CMPC PULP

Jaime Argüelles /CEO Pulp DivisionRaimundo Varela / Chief Commercial Officer

June 2019

22

CMPC Strategy

3

Mission

Lead a transformation process, modernization and growth to

increase value generation for our teams, environment, customers

and shareholders. For this, we promote excellence in all our

processes, through continuous improvement, innovation, and a

consequent act that guarantees sustainability and the creation of

wealth in the areas where we operate.

Vision

Generate natural products in a sustainable

way to improve people´s life.

STRATEGIC PLAN CMPC CELULOSA

Vision and Mission

3

4

What?Business Strategy

STRATEGIC PLAN CMPC CELULOSA

Vision and Mission

Growth Profitability Commercial Strategic Plan

• Organic

• Organic

• Inorganic

OEE

De bottle necking

• Operating Efficiency

• Commercial Mix

• Wood products

industrial

restructuring

• Differentiation

• Capillarity

• Optimal Customer / Market Mix

(Segmentation)

5

STRATEGIC PLAN CMPC CELULOSA

Vision and Mission

How?Management Strategy

• Continuous Improvement

(Kaizen)

• Process Management (6 Sigma)

• Variability Reduction (6 Sigma)

Environment and Sustainability Focus

Generating a culture that promotes the legitimization

of the social license

Increased Safety Priority

Operational and processes excellence (BEST)

6

STRATEGIC PLAN CMPC CELULOSA

Vision and Mission

Method

• New Process Development

• New Product Development

• Digitalization

• Bio-economy

Goals ManagementInspirational and Motivational Leadership

Cultural Transformation (Teamwork)

Innovation

7

Excellence

To be global referents

in competitiveness of all our

processes

Sustainability

To position ourselves as a

benchmark in the coexistence with

our neighbors and the conservation

of the environment

Growth

Diminishing the exposure to

global fiber scarcity and focusing

on leveraging our competitive

advantages where we are able to,

or where development

opportunities are available

Customers

With deep knowledge of the

markets and their tendencies,

establishing with them long-term

relationships and providing value

additional to a commodity

STRATEGIC PLAN CMPC CELULOSA

Strategic pillars

PEOPLE

8

Context Last 6 months China – Europe

8

9

Pulp Market Demand

0

2,000

4,000

1 2 3 4 5 6 7 8 9 10 11 12

2017

2018

We can see that in 2018 global market pulp demand

declined 1% year-over-year. During that period,

Hardwood demand edged up 0,4% while softwood

demand declined 3,2%, but it was Q4 the period that

explained last years’ decline.

Source: PPPC GL 100 Dec 2018

WHAT HAPPENED

with pulp demand in 2018 vs. 2017?

Q4 2018 vs. 2017

In Q4 global demand declined 11%, this included a 14% decline in

hardwood and an 8% loss in softwood.

The demand in China which represents 33% of global demand had

significant declines. It fell by 31% in Hardwood and -23% in Softwood.

The decrease in volume is mainly explained by the deceleration of paper

demand around second half 2018, specially in China. This drove to an

excess of stocks of more than 60 days of supply in hardwood (16 days

over its normal level) and 42 in softwood (8 days over). Added to this,

some Brazilian competitors in hardwood, decided not to sell at lower

prices. Also, in Europe, paper demand has suffered.-31%

TOTALEastern Europe

North America ChinaJapan

Western Europe

Latin America

Other Asia/Africa Oceanía

-2%-1%

-7%-4%

-13%

-6%-4%

9%

-14%

6%

-1%

3%

12%

-23%

7%

-2%

-8%

Softwood

HardwoodSource: PPPC GL 100 Dec 2018

Q4 ZOOM

10

581

597 607

625 632 631

641

667

698

735

753 759 761 762

767 770 771 769 770 770 762

750

690 653

666

691

621

642 648 645 648

636 634

660

701

764

873 877 886

899 900 895 891

885 877

841

855 853

828

772

697 699 708

560

620

680

740

800

860

920

CHINA NET PRICES BHKP/NBSK(US$/Tonne, c.i.f. Port)

FOEX BHKP FOEX NBSK

581

597 607

625 632 631

641

667

698

735

753 759 761 762

767 770 771 769 770 770 762

750

690 653

666

691

621

642 648 645 648

636 634

660

701

764

873 877 886

899 900 895 891

885 877

841

855 853

828

772

697 699 708

560

620

680

740

800

860

920

CHINA NET PRICES BHKP/NBSK(US$/Tonne, c.i.f. Port)

FOEX BHKP FOEX NBSK Source: FOEX

A great 2018 with china struggling in q4….

