“If a company has both paper and pulp capacity, it gets more difficult to find suitable acquisition targets and synergies. In such cases, you can seldom buy pulp capacity alone.”
rate is 35 per cent. The companies are in a stage in which they can continue to consolidate. On the other hand, the pulp industry’s consolidation is slowed down due to the fact that many big producers of market pulp also have paper production capacity. “If a company has both paper and pulp capacity, it gets more difficult to find suitable acquisition targets and syn- ergies. In such cases, you can seldom buy pulp capacity alone,” says Konttori. Teija Konttori believes that, in the pulp industry, the greatest organic growth will happen in the areas where wood fibre is available for a relatively low price, such as in Northern Europe, North America and South America. CHINA’S IMPORT BAN CHANGES THE MARKET There is an increasing number of takers for the low-price fibre. This development was triggered by the decision of China’s central government to restrict the import of re- cycled paper. In 2012, China imported some 30 million tonnes of recycled paper. In 2018, the country adopted an import licence system which cut the imports to 17 million tonnes. The imports in 2019 are likely to amount to 11–12 mil- lion tonnes. The importing of recycled paper is expected to end completely during 2020. “China seems to be very resolute in this matter. The industry in general considers it very probable that the ban will come into effect,” says Pöyry’s Tomi Amberla. The import restrictions are transforming the structures of the Chinese forest industry. The greatest difficulties in China are experienced by producers of corrugated board
and packaging paperboards who have used the inexpensive recycled paper as their raw material. “Some small and also medium-sized players will disap- pear from the market due to profitability issues and the fibre shortage. Big companies and units will be capturing a larger share of the total production,” says Amberla. Although the volume of recycled paper imported by China has been high, the import restrictions have a fairly minor impact on the demand for fresh fibre. “We must remember that recycled paper has been used as a raw material in products that are in the low-price cate- gory. You can’t replace recycled paper with the much more expensive fresh fibre in these products,” Amberla notes. We estimate that the import restrictions will increase the consumption of fresh fibre by a total of one to two million tonnes.” CHINESE COMPANIES BUY MILLS OVERSEAS Chinese companies have already come up with various solutions to the fibre problem. Investments overseas have played a key role. The Chinese have acquired, either in part or completely, mills which produce pulp from recycled paper in Europe and America. “According to current reports, the production of pulp made from recycled paper is set to grow by roughly six million tonnes in the next few years, and all of the big Chinese players have been active in this development,” says Amberla. Chinese companies have also acquired more fresh fibre in their portfolios by acquiring pulp mills and majority
Tomi Amberla Principal and head of the Biorefining practise area within Pöyry Management Consulting. ÅF and Pöyry are since February 2019 one international consulting and engineering company.
34
Powered by FlippingBook