outlook for market pulp june 2017 - afvp · 2019. 2. 20. · outlook for market pulp ... world-20...
TRANSCRIPT
HAWKINS WRIGHT
Outlook for Market Pulp – June 2017
AFVPDivonne-les-Bains
Pierre BachHawkins Wright Ltd
• Setting the stage…
• So what happens next?
• Market strength further afield?
HAWKINS WRIGHT
Outlook for Market Pulp – June 2017
AFVPDivonne-les-Bains
Pierre BachHawkins Wright Ltd
• Setting the stage…
• So what happens next?
• Market strength further afield?
HAWKINS WRIGHT
Pulp markets troughed in 2016…
400
450
500
550
600
650
700
750
800
Jan-14 Jan-15 Jan-16 Jan-17
US
$/t
de
live
red
ChinaNet NBSK prices vs. NET BEKP prices
China NBSK China BEKP
Source: Hawkins Wright
?
?Guaiba
PUMA
HAWKINS WRIGHT
400
450
500
550
600
650
700
750
800
Jan-14 Jan-15 Jan-16 Jan-17
US
$/t
de
live
red
ChinaNet NBSK prices vs. NET BEKP prices
China NBSK China BEKP
Source: Hawkins Wright
…With little warning of the imminent rally to come
Guaiba
PUMA
OKI PL2OKI PL1
HAWKINS WRIGHT
China buying cycle is a macro-economic phenomenon
90
92
94
96
98
100
102
104
106
108
110
Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17
Chinese PPI (Producer Price Index) (January 2016=100)
Producer price indexfor industrial products
Paper and paperproducts
Source: National Bureau of Stats
Any value less than
100 = deflation
Coated paper prices, by regionUncoated paper prices, by region
85
90
95
100
105
110
115
120
January
2015=
100
China
North America
West Europe
85
90
95
100
105
110
115
120
125
130
January
2015=
100
China
N America
Europe
HAWKINS WRIGHT
World-20 BCP shipments to ChinaY-o-y growth
Chinese demand boomed from October to March
(1,000)
(500)
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
-100
-50
0
50
100
150
200
250
300
350
400
an
nu
aliz
ed
gro
wth
, 000s to
nn
es
y-o
-y m
on
thly
dif
fere
nce, 000s t
on
nes
y-o-y change (LHS)
annualized (RHS)
Source: PPPC
HAWKINS WRIGHT
Meanwhile, pulp supply remains very tight…
15
20
25
30
35
40
45
50
55
Wo
rld
-20 p
rod
ucer
sto
cks
BSKP BHKP
Source: PPPC, Pulpwatch
World-20 Producer inventories, days of supply
HAWKINS WRIGHT
Outlook for Market Pulp – June 2017
AFVPDivonne-les-Bains
Pierre BachHawkins Wright Ltd
• Setting the stage…
• So what happens next?
• Market strength further afield?
HAWKINS WRIGHT
W-20 BCP demand growth, 2017 v 2016YTD, thousand tonnes and y-o-y%
Source: Hawkins Wright, PPPC
-3.7%
-0.7%
11.9%
3.2%
4.5%
1.1%
7.6%
17.7%
4.9%
-400 -200 0 200 400 600 800
West Europe
Latin America
Oceania
Japan
East Europe
North America
Other Asia/Africa
China
TOTAL
(thousand tonnes)
HAWKINS WRIGHT
BUT… new capacity does not mean…More production!
Chenming
Eldorado
Ilim
Maranhao
MDP
OJI
Guaiba
Klabin
Oki line 1
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1,500
1,600
1,700
1,800
1,900
2,000
2,100
2,200
Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16
Gre
en
field
cap
ac
ity (m
illion
s tp
a)
(00
0s
t)
BSKP
BHKP
HAWKINS WRIGHT
…new capacity does not mean…Lower prices!
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
0
100
200
300
400
500
600
700
800
900
1,000
Gre
en
field
cap
ac
ity (m
illion
tpa)
Pu
lp p
ric
es
US
$/t
(c
if C
hin
a)
NBSK cif China
BEKP cif China
Valdivia
APP Guangxi
Rizhao
Tres
Lagoas
Fray
BentosMucuri
Nueva
Aldea
Santa Fe
Veracel
APP
Hainan
Chenming
Zhanjiang
Kerinci
PL3
Maranhao
Montes
del Plata
Eldorado
OJIIlim
Guaiba
Klabin
OKI
Line 1
Mercer
Stendal
HAWKINS WRIGHT
Outlook for Market Pulp – June 2017
AFVPDivonne-les-Bains
Pierre BachHawkins Wright Ltd
• Setting the stage…
• So what happens next?
• Market strength further afield?
HAWKINS WRIGHT
Market pulp capacity growthannual and cumulative
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
An
nu
al c
ha
ng
e in
cap
ac
ity (m
illion
ton
nes
)T
ota
l c
ap
ac
ity (
mil
lio
n t
on
nes
)
Annual change in BCP capacity
BSKP
BHKP
Illustration of
supply growth
based upon
existing capacity
HAWKINS WRIGHT
Year-on-year growth in market pulp demandChina vs ROW
-3,000
-2,000
-1,000
1,000
2,000
3,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Th
ou
san
d to
nn
es
China
Rest of world
China 10yr avg: +1.2Mt/y
ROW 10yr avg: -0.2Mt/y
Source: Hawkins Wright
HAWKINS WRIGHT
0
50
100
150
200
250
300
350
400
1990 1995 2000 2005 2010 2015
Mil
lio
n t
on
nes
Newsprint Mechanical WoodfreeSanitary Carton PackagingOthers
0
50
100
150
200
250
300
350
400
1990 1995 2000 2005 2010 2015
North America CEPI
Japan East Europe
Middle East & Africa Latin America
Other Far East China
Global P&B productionby region and by sector
Source: Hawkins Wright
HAWKINS WRIGHT
Conclusions
• After a hiatus of nearly 10 years, global paper and board demand is once again growing driven by the tissue, packaging and specialties sectors.
• Market pulp demand is taking a growing share of the furnish, supported by strong demand growth for virgin fibre content tissue and through the displacement of white recovered fibre .
• A surge in new market pulp capacity promises a period of oversupply through 2018.
• There are multiple ways the market will rebalance during 2018
Inefficient assets will close
More competitive pulp prices accelerates growth through substitution RCF/virgin, or use in dissolving pulp as an extender…
• Thereafter, there are growing signs that the market may become under-supplied
There are no confirmed major capacity expansions post 2018.
• Arauco MAPA, Eldorado 2 and UPM Uruguay are all possible, not yet confirmed.
Supply may be restricted on the back of fibre constraints, especially in South East Asia; woodchip supply from Indonesia, Thailand, Vietnam, South Africa, Australia have all peaked (and Chile possibly as well)
More paper grade pulp capacity to convert to dissolving pulp? (2Mt/y+ of Viscose capacity coming online in next 5 years)
Thank you for your attention!