Post on 07-Jun-2020
Outlook and discussion: market trends and opportunities in the Middle East
Moderated by:
Abdulla Zaid
Economist,
Fastmarkets RISI
Mohnish Rikhy
President
UCIC
Sami AlSafran
CEO
Middle East
Paper Company
Raed Mahmoud Al
Khalid
Supply Chain
Director
Al-Watania Paper
Products Inc.
Dr. Fady Gemayel
President
Arab Federation for
Paper, Printing and
Packaging Industries
(AFPPPI)
Fastmarkets RISI MENA Paper Packaging Outlook and Discussion
Abdulla Zaid
Economist, Paper Packaging
Forces shaping the paper industry
2020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion 2
e-Panelists
Fady Gemayel
32020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
Sami SafranMohnish Rikhy Raed Al Khaled
Agenda
• Demand outlook
• Import trends
• Capacity and production costs
42020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
A deep dive into demand outlook
52020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
Paper packaging growth outlook
Containerboard: 56%
Boxboard: 30%
Kraft and specialty paper:
14%
6
Substitution effect
Income effect
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000
CA
GR
(201
4 -
20
18
)
Consumption (thousand tonnes)
Boxboard
Kraft and specialty paper
Early movers
Infancy
Expansion
Saturated
Containerboard
Paper packaging grades
2020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
Growth potential is strong
17Kilograms per capita
Paper packaging global demand
15 kg lower than global,
Latin American and Far
East Asian averages
7
Substitution effect
Income effect
2020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
Demand outlook is different within MENA
Paper packaging regional demand
1. UAE: 79 kg / person
2. Israel: 65 kg / person
3. Saudi Arabia: 46 kg /
person
.
.
.
9. Egypt: 17 kg / person
8
Substitution effect
Income effect
Top performers
2020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
Brace yourselves for an import wave
92020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
Europe dominates the MENA imports market for recycled linerboard
90%
0
100
200
300
400
500
600
700
800
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Thousa
nd t
on
ne
s
Asia Rest of world Europe
European share of imports
10
European exports account for
an average of 91% of MENA
imports from 2008-2018
Asian exports maintained an
average of 7%
2020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
The lion’s share of MENA recycled liner imports in 2016 came from Spain
48%
Spanish share of
European imports
Spanish recycled liner exports to
MENA reached 330,000 tonnes
in 2016, or 48% of European
LNR exports to MENA
Polish recycled liner exports to
MENA peaked in 2016 at 61,000
tonnes, or a 9% share
11
0
100
200
300
400
500
600
700
800
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Thousa
nd t
on
ne
s
Spain Poland Italy Belgium Germany Turkey Rest of Europe
2020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
Weak European demand and growing capacity signal acceleration in recycled liner net exports
6.7%
2019 | Fastmarkets | MENA Containerboard Market Outlook
-400
-200
0
200
400
600
800
1,000
1,200
1,400
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Thousa
nd t
on
ne
s
Change in European capacity Change in European demand Change in European net exports
European capacity-demand
gap growth (2019-2021)
European capacity will grow
faster than demand (2.7% vs
3.3%) annually
Weak European demand is
expected to widen demand-
capacity gap and increase
recycled liner net exports
A portion of the European
exports is expected to find its
way to the MENA markets
12
Imports still provide headwinds for domestic producers of recycled linerboard
32%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
500
1,000
1,500
2,000
2,500
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Thousa
nd t
on
ne
s
Imports Domestic production Imports share (R)
Imports share of demand
Import waves in 2012 and
2016
Expected import wave in 2020:
Imports share of demand =
40%
13
Imports and domestic production as shares of demand
2020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
Musical chairs dynamic: unloading excess recycled liner tonnage during weak European demand environment
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
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
2008 =
1.0
Thousa
nd t
on
ne
s
European recycled liner exports to MENA European recycled liner market condition index (R)
When growth music stops
European market condition
index gives indication of
market strengthening and
weakening (2008 = 1.0)
Weak recycled liner demand
and oversupply in Europe are
the catalyst of MENA market
volatility
14
Excess MENA
imports
2020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
Algeria and Saudi Arabia absorbed most of the European recycled exports
Less than 15,000 tonnes / year
15,000–50,000 tonnes / year
50,000–100,000 tonnes / year
More than 100,000 tonnes / year
152020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
GCC-TSAIP antidumping investigation and results: reshaping MENA trade outlookGrades under investigation HS Code Definition Result: GCC antidumping duties?