Until Q3 2018 world pulp demand had increased 2,2%, leaded by hardwood

(+4,9%) which kept prices high most of the year, explained by a stable economic

situation and reasonable paper demand.

WHAT HAPPENED

in 2018 in China?

But during Nov and Dic 2018, the Pulp market in China went through a tough

period. Part of it was due to macroeconomic difficulties, whose effects in pulp

prices where seen after (trade war USA-China; RMB depreciation). Part of it was

seasonal (lower demand previous to Lunar New Year) and part of it was a stock

adjustment in the China´s paper industry supply chain.

CHINA NET PRICES BHKP/NBSK(US$/Tonne, c.i.f. Port)

11

The price of most commodities increased between

Jan2016-Jun2018 related to the acceleration of

global economy. However, a fall was observed since

July 2018 as the US dollar strengthens and

economies slow down. Continuing commodities trend,

pulp prices followed the fall with a lag.

Q42018

Source: Hawkins, World Bank, The Economist

Economist Industrial Commodity Index

World Bank non-energy Index

NBSK (net China)

BEKP (net China)

WHICH WERE THE MAIN

drivers for this situation?

Macroeconomic factors mainly explained what happened….

Price Commodity Index

In 2018 RMB depreciated around 10%, which rose

costs for pulp buyers, which was added to the other

reasons explaining high pulp prices.

Exchange Rate (RMB/USD)

19% of US consumer spending on goods comes from

imports. 33% of those imports come from China, so this

country was really affected in terms of exports.

Trade War

6.4 6.3 6.3 6.3

6.4 6.5

6.7

6.8 6.8 6.9 6.9 6.9

5.8

6.0

6.2

6.4

6.6

6.8

7.0

RMB/USD

Source: X Rates Monthly Average

45%

33%

22%

OthersChinaNafta

81% 19%

Domestic

Imported

Source: PPPC

12

Source: PPPC

4500

5000

5500

6000

6500

7000

7500

Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18

FBB (RMB)

Coated (RMB)

Uncoated (RMB)

800

850

900

950

1,000

1,050

1,100

1,150

Source: China Bureau Statistics

Q42018

WHICH WERE THE MAIN

drivers for this situation?

China´s economy started to decelerate, which influenced a decline in paper demand, and derived into high pulp stocks….

An indicator of decreased demand was paper prices decline,

despite the high cost of raw material (pulp).

Paper Price

China Paper Production

Production of P&B decreased in 2018 with respect to 2017

(-5.6% YoY) which was not aligned with pulp demand increase. We

have to consider that 68% of that decline was produced with

recycled fiber.

13

PULP INVENTORIES IN CHINESE MAIN PORTS

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

Changshu (MT)

Qingdao (MT)

Source: Cellmark

Because pulp prices started to decline in November explained by a weak

paper demand, some Brazilian suppliers decided not to sell at those prices, so

the stock at ports reached high peaks.

Q42018

WHICH WERE THE MAIN

drivers for this situation?

China´s economy started to decelerate, which influenced a decline in paper demand, and derived into high pulp stocks….

14

474

494

518

542

572 598

623 633

638

659

683

705

709 718

752

731 735 746

746

746

746 746 746

733

713 704

692

591 597

604 615

630

649 650 651 659

670

702

731

734

760

777

805

833

854

871 873 873 873 873

857

808 815

785

470

530

590

650

710

770

830

890

Enero feb-17 mar-17 abr-17 may-17 jun-17 jul-17 ago-17 sept-17 oct-17 nov-17 dic-17 ene-18 feb-18 mar-18 abr-18 may-18 jun-18 jul-18 ago-18 sept-18 oct-18 nov-18 dic-18 ene-19 feb-19 mar-19

EUROPE NET PRICES BHKP/NBSK(US$/Tonne, c.i.f.)

FOEX BHKP FOEX NBSK

474

494

518

542

572 598

623 633

638

659

683

705

709 718

752

731 735 746

746

746

746 746 746

733

713 704

692

591 597

604 615

630

649 650 651 659

670

702

731

734

760

777

805

833

854

871 873 873 873 873

857

808 815

785

470

530

590

650

710

770

830

890

Enero feb-17 mar-17 abr-17 may-17 jun-17 jul-17 ago-17 sept-17 oct-17 nov-17 dic-17 ene-18 feb-18 mar-18 abr-18 may-18 jun-18 jul-18 ago-18 sept-18 oct-18 nov-18 dic-18 ene-19 feb-19 mar-19

EUROPE NET PRICES BHKP/NBSK(US$/Tonne, c.i.f.)

