Global Graphic Paper Outlook - Fastmarkets RISI...Global demand for printing & writing papers began...
Transcript of Global Graphic Paper Outlook - Fastmarkets RISI...Global demand for printing & writing papers began...
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Global Graphic Paper Outlook
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 1
Beth Lis
Vice President, Asia Paper and Packaging
Key issues in global markets
GDP growth
The global outlook for 2019 is a bit weaker than in 2018, with
softening in many regions followed by slight reacceleration in
2020. Risks abound, especially related to global trade.
Secular decline in paper demand
Rapid losses in paper demand seem to be spreading and
possibly accelerating in some regions.
Trade patterns
Traditional trade patterns are shifting both regionally and
globally due to price differentials and supply cuts.
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 2
Shifting paper supply
Withdrawals and conversions of capacity to packaging grades
are occurring in many regions, with a few projects announced
for Asia.
2
2
Global economy growing moderately, with heightened risks
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 3
Annual real GDP growth
3.7% 3.7% 3.4% 3.6%2.4%
17 18 19 20 21
GLOBAL
6.9% 6.6% 6.0% 6.1% 5.1%
17 18 19 20 21
CHINA
1.1% 1.0%1.6%
2.4%1.4%
17 18 19 20 21
LATIN AMERICA
2.5%1.8%
1.1% 1.4% 0.3%
17 18 19 20 21
EURO AREA
2.2% 2.9%1.8% 1.9% -0.1%
17 18 19 20 21
USA
4.8% 4.9% 4.7% 4.7%3.5%
17 18 19 20 21
NON-CHINA ASIA
3
Global demand for printing & writing papers began decline in 2008, newsprint in 2001
-1.9%Annual decline for P&W papers in 2008-
2020
2019 | Fastmarkets | RISI Global Graphic Paper Outlook
10
15
20
25
30
35
40
90
95
100
105
110
115
120
Mill
ion
ton
ne
s
P&W demand Newsprint demand (R)
-6.0%Annual decline for newsprint in 2008-
2020
4
3
P&W demand growth in 2019-2020
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 5
Thousand tonnes, percentage per year
-1,212 (-3.8%)
-15 (-0.1%)
-503 (-0.6%)
-102 (-4.7%)
-13 (-0.3%)
41 (0.9%)
34 (0.3%)
-1,756 (-4.8%)
-3.53Million tonnes
-1.8%Average percent change
Two-year total global growth
5
Percentage change in global demand by grade
GLOBAL P&W DEMAND DECLINING STEADILY
The largest drops are coming in the mechanical grades that are most exposed to mass-market publishing end-
uses and mature economies.
2014 2015 2016 2017 2018 AVERAGE
Uncoated woodfree -1.0% -0.7% -0.8% 0.4% -0.3% -0.5%
Uncoated mechanical -3.8% -5.9% -1.6% -4.7% -4.2% -4.1%
Coated woodfree -0.6% -2.3% -3.4% -1.1% -6.1% -2.7%
Coated mechanical -3.7% -5.0% -6.1% -2.6% -3.5% -4.2%
Printing & writing -1.6% -2.2% -2.2% -0.9% -2.5% -1.9%
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 6
4
Asian printing & writing paper markets
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 77
400
500
600
700
800
900
1,000
4,000
4,500
5,000
5,500
6,000
6,500
7,000
7,500
8,000
8,500
US
do
llars
pe
r to
nn
e
Re
nm
inb
i p
er
ton
ne
CWF E China (L) UWF E China (L)
CWF SE Asia (R) UWF SE Asia (R)
BHKP China from LAmer (R)
Woodfree paper prices will see a mild recovery after falling over the second half of 2018
PRICES DECREASED IN THE
SECOND HALF OF 2018
UNDER THE WEIGHT OF
• Supply/demand imbalances
• Declining pulp prices
RECENT RECOVERY
ATTRIBUTABLE TO
• Low margins
• Better matching of output to
demand
• Inventory restocking
82019 | Fastmarkets | RISI Global Graphic Paper Outlook 8
5
Asian P&W demand will continue to slide in 2019-2020
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 9
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
0
5
10
15
20
25
30
35
40
45
50
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Mill
ion
to
nn
es
UWF 0.6%* UMe -4.4%*
CWF -2.1%* CMe -3.4%*
Total P&W % change -0.6%*
* CAGR 2019-2020.