Kraftliner48041100 Kraftliner, uncoated, unbleached, rolls/sheets No
48041900 Kraftliner, uncoated, bleached, rolls/sheets No
Kraft and specialty paper
48043100 Kraft paper uncoated, unbleached, wt nov 150 g/m², NESOI No
48043900 Kraft paper, uncoated, bleached, wt nov 150 g/m², NESOI No
48044100Kraft paper/paperboard, uncoated, unbleached, wt 150 g/m² or
ov, nov 225 g/m², rolls/sheets, NESOINo
Semichemical medium 48051100Semichemical fluting paper (corrugating medium), uncoated,
rolls/sheetsYES
Recycled medium
48051910Fluting paper of recycled liner board weighing
150 g/m² or less
YES, except fluting paper of recycled liner
board weighed less than 105 g/m²
48051920Fluting paper, NESOI, weighing over 150 g/m², uncoated, in
rolls/sheets,YES
48051990 Other fluting paper YES
Testliner
48052400Testliner, uncoated, wt nov 150 g/m², rolls/sheets, spec ch48-
note3
YES, except testliner paper of recycled liner
board weighed less than 105 g/m²
48052500Testliner, uncoated, wt ov 150 g/m², rolls/sheets, spec ch48-
note4YES
162020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
Final dumping margin as a percentage of the CIF value
Country Company Final dumping margin
SpainSAICA 24.6%
Other companies 31%
Poland All companies 34%
172020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
18
Resurfacing:Supply outlook & market overview
2020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
European imports are the main driver in MENA production volatility
68.8%
60%
65%
70%
75%
80%
85%
0
500
1,000
1,500
2,000
2,500
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Thousa
nd t
on
ne
s
Capacity Production Operating rates (R)
Average operating rate
(2019-2021)
Capacity growth is expected to
surpass demand, leading to
lower operating rates
Imports are expected to
increase its share of demand
from 31% in 2018 to 41% in
2020, providing further
downward pressure on
operating rates
19
Recycled containerboard production, capacity and operating rates
2020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
Tight demand capacity gap, pushing for capacity expansion
5.3%
0
100
200
300
400
500
600
700
800
900
1,000
0
500
1,000
1,500
2,000
2,500
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Thousa
nd t
on
ne
s
Thousa
nd t
on
ne
s
Capacity Demand Imports (R)
Capacity growth (2018-2021)
Capacity expansion fuelled by
• Growing future demand
potentials
• GCC antidumping duties
20
Recycled containerboard Imports, demand and capacity
2020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
Large demand capacity deficit, pushing for import influx
64%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
0
500
1,000
1,500
2,000
2,500
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Thousa
nd t
on
ne
s
Thousa
nd t
on
ne
s
Capacity Demand Imports (R)
Imports share of demand
21
Boxboard Imports, demand and capacity
2020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
Domestic production supplies less than 20% of the demand
83%
0
200
400
600
800
1,000
1,200
0
200
400
600
800
1,000
1,200
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Thousa
nd t
on
ne
s
Thousa
nd t
on
ne
s
Capacity Demand Imports (R)
Imports share of demand
22
Kraft and specialty paper Imports, demand and capacity
2020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
0
50
100
150
200
250
300
350
400
GCC NorthAfrica
OtherMiddleEast
SouthernEurope
EasternEurope
WesternEurope
GCC NorthAfrica
OtherMiddleEast
SouthernEurope
EasternEurope
WesternEurope
US
dolla
rs p
er
tonne
Total fiber Chemicals Energy Labor Other Cash cost to Dubai, UAE Cash cost to Port Said, Egypt
Recycled medium
Cost of production: how competitive are the MENA containerboard producers?
23
Recycled linerboard
2020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
0
50
100
150
200
250
300
350
400
450
500
GCC NorthAfrica
OtherMiddleEast
SouthernEurope
EasternEurope
WesternEurope
GCC NorthAfrica
OtherMiddleEast
SouthernEurope
EasternEurope
WesternEurope
US
dolla
rs p
er
tonne
Total fiber Chemicals Energy Labor Other Cash cost to Dubai, UAE Cash cost to Port Said, Egypt
Uncoated recycled board
Cost of production: how competitive are the MENA boxboard producers?
24
Coated multi-ply
2020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
0
200
400
600
800
1,000
1,200
GCC NorthAfrica
OtherMiddleEast
SouthernEurope
EasternEurope
WesternEurope
GCC NorthAfrica
OtherMiddleEast
SouthernEurope
EasternEurope
WesternEurope
US
dolla
rs p
er
tonne
Total fiber Chemicals Energy Labor Other Cash cost to Dubai, UAE Cash cost to Port Said, Egypt
Bleached kraft and specialty paper
25
Unbleached kraft and specialty paper
2020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion
Cost of production: how competitive are the MENA Kraft and specialty paper producers?
Thank you
26
MIDDLE EAST & NORTH AFRICA PAPER
PACKAGING OUTLOOK
risi.com/MENApackaging
2020 | Fastmarkets | MENA Paper Packaging Outlook and Discussion