FOEX BHKP FOEX NBSK

In Europe, the situation presented a lag with respect to China. Europe

presented a healthy pulp demand in 2018. Paper demand increased in

all segments, except for P&W. What affected paper producers were high

pulp costs, lowering their margins and bringing financial problems for

them.

Q42018

SURPRISING OUTCOME

for Europe in 2018…

Europe Net Prices BHKP/NBSK(US$/Tonne, c.i.f.)

15

´000 TonnesCumulative

2017 2018 %chge

Newsprint 6 200 5 647 -8.9%

Uncoated Mechanical 5 503 5 566 1.2%

Uncoated Woodfree 8 644 8 452 -0,22

Coated Mechanical 6 210 6 211 0.0%

Coated Woodfree 6 778 6 256 -7.7%

Other Graphic Papers 27 134 26 484 -2.4%

Total Graphic Papers 33 334 32 131 -3.6%

Sanitary And Household 7 434 7 530 1.3%

Case Materials 29 249 29 961 2.4%

Carton Boards 9 455 9 636 1.9%

Weapping 4 318 4 288 -0.7%

Other Paper and Board for Packaging 4 293 4 415 2.8%

Total Packaging Papers 47 315 48 301 2.1%

Other Paper And Board 4 245 4 225 -0.5%

Total Paper And Board 92 328 92 187 -0.2%

Source: Aspapel

• Paper production increased for tissue and packaging.

The most affected segment was graphic paper.

• Paper producers began to feel a lower demand in

November 2018. But given the expectations in the

market, they kept buying their regular volumes, while

their paper sales fell.

Paper Production 2018 vs 2017

Q42018

WHAT SUPPORTED

Europe´s high pulp prices?

There´s a healthy figure showing growing demand

in Europe. In terms of inventories, they began to

rise, but mostly explained at that moment because

of Chinese pulp demand slowdown.

Pulp Demand and Inventories 2018 vs 2017

Due to high pulp prices and low margins, paper

producers started to raise prices in 2018, which

led to lower paper demand in 2019.

Paper Prices

Europe

4%

-1%

2% Hardwood

Softwood

Total

300

400

500

600

700

800

900

1000

en

e-1

7fe

b-1

7m

ar-1

7ab

r-1

7m

ay-1

7ju

n-1

7ju

l-1

7ag

o-1

7se

pt-

17

oct

-17

no

v-1

7d

ic-1

7e

ne

-18

feb

-18

mar

-18

abr-

18

may

-18

jun

-18

jul-

18

ago

-18

sep

t-1

8o

ct-1

8n

ov-1

8d

ic-1

8

PIX A4 B-copy

PIX CWF

PIX LWC

PIX NEWSPRINT

16

We have to consider that the 2018 Q1 baseline for

this -4,3% decline during Q1 2019, was too high.

We can see from PPPC data that global demand declined 4% year-over-year

in Q12019. Hardwood demand declined -10% while Softwood grew up 4%.

This is not only because paper demand declined. Brazilian producers started

to sell what they had stocked in ports, so shipments were slower than the

year before.

3 Month Moving Average

DEMAND

2019 vs 2018

Q12019

Jan 2016 Jan 2019Jan 2017 Jan 2018

4,200

4,400

4,600

4,800

5,000

5,200

5,400

Q1 2017: 6%

Q1 2018: 0,5%

Q1 2019: -4,3%

Total demandt

Total softwood demand increased 4%, with the

biggest growths in North America, China, and Japan.

Total hardwood pulp demand fell -10%, but increased

in North America and Oceania.

Q1 2019 vs 2018

10%

26%

-4%

-17%

7% 7%

-17%

0%

-10%-4%

0%

-8%

-18%

4%

-19%

-3%

272%

4%

TOTALEastern Europe

North America

ChinaJapanWestern Europe

Latin America

Other Asia/Africa

Oceanía

Softwood

Hardwood

17

581 597

607 625 632 631

641

667

698

735 753 759 761 762 767 770 771 769

770 770

762

750 690

653 666 691

683

651 621

642 648 645 648 636 634

660

701

764

873 877 886 899 900 895 891 885 877

841 855 853 828

772

697 699 708 708

671

555

605

655

705

755

805

855

905

CHINA NET PRICES BHKP/NBSK(US$/Tonne, c.i.f. Port)

FOEX BHKP

FOEX NBSK

In Q1 2019, the pulp market started to recover in China for both long and short fiber. This

price recovery in pulp was due to better demand in paper, some price improvement in that

sector and a better macroeconomic scenario (RMB appreciation, Trade War expectations,

manufacturing industry recovery, etc). During April, macroeconomic factors had a downturn,

which added to the suppliers stock excess showing slow rotation, affected price.

