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Global Paper and Board Outlook
Alejandro Mata Economist, European Forest Products
October 2013
1
Alejandro Mata, Economist, European Forest Products, RISI
• Bachelor degree in Engineering, MBA degree earned in 2007
• Worked in Business and Market Intelligence functions for one of Europe’s leading paper producers
• Has been analyzing and forecasting the industry since 2009
• Recently joined RISI team• Author of the Paper Trader Europe,
the European Graphic Paper 5-Year and 15-Year Forecasts
2
3
Where is the industry right now?... And where is it going?
Tough Times?
World Paper & Board Demand…Is the Global Market in Decline?
96 97 98 99 0 1 2 3 4 5 6 7 8 9 10 11 120
50
100
150
200
250
300
350
400
450
-15%
-10%
-5%
0%
5%
10%
15%
Volume (L)
Percent Change (R)
Million Tonnes
4
5
Global State of the Industry
Are there any regional differences? Industry segment differences?
Forecast Change, 2012-2014: +5%
86 mt(21%)
32 mt(8%)
30 mt(8%)
109 mt(27%)
145 mt(36%)
-4% +9%
+1%
+6%
+7%
Printing & Writing
Newsprint Tissue
Cartonboard/ Other
Containerboard
Paper & Board Markets – Global
• US economy accelerating
• Euro area out of recession
• Emerging economies growing slower than before
• Newsprint papers declining globally
• Printing & writing: growth in emerging markets, contraction in mature markets
• Tissue and packaging driving growth
The global picture keeps growing!
6
7
Paper & Board Markets – Comparison
Cartonboard
Containerboard
Tissue
Newsprint
P&W
Paper & Board
-10.0% -5.0% 0.0% 5.0% 10.0% 15.0%
AsiaL.Am.N.A.Europe
Paper & Board Markets – Europe
+3%
Forecast Change, 2012-2014: -0%
21 mt(21%)
8 mt (9%)
9 mt(9%)
29 mt(30%)
30 mt (31%)
-8% +7%
-5%+3%
Printing & Writing
Newsprint Tissue
Containerboard
Cartonboard/ Other
No growth for the P&B markets as a whole • Newsprint heavily impacted by new media
• Printing & writing grades showing mixed trends, UM doing better than coated grades
• Containerboard and cartonboard supported by economic recovery and inventory restocking
• Eastern Europe driving growing trends
8
9
Paper & Board Markets – Europe
• Mature vs. growing segments
• Economy impacting segments differently
• New technologies impacting segments differently
• West vs. East
• Saturated vs. unsaturated markets
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Different Trends Emerging in the Region
Growing vs. Declining
• Demand growth in East vs. contraction in
West
• This applies not only to graphic grades, but also
to packaging and tissue
• Capacity base shifting
• East will become more relevant in defining
trends going forward
* Percent change reflecting 2012 vs. 2011 apparent consumption levels for all paper and board grades.
-3.4%2.4%
11
While There Is Limited Growth in Western Europe…
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Newsprint Other Packaging Tissue P & W
Western European Apparent Consumption
12
…Eastern Europe Keeps Showing Better Trends
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Newsprint Other
Packaging Tissue
P & W
Eastern European Apparent Consumption
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Graphic Papers
Total European Graphic Demand by GradeMillion Tonnes
14
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
0
10000
20000
30000
40000
50000
60000Uncoated WoodfreeUncoated MechanicalNewsprintCoated WoodfreeCoated Mechanical
Average Annual Growth 2013-2015
News -3.8%CWF -3.6%Cmec -3.7%UWF -1.6%Umec -0.4%
15
07 08 09 10 11 12 13 14 1550%
60%
70%
80%
90%
100%
110%
120%
Pre-Crisis Average
Long-Term Average
Crisis Period Average
Profitability
Western European Profitability (All Grades)Price/Total Delivered Costs
Note: Total costs include mill operating costs, depreciation, interest, SG&A and delivery.
07 08 09 10 11 12 13 14 1560%
65%
70%
75%
80%
85%
90%
95%
100%
Pre-Crisis Average
LT Average
Crisis Period Average
OR (with Assumptions)
OR (w/o Assumptions)
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Western European Operating Rates(All Grades)Percent
Announced Net Newsprint Capacity Changes for 2013-2014 vs RISI Forecast of Demand Growth for the Same PeriodThousand Tonnes
Europe N. America Asia Latin America Global-1,400
-1,200
-1,000
-800
-600
-400
-200
0
200
400
600Capacity Growth
Demand Growth
17
Announced Net P&W Capacity Changes for 2013-2014 vs. RISI Forecast of Demand Growth for the Same PeriodThousand Tonnes
Europe N. America Asia Latin America Global-2000
-1500
-1000
-500
0
500
1000
1500
2000
2500
3000Capacity Growth
Demand Growth
18
19
EU 27+2 China Latin America North America0
50
100
150
200
250
300
350
400
450Fiber Chemicals Fuels Electricity Labor Materials
Cash Manufacturing Costs* (Euro/Tonne) 2Q13 - Newsprint
*Capacity Weighted Average
EU 27+2 China Latin America North America0
100
200
300
400
500
600 Fiber Chemicals Fuels Electricity Labor Materials
20
Cash Manufacturing Costs* (Euro/Tonne) 2Q13 – Printing & Writing
*Capacity Weighted Average
World Graphic Paper 5-Year Forecast
Global Newsprint Risk of Closure Studywww.risi.com/gnr
China’s Influence on WorldGraphic Paper Markets in theComing Decadewww.risi.com/chinagraphic
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