NO BREAK FROM E-MEDIA
COMPETITION
• And decelerating economy does not help
UNCOATED WOODFREE PAPER
ONLY GRADE WITH POSITIVE
GROWTH
• Supported by end uses, including copy
paper and books/teaching supplies
• Is the dominant grade in markets still seeing
growth
RISKS
• Slower regional/global economic growth
• Trade war
9
-15%
-10%
-5%
0%
5%
10%
ChinaJapanIndiaSouth Korea, Taiwan, Hong Kong, SingaporeIndonesia, Thailand, Malaysia, PhilippinesOther
Across Asia, a few markets still growing, but mature markets continue to slide
CHINA CONTINUES TO
SHRINK
• Only UWF growing, while other
grades hurt by e-media competition
JAPAN RECOVERS FROM
SHARP DROP IN 2018 BUT
REMAINS WEAK
• UWF getting some support from
printing related to the era change
with the new emperor
• Other mature markets continue to
retreat
INDIA AND OTHER LESS
MATURE MARKETS SEE
POSITIVE GROWTH
102019 | Fastmarkets | RISI Global Graphic Paper Outlook 10
6
Asia’s uncoated woodfree paper market is in state of oversupplyYear-to-year change and percent
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 11
65%
70%
75%
80%
85%
90%
95%
-500
0
500
1,000
2013 2014 2015 2016 2017 2018 2019 2020
Th
ou
sa
nd
to
nn
es
China UWF market
Demand Capacity Operating rate
IMBALANCE GREW IN 2018
• A few projects and assumed grade shifts
• Weak demand
SOME CAPACITY INCREASE IN CHINA
IN 2019 WHILE DEMAND REMAINS
WEAK
• Its about the economy
BALANCE SEES MODEST
TIGHTENING
• Dependent on capacity assumptions
• Changes in trade will not be a major factor
65%
70%
75%
80%
85%
90%
95%
-500
0
500
1,000
1,500
2013 2014 2015 2016 2017 2018 2019 2020
Tho
usand
ton
ne
s
All Asia UWF market
Demand Capacity Operating rate
11
Following the upturn in Asian uncoated woodfree net exports in 2018, we will see a very modest gain in 2019-2020
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 12
0
1,000
2,000
3,000
4,000
5,000
2015 2016 2017 2018 2019 2020
Th
ou
sa
nd
to
nn
es
Net imports by net importers
Japan Other Asia
0
1,000
2,000
3,000
4,000
5,000
2015 2016 2017 2018 2019 2020
Th
ou
sa
nd
to
nn
es
Net exports by net exporters
Indonesia China Thailand & India
0
500
1,000
1,500
2,000
2015 2016 2017 2018 2019 2020
Th
ou
sa
nd
ton
ne
s
Asian net exports
EXPORTS HELD BACK BY
• Weak global demand
• Capacity conversions in Indonesia
SOME GAINS FOR CHINA DUE TO
NEW CAPACITY
IMPORTS CONTINUE TO
TRACK LOWER
• Less demand
12
7
Asian coated woodfree: A struggle to keep up with drop in demandYear-to-year change and percent
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 13
0
500
1,000
1,500
2,000
2,500
3,000
2013 2014 2015 2016 2017 2018 2019 2020
Th
ou
sa
nd
to
nn
es
Asian trade balance
Net exporters Net importers Net exports
DEMAND HAS INCREASED ONLY
ONCE IN THE LAST FIVE YEARS
RAISING NET EXPORTS NOT AN
OPTION
• Weak global demand
• Tariffs on shipments to US and EU for several
suppliers
80%
82%
84%
86%
88%
90%
-800
-600
-400
-200
0
200
400
2013 2014 2015 2016 2017 2018 2019 2020
Th
ou
sa
nd
to
nn
es
Asian CWF market
Demand Capacity Operating rate
13
US printing & writing markets
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 1414
8
Most end-use indicators in the US are on a downward trajectory
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 15
4
5
6
7
8
9
10
11
45
55
65
75
85
95
105
115
Bill
ion
s o
f p
iece
s
US postal volumes
First classMarketing mailPeriodicals (R)
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
Percent change in magazine ad pages
Source: PIB & Fastmarkets RISI; includes Sunday magazines and the effect of discontinued print
editions.
-20%
-15%
-10%
-5%
0%
5%Percent change in catalog circulation
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
580
600
620
640
660
680
700
720
2013 2014 2015 2016 2017 2018
Un
it s
ale
s in
th
ou
sa
nd
s
Unit sales of printed books
Unit Sales Percentage change (R)
Source: NPD Bookscan, covers 80-85% of print sales.