Source: FOEX

OPTIMISTIC RECOVER

of China´s demand

1H2019

18

4,500

5,000

5,500

6,000

6,500

7,000

7,500

FBB (RMB)

Coated (RMB)

Uncoated (RMB)

900

950

1,000

1,050

1,100

1,150

LET´S BE “SLIGHTLY” OPTIMISTIC,

but this will not be fast…

1H2019

Spot prices showing stability

Paper Price

China Paper Production

Paper production started to recover after

Chinese new year, which is correlated with pulp

demand, but in April production stabilized.

Source: PPPC

Source: China Bureau Statistics

19

LET´S BE “SLIGHTLY” OPTIMISTIC,

but this will not be fast…

1H2019

PULP INVENTORIES IN CHINESE MAIN PORTS

As paper demand returned to their normal levels, stocks started to decline,

also because Brazilian producers didn´t ship for 2-3 months to sell what they

had in ports. But normal demand hasn’t been able to reduce fast enough stock

excess.

Source: Cellmark

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Changshu (MT)

Qingdao (MT)

Gaolan (MT)

21

The demand for papers in Europe has become very complicated. It is similar to the story that

China lived a few months ago. The European paper producers began to notice a lower demand

in November 2018, however pulp prices expectations were still high, so they continued

producing paper and buying pulp at a relatively normal pace. This year, prices have been

eroding at a slower pace than China due to slower demand and economic / political factors.

1H2019

THE OTHER SIDE…

Europe

474

494 518

542

572

598

623 633 638 659

683

705

709 718

752

731

735

746 746 746 746

746 746 733

713 704

692 678 664

591 597 604 615

630 649 650 651 659

670

702

731 734

760 777

805

833 854

871 873 873 873 873 857

808 815

785

761 742

470

530

590

650

710

770

830

890

Europe Net Prices BHKP/NBSK(US$/Tonne, c.i.f.)

FOEX BHKP

FOEX NBSK

Source: FOEX

22

Paper Production

1H2019

WHAT SUPPORTED

Europe’s high pulp prices?

Paper Prices Pulp Stocks Al Ports

As mentioned in Q42018, paper producers continued

to rise paper prices to increase their margins, but this

had a negative impact in demand.

300

400

500

600

700

800

900

1000

en

e-1

7

feb

-17

mar

-17

abr-

17

may

-17

jun

-17

jul-

17

ago

-17

sep

t-1

7

oct

-17

no

v-1

7

dic

-17

en

e-1

8

feb

-18

mar

-18

abr-

18

may

-18

jun

-18

jul-

18

ago

-18

sep

t-1

8

oct

-18

no

v-1

8

dic

-18

en

e-1

9

feb

-19

mar

-19

abr-

19

PIX A4 B-copy PIX CWF

PIX LWC PIX NEWSPRINT

We can see that in Jan-Feb 2019 paper and board

production have fallen in almost all European countries,

except in Spain, U.K and Poland.

• This led to an increase in their stocks of paper, and now in

February and March many of them have decided to stop

machines and drastically reduce their purchases of pulp, as

they still have no demand for these papers.

• Part of the stock that is in Europe corresponds to volume

that is normally sent from there to China, but given the

situation in that market, it has not been possible to

dispatch.

ME

TR

IC T

ON

S

Issue Date: 25 March 2019

Germany: March 2019 = Estimated

Constantly Revised

-6,1%-5,3%

-4,7%

-3,5%-2,8% -2,7% -2,6%

-1,8%

-0,7%

0,5%

2,3%

6,1%

-1,4%

Source: FOEX Source: Aspapel (Jan-Feb 2019 vs 2018)

STOCKS OF WOOD PULP IN EUROPE PORT: 2017 -2019

23

Short Term Prospects

23

24

Pulp demand in China is in its normal level, but there´s not an “over demand”

to cover the excess of supply available in ports, so it becomes a risk for pulp

prices. What are the good news?? Apparently a large Brazilian producer will

have their downtime of about 1 -1,5 million tonnes, which will alleviate and

reduce high inventories.

