A number of factors have affected demand for paper and board over the last decade, according to panelists at the 2019 Paper & Plastics Recycling Conference Europe session Sector Analysis: Paper & Board, Nov. 5. Additionally, global recovered fiber flows have changed considerably since China introduced quotas and quality restrictions on imports of recovered fiber in 2018.
David Powlson, director of Poyry Management Consulting, Finland, said the 2010s have been an eventful decade for the paper and board sector. Factors as varied as the introduction of the iPad in 2010, the Chilean earthquakes, tensions in Russia and Ukraine, China’s recovered fiber import changes, vaping and Brexit have affected the sector.
Despite these changes, Powlson said paper recycling has remained important. “The amount of paper recycled over the last decade globally is equivalent to the size of a forest the size of the entire EU. If we didn’t recycle paper, we would need to harvest a forest the size of Sweden each year.”
He noted that world demand for paper and board is projected to grow by 1.2 percent annually, reaching 489 million metric tons by 2030. “Sometimes we forget that we are working in a growth industry,” Powlson added.
While one-third of paper production consists of writing papers and graphic papers, he said the growth in paper and board production is centered around packaging, with Chinese demand projected to increase, while demand in North America and Western Europe are projected to remain flat.
Given China’s growth demand and its current restrictions on recovered fiber imports, Powlson said the country has five possible options for sourcing fiber: planting and using more trees, imports of wood, imports of recycled pulp, imports of recovered paper and more domestic recovery of paper. A blend of the above solutions likely will occur, Powlson added.
Recycling rates are understated for China and overstated for Europe, he said, adding that the collection rate for China was broadly the same as Europe’s. He said that while China’s volume of recovered paper collected will increase, its collection rate won’t. The European Paper Recycling Council (EPRC) reports a 72.5 percent recycling rate for the region.
Powlson said China can’t stop its imports of recovered paper easily without creating significant effects on price and availability of packaging grades. However, he added that Poyry does believe the Chinese government has solutions in place for increased imports of wood chips, pulp and recycled pulp grades.
Christine Rossberg, also of Poyry, said pulp is used to produce 44 percent of the paper in Europe, with Finland and Sweden being Europe’s largest producers.
Numerous pulp production projects have been announced for 2025, with 70 percent of this capacity being installed in the Nordic countries, she said. Metsa plans to invest in a kraft mill that uses softwood and hardwood, while Finnpulp will invest in a softwood pulp mill. Sveza, a Russian plywood producer, plans a kraft mill that will use softwood and hardwood.
As of 2018, 4.76 million metric tons of graphic paper capacity in Europe had been converted to produce packaging, Rossberg said. By 2029, that number will grow by another 1.5 million metric tons to 6.24 million metric tons, she noted. “We have to watch that it doesn’t overshoot the target.”
Bill Moore of Moore & Associates, Atlanta, said world recovered paper demand has been flat to down over the last 10 years, with Europe’s exports declining a bit more than the United States’.
Paper and board production in the U.S. peaked at 105 million tons in 1999, he said. Production has since declined by 28 percent to reach an expected 2019 level of 75 million tons. A major part of the decrease is in newsprint and printing/writing papers, which are still declining, Moore explained. However, the corrugated box business in the U.S. is growing after 20 years of limited growth thanks to e-commerce.
In 2017, most U.S. recovered fiber exports—60 percent—were shipped to China, while 18 percent went to India, Moore said. However, U.S. exports to China fell to 33 percent in the first seven months of 2019.
Moore said the trend in average annual old corrugated container (OCC) pricing in North America has been upward; however, supply no longer dries up the way it used to in response to low pricing, which keeps pricing at the bottom, he explained.
The U.S. has been adding containerboard capacity, which has led to concerns about excess capacity, though Moore said a number of these projects, including CorrVentures and Crossroads Paper, appear to be in question. Many of these mills plan to use some mixed paper furnish in addition to OCC, he said, which will cause the U.S. board industry to more closely resemble that of Europe’s.
Powlson advised shifting away from producing mixed paper in Europe, however, saying there were “inherent risks in collecting more and more mixed paper.”
Moore said manufacturers have shift away from using recycled content in tissue, noting that cost to process office pack into tissue is a factor as is declining use of uncoated freesheet. He added that tropical pulp is widely available and that mills “love” to use that material.
Powlson added that many of Europe’s new tissue mills have been installed by Italian manufacturers that prefer to use virgin material in their tissue production.
The 2019 Paper & Plastics Recycling Conference Europe was Nov 5-6 in Barcelona, Spain. The event is organized by Recycling Today Events.