15
Real dollar sales for US commercial printing
BIG DECLINE IN 2017, WHILE BETTER PERFORMANCE IN 2018 HELPED TO
MODERATE DECLINE IN PAPER DEMAND
162019 | Fastmarkets | RISI Global Graphic Paper Outlook
5,000
5,500
6,000
6,500
7,000
7,500
8,000
8,500
Mill
ion
s o
f re
al 2
00
3$
pe
r m
on
th
MONTHLY
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
ANNUAL GROWTH
Recession
16
9
North American demand for multi-purpose cut size business papers
-3.3%Trend since 2006
2019 | Fastmarkets | RISI Global Graphic Paper Outlook
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
0
1,000
2,000
3,000
4,000
5,000
6,000
Th
ou
sa
nd
to
nn
es
North American demand % change (R)
-1.3%Decline in 2018 after 6.7% drop in 2017
17
US printing & writing demand
DEMAND TO ACCELERATE DOWN AFTER SLOW DECLINE IN 2018
US P&W demand dropped only 2.4% in 2018 after falling 7.7% in 2017. Most grades are expected to decline
more quickly in 2019/2020.
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 18
DEMAND
THOUSAND TONNES2017 2017 %CH 2018 2018 %CH
FORECAST
20192019 %CH
FORECAST
20202020 %CH
Coated woodfree 3.525 -4.5% 3,451 -2.1% 3,327 -3.6% 3,201 -3.8%
Coated mechanical 2,118 -12.2% 2,115 -0.1% 2,016 -4.7% 1,885 -6.5%
Uncoated woodfree 6,991 -6.3% 6,900 -1.3% 6,720 -2.6% 6,545 -2.6%
Uncoated mechanical 2,596 -11.4% 2,473 -4.7% 2,328 -5.9% 2,174 -6.6%
Total P&W 15,230 -7.7% 14,868 -2.4% 14,326 -3.6% 13,791 -3.7%
-1.7%
10
Western European printing & writing markets
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 1919
Western European P&W demand will remain in the doldrums in 2019-2020
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 20
-6%
-5%
-4%
-3%
-2%
-1%
0%
0
4
8
12
16
20
24
2014 2015 2016 2017 2018 2019 2020
Mill
ion
to
nn
es
UWF -3.8%* UMe -4.0%*
CWF -6.9%* Cme -5.0%*
Total P&W % change -4.8%*
* CAGR 2019-2020.
ACCELERATED DECLINE IN 2018 AS
ECONOMY WAS PAST PEAK
• Also affected by higher prices
SUBSTITUTION BETWEEN GRADES
LEFT MECHANICAL GRADES A
LITTLE BETTER OFF THAN
WOODFREE IN 2017-2018
• And slightly less cost pressure
SIMILAR RATE OF DECLINE IN 2019-
2020
• Total volume drop of 1.8 million tonnes over
the two years
20
11
Trade issues
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 2121
Update of key graphic paper tariffs
into USA
Coated freesheet in sheets from China and
Indonesia, 2010
In place since 2010, no recent changes
SC Ume from Canada, 2015
US DOC revokes and refunds back to August 2015 after
petition by Verso, the sole US producer. Verso received $42
million from Canadian mills in the settlement.
Uncoated freesheet cut size paper, 2015
Navigator wins battle in 2018 and sees tariff drop to less than
2% after a new investigation raised it from 8% to 37%. Ideal
opportunity for Navigator to expand in the USA with GP moving
out.
Newsprint and certain other Ume from Canada,
2018
US DOC nullified all tariffs and will refund all monies collected
after ITC commissioners unanimously ruled no harm done to
US industry by Canadian imports.2019 | Fastmarkets | RISI Global Graphic Paper Outlook 2222
12
Tariffs on US imports of coated woodfree paper in sheets
CVD ADD COMBINED
APP Indonesia 17.94% 20.13% 38.07%
APP China 19.46% 7.6% 27.06%
Sun Paper China 202.84% 135.73% 338.67%
All other China 19.46% 135.83% 155.29%
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 23
PROHIBITIVELY HIGH TARIFFS ON MANY CHINESE PRODUCERS
Tariffs have shifted sources of US imports from China and Indonesia to South Korea and Europe. There are no
tariffs on rolls, but imports of rolls are still modest.
