future prospects for usa pulp and paper technology prospects for usa pulp and ... –economics do...
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NC State University NC State University
Future Prospects for USA Pulp and Paper Technology
Richard B. Phillips, PhD
Student TAPPI Summit
Raleigh, North Carolina
January 20, 2012
NC State University NC State University
Main Points
1. USA very competitive with Rest of the World in Pulp and Paper – Both Cost and Profitability
2. Biggest issue for USA Paper and Board Industry is shrinking Demand – We are becoming more export oriented
3. World will face shortage of softwood fiber for paper
– China’s growth in packaging will require more virgin softwood fiber
– OCC supply will become tight
– Growth of absorbent pulps will divert softwood pulp supply from paper
– USA – Southeast well positioned to participate
4. What will be required for a new softwood mill to be built?
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USA Competitive Costs
$0
$10
$20
$30
$40
$50
$60
$ p
er H
ou
r
Hourly Labor
$0
$50
$100
$150
$200$
per
BD
FT
of
Pu
lp
Transportation to Shanghai
Source: FisherSolve®
$0
$50
$100
$150
$200
$250
$ p
er B
Dt
Softwood Chips
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466 473489 494
519530
556569
621
497512
594
621
686
849
467
681
702 705
846
Total Cost and Cumulative Production
Cumulative Production, FMT per Year (x1,000,000)
0 2 4 6 8 10 12 14 16
Co
st,
US
D p
er
FM
T
0
100
200
300
400
500
600
700
800
900
0
Canada
Chile
China
Finland
Russia
Sweden
United States
Softwood Market Pulp USA Cash Cost Delivered to Shanghai very competitive
with all except Russia
4 Source: FisherSolve®
Canada Chile
China
Finland
Russia
Sweden
USA
Canada biggest producer of softwood market pulp USA minor player in
paper pulp
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Dominant in Fluff Pulp Market Both Cost and Fiber Properties
651
321
344357 358 366
377387
399 404 409 417436 439 447
460
Mfg. Cash Cost and Cumulative Production
Cumulative Production, FMT per Year (x1,000,000)
0.00 1.00 2.00 3.00 4.00 5.00
Co
st,
US
D p
er
FM
T
0
100
200
300
400
500
600
700
800
0
Argentina
Finland
Sweden
United States
Source: FisherSolve®
Southeast USA owns the fluff pulp market
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Fluff Pulp Demand Growth to Continue Mothers want their babies in disposable diapers
0
1,000
2,000
3,000
4,000
5,000
6,000
2009 2010 2011
Airlaid/Other
Adult Incontinence
Feminine Hygiene
Disposable Diapers
Source: RISI
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USA Corporate Returns competitive with Latin America and superior to ROW
Figure 13. Profitability of Major Pulp and Paper producers (Source: PriceWaterhouseCoopers “Global Forest, Paper and Packaging Survey”, 2012). (A) EBITDA Margin and (B) Return on Capital Employed
Source: PriceWaterhouseCoopers “Global Forest, Paper and Packaging Survey”, 2012
% EBITDA Margin % Return on Capital Employed
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Biggest issue for USA is declining demand Consumption of Paper and Board increasing in Asia
and stagnant to declining in the West
Asia account for ~ 50% of world Consumption Source: RISI
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Exports have not been a major factor for USA but they will be
Source: RISI
Exports are 17% of Production
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Production of Paper and Board is Local …
10
Shortage
Excess
2010
Relatively good Regional Balance
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… And will remain so in 2020
11
Shortage
Excess 2020
North America and Western Europe will become larger exporters
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Purchased Softwood Pulp Must Grow Softwood Pulp will likely be in significant shortfall
12
Shortage
Excess
Shortage in Asia not balanced by Excess produced elsewhere
2020
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Asia currently imports 25 Million Tonnes of waste Current collection rate of ~50%
13
Shortage
Excess 2010
Waste for Asia comes principally from North America and Western Europe
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Shortage grows to 35 Million Tonnes in 2020 If recovery rate grows to 64%
14
Shortage
Excess 2020
Waste availability from North America and Western Europe cannot grow because local consumption of P&B declines
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Main Points
• USA very competitive with Rest of the World in Pulp and Paper – Both Cost and Profitability
• Biggest issue for USA is shrinking Demand – We are becoming more export oriented
• World will face shortage of softwood fiber for paper – China’s growth in packaging will require more
– OCC supply will become tight
– Growth of absorbent pulps
• What will be required for new softwood pulp capacity to be built? – Economics do not favor construction of new softwood capacity
– But prospects could change by incorporating biomaterials and bioenergy into scope of new mill