15

20

25

30

35

40

45

50

55

60

65

70

1 2 3 4 5 6 7 8 91

01

11

2 1 2 3 4 5 6 7 8 91

01

11

2 1 2 3 4 5 6 7 8 91

01

11

2 1 2 3 4 5 6 7 8 91

01

11

2 1 2 3 4 5 6 7 8 91

01

11

2 1 2 3 4 5 6 7 8 91

01

11

2 1 2 3 4 5 6 7 8 91

01

11

2 1 2 3 4 5 6 7 8 91

01

11

2 1 2 3

2011 2012 2013 2014 2015 2016 2017 2018 2019

WO

RL

D-2

0 P

RO

DU

CE

RS

ST

OC

KS

(D

AY

S

OF

SU

PP

LY

-MM

3)

bskp

bhkp

HW and SW reached a peak

of 63 and 42 supply days

respectively in Q1 2019.

In its peak there were 2,8

million tonnes of excess pulp

stock around the world.

As it was mentioned before, pulp stocks were high both in China and

Europe during the first months of 2019. Despite Brazilian started selling

in March their pulp stocked in ports and stopped their shipments to

China for the first months of the year, they reactivated their shipments

with arrival in June.

STOCKS

at ports

Source: PPPC

25

Market Analysts have been reviewing the situation of what has

happened this last 6 months, but they agree that the most important

risk is to predict macro economic outlook. Pulp prices will have a

support during the coming years from a tightening of supply and a

growing demand. Despite that, all of them are forecasting a recover for

second semester.

NBSK Net Prices China

IT SEEMS TO BE

a more optimistic second semester

BHKP Net Prices China

26

However we also need to look at the supply side that will increase 0,8 million

tons, which will create a gap between supply and demand. In 2018 downtimes

limited supply. These downtimes were greater than the increase in capacity and

consequently the supply decreased with respect to 2017. For 2019, unplanned

downtimes don´t seem to be an issue as last year.

For 2019 the expected demand growth of 1 -1,5 million tons/year

might be over stated taking into account Q1 results, but it is surely

lower than the one observed during 2016 and 2017 (when the market

grew 2.0-2.5 million tons/year).

24,9 25,7 26,20,24 0,17

33,8 33,9 34,71,1 1,6

Total Pulp Demand

Unplanned Downtime

Total Pulp Demand

Unplanned Downtime

An increase in BSKP demand of 2% is expected in 2019, lower than the growth of BHKP (2,4%)

BSKP BHKP

SUPPLY/DEMAND BALANCE

for 2019-2

0,5

0,2

0,30,8

0,5

-90

0,3

Source: Average between Demand PPPC March 2019 and HW April 2019, Expansión de la oferta

(capacidad) Hawkins & Wright Outlook for Market Pulp, April 2019.

Capacity expansion for BSKP Demand expansion for BSKP Capacity forecast for BSKPCapacity expansion for BSKP

Demand expansion for BSKP

Capacity forecast for BSKP

Unplanned downtime

27

Long Term Prospects27

28

Source: Average between Demand PPPC March 2019 and HW April 2019, Expansión de la oferta (capacidad) Hawkins & Wright Outlook for Market Pulp, April 2019.

The biggest gap is in 2020. In terms of demand, both BHKP and BSKP will still

grow, but the first one at higher rates than the second. In terms of demand, until

2023 China will be the region that leads the growth in both fibers. Europe will

suffer a decline, continuing with the tendency it has had in the previous years.

During 2019 to 2022 there is no relevant new supply in the pulp

market besides MAPA project from Arauco and therefore there is

going to be a bigger gap, than in previous years, between demand and

supply. The gap is estimated on average between 0,2 and 0,8 for each

fiber.

BSKPBSKP DEMAND 2019-

2023

SUPPLY/DEMAND BALANCE

for 2019-2023

0,5

0,2

0,3

0,3

0,5

0,4 0,4

0,5 0,5

- 0,2 - 0,1 - 0,1

Capacity expansion for BHKP Demand expansion for BHKP Capacity forecast for BHKP

29

BHKP BHKP DEMAND 2019-2023

Source: Average between Demand PPPC March 2019 and HW April 2019, Expansión de la oferta (capacidad) Hawkins & Wright Outlook for Market Pulp, April 2019.