Tariffs on US imports of cut size copy paper
CVD ADD COMBINED
Australia Paper 222% 222%
Suzano 17%* 17%
Navigator 2%** 2%
APRIL Indonesia 4%* 66.81%*** 70.81%
APP Indonesia 109% 17% 126%
Asia Symbol (China) 7% 84% 91%
APP China 7% 149% 156%
UPM China 177% 149% 326%
Sun Paper China 177% 149% 326%
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 24
TARIFFS RANGE FROM 2% TO 326%
Effects of tariffs waning as US operating rates declined and imports from non-tariffs counties exploded in 2018.
Because US prices remain high relative to other world regions, major capacity exits are scheduled for 2019, and
Brazilian, Portuguese and Indonesian producers remain in the market, imports are likely to rise again.
* Revised down April 2018.
** Revised down October 2018.
*** Revised up March 2019.
13
US offshore imports of P&W paper are supplying a growing share of US demand
15%Share of US p&w demand supplied from
offshore
2019 | Fastmarkets | RISI Global Graphic Paper Outlook
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
0
1,000
2,000
3,000
4,000
5,000
6,000
Th
ou
sa
nd
to
nn
es
Offshore imports Share of US demand (R)
0%Decline in US offshore imports since the
recession ended in 2009, despite
numerous tariffs
52%Share of US market for coated sheets
supplied from offshore, despite tariffs on
China and Indonesia25
EU coated mechanical exportsOverall exports rose by more than 10% in 2018
2019 | Fastmarkets | RISI Global Graphic Paper Outlook
US prices higher than European prices
since weakening of the euro in 2014
Exports rising, primarily to the United
States, where closures have pushed
operating rates close to 100%
Tight market conditions in European
publication markets limiting gains
Europe exporting more to North America
due to high prices in the USA and more
than 11% reduction in capacity in 2018
All other regions in decline due to the
weakening in the economy and higher
paper prices
0.0
0.1
0.2
0.3
0.4
0.5
0.6
Africa Far East/Oceania
LatinAmerica
Middle East NorthAmerica
Mill
ion
to
nn
es
2017 2018
EU coated woodfree exportsExports declined 65,000 tonnes in 2018
0.0
0.1
0.2
0.3
0.4
Africa Far East/Oceania
LatinAmerica
Middle East NorthAmerica
Mill
ion
to
nn
es
2017 2018
26
14
Paper supply and demand balance
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 2727
282019 | Fastmarkets | RISI Global Graphic Paper Outlook
No more safe havens
China no longer the growth engine it
used to be
Packaging papers are becoming
oversupplied
Tissue and specialty papers offer little
volume for sufficient growth
28
15
Global P&W demand decline, cumulative 2018 to 2020Thousand tonnes
EXPECTED COATED DEMAND DROP
THROUGH 2020 ALREADY MORE
THAN MATCHED BY ANNOUNCED
CLOSURES!
• Massive 3.3 million tonne decline in coated
paper demand vs 5.0 million tonnes of
announced and expected shuts/conversions
• Many announcements in last two months
UWF BALANCE IS AT RISK
• Closures in US tightening market there
• But continued expansion of Asian UWF
threatens global balance
• No significant announced closures globally in
UME!! Some coming soon?
26
-157-302
-451
-995
-1365
-337
-754
-1132-984
-1,614
-2,144
-2,500
-2,000
-1,500
-1,000
-500
0
500
2018 2019 2020
UWF UME CME CWF
292019 | Fastmarkets | RISI Global Graphic Paper Outlook 29
Global coated woodfree paper machine shuts/conversions, 2018-2020
COMPANY MILL COUNTRY CAPACITY (TONNES/YR)
DATE COMMENTS
Scheufelen Lenningen Germany 120,000 CWF Q1 2018 Mill shift to packaging
SAPPI Maastricht Netherlands 160,000 CWF Q1 2018 Shift to packaging
Arjowiggins Besse-sur_Braye France 275,000 CWF Q1 2019 Mill closure
Arctic Paper Grycksbo Sweden 45,000 CWF Q1 2019 Shut PM7
Feldmuehle Uetersen Germany 80,000 CWF Q1 2019 Shut PM2
Lecta Condat France 230,000 CWF 2019 Convert a PM to specialty
StoraEnso Oulu Finland 1,080,000 CWF End of 2019-2020? Shut PM6, convert PM7 to CUK
Verso Jay USA 160,000 CWF Q1 2018 Shift to specialties
SAPPI Somerset USA 135,000 CWF Q2 2018 Shift to packaging
Verso Luke USA 408,000 CWF Q3 2019 Shut mill, listed capacity incudes specialties
Indah Kiat/APP Mojokerto Indonesia 245,000 CWF Q2 2019 Shift PM10 to packaging
Tjiwi Kimia/APP Mojokerto Indonesia 50,000 CWF H2 2019 Shift PM11 to packaging, but may be on hold
Nippon Paper Ind. Akita Japan 147,000 CWF Q2 2018 Shut coater No. 1
Nippon Paper Ind. Ishinomaki Japan 86,000 CWF Q2 2018 Shut coater No. 2
Mitsubishi Hachinohe Japan 120,000 CWF Q4 2018 Mill shut in November
Daio Paper Mishima Japan 150,000 CWF Q4 2019 PM N7 converting to kraft paper and paperboard
Nippon Paper Ind. Yufutsu Japan 88,000 CWF Q1 2020 Shut mill
3,579,000 CWF
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 30
Note: There are currently no major coated paper capacity expansions occurring globally.