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Abundant Softwood available in SE USA
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Export Wood Products
Pulp and Paper
Fuel Wood
Logs
Timber
Wood Pellets
30 Million Hectares 3.4 M3 / Ha / Year
Annual Growth ~ 100 mm M3 per Year Annual Removals ~ 80 mm M3 per Year
90% of harvest takes place on 10% of the forest
Saw logs 31,446,920
Veneer logs 4,721,578
Pulpwood 30,842,966
Composite products 4,133,231
Fuelwood 582,053
Posts, poles, and pilings 799,650
Miscellaneous products 703,356
73,229,755
All USA Forest Products Domestic Demand Falling Except wood pellets
Source: USDA FS RPA 2007
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Modern Kraft Mill
17
Woodyard
Pulp Mill Chemical
Plant
Pulp Line
• Roundwood • Sawmill Chips
• Kraft Cooking • Low Energy
• Turpentine • Tall Oil • Pulping / Bleaching
Chemical Prep
• Pulp Drying • Pulp Bales for Shipment
1
2
3
4
5
• High Pressure • 50% Excess Power • Black Liquor > 85% • Hog Fuel 15%
Power Plant
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Characteristics of Modern Kraft Pulp Mill
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1,000,000
Woodyard $119,826,634
Pulp Mill $312,398,638
Caustic Plant $204,870,330
Evaporation $139,684,316
Recovery Boiler $377,829,924
Power Boiler $102,787,517
Turbogenerators $108,156,996
Machines $433,187,011
Chlorine Dioxide Plant $103,043,210
Infrastructure $99,143,913
TIC (USD 2016) $2,000,928,488
ADMt per Year
Southeastern USA
Greenfield Pulp Mill Investment
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Net Present Value (10%) requires unrealistic price for Paper Pulp
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-$1,093,797,253
-$573,472,970
$276,900,247
Price Escalation
Net Present Value at 10%
Analysis is based on southeast United States with the lowest softwood pulpwood price in the world
Source: Author
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Chip Pile
Chipping Debarking Roundwood
Receiving
Sawmill Chips
Pulp Wood
Kraft Pulp Mill integrated with Bioenergy and Biomaterials
Chemicals Extraction
Chipping
Extraction
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Chip Pile
Chipping Debarking Roundwood
Receiving
Sawmill Chips
Pulp Wood
Extraction
Kraft Pulp Mill integrated with Bioenergy and Biomaterials
Chip Screens
Auto Hydrolysis
Enzyme Hydrolysis
Purify
Ferment
Sawdust
Wood Chips
Lignin
Pelletizer
Bioproducts
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Cellulose Lignin
Chemicals / Materials
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Chip Pile
Chipping Debarking Roundwood
Receiving
Sawmill Chips
Pulp Wood
Extraction
Kraft Pulp Mill integrated with Bioenergy and Biomaterials
Chip Screens
Pre-Cook
Wood Chips
Kraft Cook
Hemicellulose Extraction
Bioethanol, Foams/ Gels
Turpentine Collection
Turpentine
22
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Debarking
Pre- Cook
Lime Kiln
Power Generation
Kraft Cook
Caustic Plant
Recovery Boiler
Pulp Washing
Evaporator Plant
Tall Oil Production
Tall Oil
Power
Kraft Pulp Mill integrated with Bioenergy and Biomaterials
Biomass Boiler
Natural Gas
Chemical and Energy Recovery
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Debarking
Pre- Cook
Lime Kiln
Biomass Gasifier
Power Generation
Kraft Cook
Caustic Plant
Recovery Boiler
Pulp Washing
Evaporator Plant
Tall Oil Production
Power
Lignin Plant
X
Kraft Pulp Mill integrated with Bioenergy and Biomaterials
Tall Oil Production
Tall Oil
Biomass Boiler
Natural Gas
Lignin Recovery
24
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Pre- Cook
Lime Kiln
Kraft Cook
Caustic Plant
Pulp Washing
Evaporator Plant
Kraft Pulp Mill integrated with Bioenergy and Biomaterials
Biomass Gasification
25
Biomass Gasifier
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Chemrec Black Liquor gasification – biodiesel production
26
NC State University Chemicals Extraction
Chip Pile
Chipping Debarking Roundwood
Receiving
Pre- Cook
Lime Kiln
Biomass Gasifier
Power Generation
Kraft Cook
Caustic Plant
Recovery Boiler
Pulp Washing
Turpentine Collection
Evaporator Plant
Tall Oil Production
Oxygen Delignificatn
DEo+pDP Pulp Dryer
ClO2 Plant
Biological Treatment
Pulp Bale Line
Natural Gas
Sawmill Chips
Tall Oil
Turpentine
Power
Pulp Wood
Makeup Chemicals
Hemicellulose Extraction
Bioethanol, Foams/ Gels
X
Lignin Plant
X X
Fluff Pulp
Biodiesel
SBSK Pulp
Recovered Lignin
Extraction
Kraft Pulp Mill integrated with Bioenergy and Biomaterials 27
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• Asia has become overly – dependent on cheap Recovered Paper that will become scarce and expensive in the future
• New softwood capacity will be needed to provide fiber to Asia
• Softwood capacity difficult to justify financially – bioenergy and biomaterials integration may make it work
• USA – Southeast a strong contender for a new mill 28
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Questions?
29