The Australian cardboard market is in the hands of just a small number of companies, and the substantial demand-side pressure for virgin fibre could bring opportunities for Finnish pulp in the future. A SMALL MARKET WITH LARGE PLAYERS
HANNAMIINA TANNINEN photos GETTY IMAGES, SHUTTERSTOCK
“Australia – and New Zealand for that matter – is a highly developed economy, but a very small local market,” says cardboard industry expert Tim Woods . He is the managing director of IndustryEdge, which pro- vides data, analysis and advice about the paper industry. Woods has a solid background in research and 25 years of expertise in fibre and wood products, as well as in the pulp and paper industry. “Whether you think of boxes, other materials, retail, banking or whatever, Australian markets are dominated by a small number of very large players. The largest box manufacturer holds more than 50 per cent of the national market, for instance,” Woods says. This means that there are a small number of large supply contracts that only come up from time to time. Naturally there are many more supply contracts on the market, but the result of this concentration is that the supply chain is quite efficient due to, for example, long-term working arrangements. On the other hand, the industry is not under the type of pressure to improve that normally comes with constant competition from many other businesses. At the moment, the corrugated box market in Australia and New Zealand is very tightly controlled by few very
large businesses. Two companies dominate around 85 per cent of the Australian corrugated box market and con- solidation seems unlikely. What is more likely is that one of the large players could be purchased by an even larger business. MOST OF AUSTRALIA’S BOX PAPER IS EXPORTED When comparing Australia to Western Europe and the United States, it is important to notice that Australia is a net exporter of containerboard materials for the manufacturing of corrugated boxes. Whether it is high quality virgin kraftliner or recycled corrugating medium, Australia’s box paper travels out of the country, but very little comes back in. “That is quite different in some respects from markets in Western Europe and even from North America.” Despite the media attention, China’s recovered paper prohibitions don’t have a direct impact on manufacturing corrugated boxes in Australia. “The local producers use all the recovered paper they can, so if anything, they have paid a little more for the best quality material. But there is a large supply available for them because Australia is still a significant net exporter of recovered paper.”
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