16
Global coated mechanical paper machine shuts/conversions, 2018-2020
COMPANY MILL COUNTRY CAPACITY (TONNES/YR)
DATE COMMENTS
Burgo Verzuolo Italy 165,000 CME Q1 2018 PM8 shut
Kublier & Niethammer Kriebstein Germany 40,000 CME 2018 Shift to specialty grades
Arjowiggins Bourray France 73,000 CME Q1 2019 Shut PM1
UPM Plattling Germany 155,000 CME Q3 2019 Shut PM10
Burgo Verzuolo Italy 400,000 CME Q4 2019 PM9 conversion to containerboard
UPM/Blandin Grand Rapids USA 116,000 CME Q1 2018 Idle PM5
ND Paper Biron USA 103,000 CME Q3 2019 Shift PM25 to packaging
New-Indy Catawba USA 310,000 CME NA Potential conversion to packaging
Nippon Paper Ind. Fuji Japan 33,000 CME 2019 Shut PM11
1,395,000 CME
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 31
Note: There are currently no major coated paper capacity expansions occurring globally.
Global uncoated freesheet machine startups, 2018-2020
COMPANY MILL COUNTRY CAPACITY (TONNES/YR)
DATE COMMENTS
Ittihad Paper Abu Dhabi United Arab Emirates 325,000 Q4 2018; not started yet Non-integrated machine
Sun Paper Yanzhou, Shandong China 200,000 Q1 2018 Heavyweight grades including CFS, specialty
Shandong Chenming Shouguang, Shandong China 510,000 Q3 2018 Voith PM9 to focus on cut size
Shandong Chenming Shouguang, Shandong China 500,000 Q3 2018Machine converted from newsprint; four cut size sheeters ordered
Shandong Bohui Shandong China 600,000 Q1 2019PM 6 produces CM but can swing to UWF depending on demand and fiber availability
Shandong Bohui Shandong China 600,000 2020 PM ordered from Valmet
Sun Paper Yanzhou, Shandong China 450,000? 2020 Looking to place order
Malaysia Newsprint Industries
Mentakab Malaysia 250,000 2018-2020 Conversion from newsprint machine
Sirpur Paper Mills Adilabad India 124,000 2019 Restart mill now owned by JK paper
DSG Paper Bhanri India 171,000 2019 New PM
Tan Mai Konturn Vietnam 200,000 2020 New pulp and paper mill
3,330,000 total excluding Shandong
Bohui CM/UWF PM6
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 32
17
Global uncoated freesheet machine shuts and conversions, 2018-2020
COMPANY MILL COUNTRY CAPACITY (TONNES/YR) DATE COMMENTS
UPM Nordland Germany 200,000 Q3 2019 Convert PM2 to specialty
Flambeau River Park Falls USA 77,000 Q1 2018 Shut PM3
PCA/Boise Wallula USA 70,000 Q2 2018 Convert to packaging
GP Camus USA 215,000 Q2 2018 Shut PM
GP Port Hudson USA 630,000 Q2 2019 Shut mill, exit UFS business
IP Selma USA 213,000 2020 Delayed plans to convert to packaging
MONDI Merebank South Africa 75,000 Q3 2018 Shut PM
COPOMEX Anahuac Mexico 171,000 2019 Convert PM to containerboard
Shandong Bohui Shandong China 120,000 2019-2020 Shutting 12 old PMs when start new one
Pindo Deli/APP Karawang Indonesia 150,000 Q1 2019 Convert PM14 to packaging
Tjiwi Kimai/APP Mojokerto Indonesia 30,000 Q2 2019 Convert PM10 to packaging
Tjiwi Kimia/APP Mojokerto Indonesia 350,000 2019?Convert PM11 to packaging, but may be delayed due to potential new RCP contaminant limits in Indonesia
NIPPON Yufutsu Japan 144,000 2020 Shut mill
2,445,000 total shuts3,330,000 total expansions
885,000 net expansions
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 33
2019 | Fastmarkets | RISI Global Graphic Paper Outlook
Closure of uncoated freesheet PM3 & PM4
at Port Hudson, LA
• Removal of 630,000 tonnes by mid-March
• Complete exit of GP from white paper
• GP was fourth-largest producer of UWF
