports

1818


Clay Coated Multi‐Ply Imports Have Struggled to Gain Share in the USAHowever, pressures are mounting…

19

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

US

Impo

rts

of C

lay

Coa

ted

Mul

ti-Pl

y B

oard

, To

nnes

Rest of World South Korea Chile Sweden Finland China Canada

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

$0

$500

$1,000

$1,500

$2,000

02 03 04 05 06 07 08 09 10 11 12 13 14 15 US

Dol

lar T

rade

Wei

ghte

d Ex

chan

ge R

ate

Net

-Net

US

Dol

lar P

rice

per T

onne

US SBS European FBBChinese Ivoryboard Premium Brazilian Virgin DuplexUSD Trade Weighted Exchange Rate

p pStrengthening of the US dollar changing the competitive landscape of boxboard

Brazilian Board Very Competitive Given Recent Exchange Rate MovesStrong dollar aiding European producers as well


Latin America Has Strong Long‐Term Prospects for Boxboard DemandHowever, growth varies across the major economies…


Country Consumption(Tonnes)

10‐Year CAGR History

2‐Year CAGR Forecast

Brazil 1,001 3.8% -0.9%

Mexico 950 3.7% 3.1%

Chile 180 7.0% 1.2%

Colombia 182 3.8% 2.9%

Argentina 139 -1.7% 0.3%

Venezuela 114 2.6% -0.4%

Peru 93 10.3% 2.8%

Ecuador 75 11.9% -4.7%

Rest of Latin America 304 6.2% 1.8%

Total 3,037 4.1% 1.1%

Latin America Imports a Significant Volume of Boxboard However, a weakened outlook through 2017


20%

30%

40%

50%

-600

-400

-200

0

200

400

600

800

1,000

1,200

Net

Impo

rts,

Tho

usan

d To

nnes

Brazilian and Chilean Net ImportsRest of Latin American Net ImportsNet Imports/APC

Most of Brazil’s Boxboard Exports Stay Within South AmericaExports serve as safety valve when domestic demand is weak


0

50

100

150

200

250

300

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Boxboa

rd Exports (T

housan

d Tonn

es) SouthAmerica Europe Central America North America Asia All Other

Rest of World Demand Continues to Show StrengthAnnual demand growth of ≈126,000 tonnes in 2016‐2017


-

500

1,000

1,500

2,000

2,500

3,000

3,50020

02

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Dem

and

(Tho

usan

d To

nnes

)

Middle EastOceaniaAfrica

Global Operating Rates Have Come Under Pressure Since 2010


78%

80%

82%

84%

86%

88%

90%

-2,000

-1,000

0

1,000

2,000

3,000

4,000

5,000

Ope

ratin

g R

ate

Gro

wth

in T

hous

nad

Tonn

es

DemandCapacityOperating Rate

Conclusion: Take Home Points on the Outlook for Global Boxboard

• Headwinds will keep global boxboard demand growth restrained in 2016‐2017

• Slowing China, low commodity prices, soft consumer spending data

• The capacity overbuild in China and now Europe will continue to impact global trade

• Especially for virgin boxboard (SBS and FBB)• Chinese ivoryboard is competing in neighboring markets, particularly commodity grades

• Near‐Term outlook mixed in Latin America• Export markets will be a key outlet for producers• More competition from European FBB seeking a home in the region


2015 World Boxboard Studywww.risi.com/worldboxboard

China Boxboard Study –2014 Updatewww.risi.com/chinaboxboard

27

Thank you for your attention!For more information:

To Order or Request InformationContact your account manager or follow the links shown!


outlook for boxboard - fastmarkets risi · should remain stable through 2016 challenging external...

Documents