BHKP BHKP DEMAND 2019-2023

SUPPLY/DEMAND BALANCE

for 2019-2023

0,80,8 0,8 0,8

0,3

0,8

0,20,3

0,50,0

0,6 0,5

The biggest gap is in 2020. In terms of demand, both BHKP and BSKP will still

grow, but the first one at higher rates than the second. In terms of demand, until

2023 China will be the region that leads the growth in both fibers. Europe will

suffer a decline, continuing with the tendency it has had in the previous years.

During 2019 to 2022 there is no relevant new supply in the pulp

market besides MAPA project from Arauco and therefore there is

going to be a bigger gap, than in previous years, between demand and

supply. The gap is estimated on average between 0,2 and 0,8 for each

fiber.

Capacity expansion for BSKP

Demand expansion for BSKP

Capacity forecast for BSKP

Unplanned downtime

30

Tissue segment has been growing steadily, specially in China. The P&W

segment will continue to decline, particulary in the developed world. Board* (8% of pulp total consumption)

expected to grow 30% since 2010 (57 MM

tons) where the main players are:

China: 33%

Europe: 26%

Others Asia: 18%

P&W (25% of pulp total consumption)

expected to decrease 21% since 2010. All

markets will decrease with the exception of

China and Asia (excluding Japan).

Tissue (37% of pulp total consumption)

expected to grow 49% since 2010 (14MM

tons) where China lead this growing.0

50

100

150

200

250

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

+30%

-21%

+49%

BOARDTISSUEPWFuente: PPPC

* 99% of this volumen produced with recycled fiber

OPPORTUNITIES IN END USE

segments tissue and board leading growth

CAGR Board: 2,2% (2010-2022)

CAGR P&W: -1,9% (2010-2022)

CAGR Tissue: 3,4% (2010-2022)

31

• Vietnamese supply continues to grow to fill reductions from other

countries.

• Australian plantation supply has doubled since 2013 due to a maturing

resource, but further increases in plantation supply are limited and will

drop from 2023 for at least 5 years.

• Other suppliers expected to reduce due to a combination of domestic

demand (Mapa in Chile) ,limited plantation availability and less competitive

in costs.

• Also, increasing demand for hardwood logs may reduce woodchip supply.

Woodchip Supply

FIBER SCARCITY

will help to maintain high pulp prices

12,000

10,000

8,000

6,000

4,000

2,000

-Vietnam Australia Chile Thailand South

AfricaBrazil Malaysia Indonesia New

ZealandEcuador Mozambique

• Expected deficit of 3,5 million BDMT by 2022.

• Forecast may not take into account the full impact of Indonesian imports.

• Gap can only be closed by reduced pulp production or finding new sources

of supply. Potential supply from Brazil, Uruguay or explore Africa.

Woodchip Supply And Demand Balance In The Asia Pacific – 2022/23

32

With the world’s eyes focused

on the devastating impact that

plastic has on our oceans, paper

is once more reasserting itself

as a valid packaging medium.

Paper has the obvious benefits

over plastic of a lower carbon

impact and improved recyclability

CHALLENGE:

come up with solutions both in terms

of weight, coatings and end-of-life

processes if paper is to become the

first choice for packaging.

TRENDS BECOMING OPPORTUNITIES:

Sustainability plastic replacement

33

In summary, in the short term we see that for pulp demand in China 2019,

the situation is “cautiously optimistic" thinking that we have already passed

the worst part of the adjustment, and that the demand for pulp should grow

in China 0,9 million tons this year. In addition, the Chinese government took

several measures to improve the economy (VAT reduction from 16% to 13%

as of April 2019, being the most relevant).

There´s concern about Europe demand mainly because of macroeconomic

factors, but wee see steady demand in the rest of the world.

In the long term, the scenario is optimistic for pulp and paper industry mainly

explained by:

END USE SEGMENT´S GROWTH

Tissue and Board will grow over the next 4 years. Tissue

represents 37% of total pulp consumption and will grow 3,4%

per year, leaded by the Chinese market.

TIGHT DEMAND SUPPLY BALANCE

Demand will grow slower than previous years, but it will clearly

grow over new capacities added to the market in the same

period, supporting pulp prices in the long term.

CONCLUDING

remarks

FIBER SCARCITY

Woodchip´s deficit by 2022. It will be difficult for pulp producers

to obtain woodchips and also expensive.Paper as an alternative for packaging in replacement of plastic.

SUSTAINABILITY TRENDS