• After GP exit, 71% of the North American
industry will be controlled by three players
• The North American market will tighten briefly,
but imports will pick up and exports will fall,
while demand sinks 200,000-300,000 tonnes
per year, quickly restoring the balance
• Europe will benefit from more exports to USA
34
18
Global newsprint markets
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 3535
Global newsprint demand continues to plunge in 2019-2020Thousand tonnes
ASIAN DECLINE ACCELERATED
SHARPLY IN 2019
• Impact of higher prices
• China and India both saw drops
SLIDE MODERATES OVER NEXT
TWO YEARS
• Lower prices help
• Assumes better conditions in India and
China, although demand will still decline in
China
• But little evidence of this yet, so risk that
demand is even weaker
-517
-908
-404
-280
-383-334 -332
-229
-516-565
-519
-453
-322
-107-81 -73
-1,000
-900
-800
-700
-600
-500
-400
-300
-200
-100
0
2017 2018 2019 2020
Asia North America Europe Rest of world
-7.6%* -9.0%*
-6.9%* -5.7%*
* Percent change in global demand.
362019 | Fastmarkets | RISI Global Graphic Paper Outlook
19
0
100
200
300
400
500
600
700
800
900
Hong Kong 45 gsm China 45-48.8 gsm India 42 gsm
Asian newsprint prices falling sharply thus far in 2019
372019 | Fastmarkets | RISI Global Graphic Paper Outlook
Chinese prices are adjusted for VAT. Second quarter 2019 reflects April only. For India, 2Q19 value based on partial information.
GLOBAL OVERSUPPLY
DEVELOPED AS CAPACITY
WITHDRAWALS DID NOT
KEEP PACE WITH THE DROP
IN DEMAND
The global market balance has shifted againYear-to-year change and percent
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 38
80%
81%
82%
83%
84%
85%
86%
-1,200
-1,000
-800
-600
-400
-200
0
2015 2016 2017 2018 2019 2020
Th
ou
sa
nd
to
nn
es
Asian market balance
Demand Capacity Operating rate
TIGHTENING IN SUPPLIES TO ASIA IN
2018
• Local closures
• Rising demand from China
• Disruptions from antidumping case in the US
TIGHTNESS DISSIPATING
• Dramatic drop in global demand
• Less demand from China for now
89%
90%
91%
92%
93%
94%
95%
-3,000
-2,500
-2,000
-1,500
-1,000
-500
0
2015 2016 2017 2018 2019 2020
Th
ou
sa
nd
to
nn
es
Global market balance
Demand Capacity N. American operating rate
20
Asian newsprint imports: Less from Asia, more from Rest of World, more to China
2019 | Fastmarkets | RISI Global Graphic Paper Outlook 39
0
500
1,000
1,500
2,000
2,500
3,000
2014 2015 2016 2017 2018
Th
ou
sa
nd
to
nn
es
Asian imports by source
Asia North America Western Europe Rest of World
0
500
1,000
1,500
2,000
2,500
3,000
2014 2015 2016 2017 2018T
ho
usa
nd
to
nn
es
Asian imports by destination
China India Rest of Asia
Share went from
21% to 37%
China’s share at
18% in 2018
Take home points
High paper prices have accelerated demand losses
Globally, up to 1.0 million tonnes or an additional 1% of
demand lost in 2018
01
2019 | Fastmarkets | RISI Global Graphic Paper Outlook
02
03
04
40
No more safe havens
China is no longer the growth engine of the world
Packaging papers becoming oversupplied (slowing demand +
large number of projects within the next three to five years)
Global graphic markets easing due to weakness in global
economy
Capacity closures will still be needed to compensate for
production losses
Increased competition in export markets
Producers using exports to limit losses in operating rates (newsprint in
North America)
Demand slowdown is reducing opportunities globally
05