“We expect the demand for pulp to grow at an average annual rate of 2.5 per cent over the next 10–20 years.”
Bleached softwood and hardwood pulp is required for applica- tions such as tissue paper, packaging materials and office paper. The demand for unbleached pulp is driven by packaging, which is required for transporting goods bought online as well as for food packaging. “The demand for unbleached pulp is increasing due to Chi- nese import restrictions on recycled paper. In the production of packaging board, fresh fibre is then required to replace it,” Litvay points out. Growth focus on Asian markets In the future, China will play an increasingly important role in the global pulp market. Its share of market pulp consumption has risen to around 40 per cent. “China’s already significant paper and board industry will keep growing in the coming years, albeit at a slower pace than before. However, there may not be enough domestically produced fibre available,” says Lansdell. In addition to China, demand for pulp is growing in other emerging economies. For example, Indonesia, Vietnam, and India are all at different stages of development, but all have a growing and prospering middle class. The Indian Paper Manufacturers Association (IPMA) expects paper consumption in India to grow by 6–7 per cent in the com- ing years. “The availability of wood is poor in regions with the world’s high- est population growth. Market pulp is the most economical way to get raw material for local paper mills, as it is not economically feasi- ble to ship products like tissue paper across the seas,” says Amberla. He points out that global demand for pulp is also being boosted by a decline in the amount of high-quality recycled fibre, which
is due to a decline in the consumption of printing and writing paper in Europe and North America. “The recycled paper that is not available has to be replaced by fresh fibre in the manufacture of new products.” Increasing volatility in pulp markets Predicting pulp prices has never been easy, but Amberla says it has become even more challenging due to increased volatility, in other words, price fluctuation. This is primarily due to China becoming one of the largest buyers of pulp globally. “The Chinese pulp market is inherently speculative. Volatility is further increased by the growth of the country’s own pulp pro- duction capacity, as there are large fluctuations in the production volumes of local pulp mills.” When the price of domestically sourced wood raw material and imported wood chips is low, it is worth running mills at full capacity. When raw material is expensive, more market pulp is used for paper production in China. Volatility in the international pulp market is amplified by chang- es in pulp supply around the world. Amberla says there have been more supply shocks recently than in the past for various reasons. The Covid-19 pandemic has disrupted production and supply chains at some mills in North America and other places. Con- gestion in major ports and occasional container shortages have also affected pulp shipments. Climate change is also having an impact on pulp markets. For example, exceptional weather conditions have hampered pro- duction plant operations in Canada, with floods and landslides caused by heavy rainfall disrupting road and rail links in British Columbia last year. •
Tomi Amberla Director at AFRY Management Consulting. He leads the Biorefining unit specialising in pulp and new bioprod- ucts. Amberla has held various positions at AFRY since 2007 and previously worked as a researcher at the University of Helsinki.
Oliver Lansdell Director of Hawkins Wright has over two decades of experience in analysis and consultancy in international pulp and paper markets. Lansdell previously worked as an analyst for the Pulp and Paper Products Council in Canada.
23
Powered by FlippingBook