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Presentation to:
Tembec Marketing Group
January 24, 2006Montreal, Quebec, Canada
Global Trends in Market Pulp
Brian McClay & Associates Inc.
www.pulpmarket.ca
Alberta Forest Products Association
Jasper, Alberta
22 September 2016
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Market Pulp: 65 mm tonnes, $50 billion business
Intermediate product used to make paper (84%), hygienic goods e.g. Diapers, pads, wipes (8%), textiles/specialties (8%)
Production processes - chemical (cooking – 94%) and mechanical (grinding – 6%)
Differentiated by wood species – soft & hard
• 90% exported• US$ pricing• Supply shock driven
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Paper still a growth business, China now 27% of total
China closes 36 million tonnes of obsolete capacity 2010-14
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Graphic paper down, packaging and tissue paper up
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More purchased pulp; less non-wood & integrated pulp
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Capacity surge in China, 85% non-integrated to fibre
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3 months
1 year6 years
Extremely low cost Eucalyptus plantations is the key
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Low cost, high quality pulpwood and lots of it
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More capacity than demand growth next few years
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APP OKI start-up October 2016, wood supply & other risks
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+8.75 mmt BHK capacity 2016-19; 70% above demand growth
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+2.8 mmt BSK capacity 2016-18; 2x demand growth
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Even with modest aagr of 4%, China’s paper & board output will reach 155 million tonnes in 2025, 50 m tonnes over 2015.
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Building airports in China does not use much paper
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But using airports does
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China’s consumers not just domestic market story
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Big upside for towelling in China, other emerging markets
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Print may be seen as old, tissue is modern, sophisticated
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Potential upside to toweling use due to health concerns
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Some long-shot risks to wood pulp in tissue
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Growing Specialty Paper business is NBSK-centric
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Faux leather patch – 100% NBSK saturated with latex
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• Graphic paper use down in U.S., EU and Japan – less to recover
• Already high recovery rates? U.S. 72%, Europe 77%, Japan 81%
• Raising recovery rates elsewhere – not enough to offset loss above
• More specialty papers, food grades, composites, not as recoverable
• Marginal cost of collection rising – deeper into the waste stream
• Quality of marginal supply declining – e.g. single stream recovery
• Tissue demand growing fast (4.5%), potential recovery rate lower.
•
Peak Recovered Paper
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Millennials, 25% of population, 50% by 2050 prefer online shopping, fibre-based packaging
Paper-based packaging will gain market share
China world’s biggest ecommerce market; +600% 2010-2014
By 2030, India a 1 billion person digital market
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• 85% of ocean solid waste pollution is micro-plastics – mostly textiles
• 1900 micro-fibrils released each washing of polyester garment
• Too small to screen, must stop at source, regulation, prohibition
• Micro-plastic particles moving up the marine food chain
• More plastics by weight in the oceans than fish by 2050
• Polyester non-biodegradable, DP pulp-based rayon is biodegradable
• Precedent: Microbead-Free Waters Act of 2015
Replace non-biodegradable polyesterwith bio-degradable Cellulosics (dissolving pulp rayon)
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Big opportunity for dissolving pulp (Cellulosics)Microplastics water pollution
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Cellulosics 4% of world textile fibre, polyester 60%, cotton 25%Solid Cellulosics growth as is, but share gains from polyester (and cotton) a bigger boost
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Novo Institute forecasts Cellulosics demand could rise to 84 mmt in 2050 from 6 mmt in 2013
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Brian McClay
Montreal, Canada
514-457-4450
Leader-level Council Member - GLG Research
Also available through Guidepoint Global and Coleman Research Group
Brian McClay & Associates Inc.
www.pulpmarket.ca
