Pulp and paper industry review in 2023: containerboard, printing and writing paper, pulp

The final performance of the global economy in 2023 is the result of a delicate interplay of global events and policy changes, leaving many uncertain about its future trajectory. These developments have profound implications for various industries, including the pulp and paper industry, impacting factors such as price and demand patterns. As the New Year approaches, let's take a look back at the performance of different pulp and paper types throughout the year.

Containerboard

Containerboard, the dominant major paper type in the industry, continues to maintain its dominance, accounting for approximately 39% of annual capacity. Since 2020, the compound annual growth rate (CAGR) has been 3.67%. This is driven by the surge in demand that will sweep the industry in 2020 and 2021. Various factors, from the increase in sustainability initiatives, to the exponential growth of the e-commerce industry during the COVID-19 pandemic lockdown, can be attributed to this growth.

Although containerboard capacity is still unrivaled compared to other major paper grades, it does experience a slight slowdown in 2022. So, how is this leading paper grade performing in 2023? Quarter 1 U.S. containerboard production in 2023 is down 10% from Quarter 1 in 2022, according to AF & PA. Q3 production is down just 1% from the same period last year, but it's down 8% from nine months later. Additionally, Quarter 1 paper mill inventories in 2023 fell below 400,000 tons for the first time since September 2021.

The containerboard production company's report detailing the containerboard industry includes:

Smurphy Kappa observed that the price of containerboard in Europe has declined in the first half of this year compared to the peak level in the first half of 2022. This decline is attributed to lower year-on-year prices for recycled fibres and energy, as well as due to reduced demand from corrugated box producers. On average, in the first six months of 2023, the price of imitation kraft paper fell by 200 euros/ton compared to the same period last year, while the price of kraft paper fell by 172 euros/ton.

International Paper reported weak demand for corrugated boxes and containerboard in North America in the second quarter of 2023. The company's earnings in North America declined due to weak demand for corrugated boxes and containerboard, continued low selling prices, and inventory savings by customers. https://www.risedongsheng.com/

However, it is worth noting that in North America, most major producers stopped work during the year to "adjust" their various inventories. This included shelving several containerboard expansion projects. Now, these projects appear to be moving forward and the situation appears to have returned to manageable market levels.

Printing and writing paper

Printing and writing paper accounts for 13% of global pulp and paper capacity, with a compounded annual growth rate of -1.68% since 2020. Despite a short-term increase in capacity output in 2022 due to a slight economic recovery and the easing of COVID-19 pandemic restrictions, the printing and writing paper market has been declining since the beginning of 2013.

However, unlike many other countries, some Asian countries such as China and India are seeing significant growth in printing and writing capacity. For example, ITC, BILT Graphic Paper Products and Andhra Paper in India have increased the price of various papers by INR 1,000-3,000 per tonne in response to growing demand and a shortage of supply. The price increase reflects the booming market and the need to meet growing demand in the region.https://www.risedongsheng.com/

The increase in demand for printing and writing paper in the region is mainly driven by the growth of the booming education sector and e-commerce industry. The Paper Manufacturers Association of India reported that imports of uncoated printing and writing paper jumped by 214% in Quarter 1 this year, with Indonesia, Singapore and China becoming the largest import sources of this paper.

tissue paper

Although the tissue industry accounts for only about 9% of global pulp and paper production capacity, it is currently one of the fastest growing industries in the industry. Since 2020, its compound annual growth rate (CAGR) has reached an impressive 4.25%.

A closer look at the data reveals a significant increase in capacity in specific countries. For example, China's capacity increased by around 3 million tonnes in the first half of 2023 compared to the same period in 2022. Similarly, Turkey's capacity increased by almost 153,000 tonnes and Mexico's by around 149,000 tonnes. These three countries stand out among the top 10 producers in terms of capacity growth in 2023 compared to the previous year.

This capacity growth, coupled with positive reports from major tissue paper producers, highlights the bright outlook for the industry. Companies such as Cascades, The Navigator, Kimberly-Clark, and Clearwater Paper have all reported encouraging results, with significant growth in tissue paper sales and volumes. These developments further solidify the tissue paper industry's position as a booming part of the global pulp and paper industry.https://www.risedongsheng.com/

Market pulp

Commercial pulp is the second largest major category in the pulp and paper industry, accounting for about 16% of global capacity. With a compounded annual growth rate of 1.87% since 2020, it is the only major category in Latin America to replace the leading production in the Asia-Pacific region. In South America, BEK pulp is being used more and more frequently. Some companies in the region are now switching to 100% BEK pulp to produce a wide range of products. While companies and producers in Western Canada and other Scandinavian countries prefer to use NBSK pulp.

The Brazilian Forestry Association (Ibá) reports that total Brazilian pulp exports reached 9.10 million tonnes between January and June 2023, an increase of 1.5% compared to the same period in 2022. It is worth noting that exports of pulp to China increased significantly by 25.4%, while exports to North America also increased by 19.9%. Commodity pulp, an important material in the papermaking process, has been showing impressive growth since 2009. Forecast 2023 will end with the largest annual capacity growth, with more than 4 million tonnes of new capacity added.

Latin America plays a crucial role in driving the phenomenal growth of the pulp market thanks to a series of new pulp projects announced in the region. These new build projects have the potential to have a significant impact on the global pulp market, resulting in a variety of outcomes. One potential impact is increased pulp price volatility as the market absorbs the additional capacity from these projects. As more players enter the market and competition intensifies, there may be an oversupply or under-supply situation, leading to increased price volatility.