Pulp and paper markets in Europe

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1 Pulp and paper markets in Europe P.A. Lacour AFOCEL Economics Department Domaine de l Etançon NANGIS Tél.: Fax.: Paul-antoine.lacour@afocel.fr Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

2 Content of the presentation Paper Pulp Recovered paper Trends affecting the P&P Industry Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

3 Statistical sources All data are coming from CEPI CEPI countries are: Austria Belgium Czech Republic Denmark Finland France Germany Greece Hungary Ireland Italy Netherlands Norway Poland Portugal Slovak Republic Spain Sweden Switzerland United Kingdom Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

4 PAPER Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

5 Paper Production by Region in 2003 Rest of the World 2% CEPI Countries 29% Latin America 5% Asia 30% North America 31% Other Europe 3% Total: Million Tonnes Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

6 Turnover and Paper Production in CEPI Countries ,000 80,000 Turnover Paper Production Turnover (Million Euros) 75,000 70,000 65,000 60,000 55,000 50,000 45,000 40,000 35, Paper Production (Million Tonnes) 30, Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

7 Paper Production by Grade in CEPI Countries in 2004 Other 4% Newsprint 11% Other Graphics 40% Total Packaging 39% Total: 99.5 Million Tonnes Sanitary & Household 6% Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

8 Total Paper Production by CEPI Austria 5% Rest of CEPI Countries 17% Country in 2004 Germany 20% Spain 6% United Kingdom 6% Finland 14% Italy 10% France 10% Total: 99.5 Million Tonnes Sweden 12% Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

9 Paper Consumption by Region in 2003 Rest of the World 2% Latin America 6% CEPI Countries 26% Asia 33% North America 30% Other Europe 3% Total: Million Tonnes Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

10 Trade Flows of Paper to and from '000 Tonnes CEPI Countries in 2004 North America: Exports to 3,153 Imports from 1,762 Other Europe: Exports to 2,996 Imports from 1,291 Asia: Exports to 5,303 Imports from 375 Latin America: Exports to 1,147 Imports from 418 Rest of the World: Exports to 2,162 Imports from 369 Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

11 PULP Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

12 Pulp Production by Region in 2003 Rest of the World 3% Latin America 7% CEPI Countries 22% Asia 22% North America 42% Other Europe 4% Total: Million Tonnes Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

13 Number of Pulp Mills and Pulp Production in CEPI Countries Number of Pulp Mills Pulp Production Trend in Pulp Production Number of Pulp Mills % Pulp Production (Million Tonnes) Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

14 Pulp Production by CEPI Country in Austria 5% Portugal 5% Rest of CEPI Countries 10% Spain 5% 2004 Finland 29% Germany 6% Norway 6% France 6% Sweden 28% Total: 42.7 Million Tonnes Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

15 Pulp Consumption by Region in Rest of the World 2% Latin America 5% Asia 28% 2003 CEPI Countries 25% North America 37% Other Europe 3% Total: Million Tonnes Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

16 Trade Flows of Pulp to and from '000 Tonnes CEPI Countries in 2004 North America: Exports to 248 Imports from 4,296 Other Europe: Exports to 310 Imports from 501 Asia: Exports to 1,007 Imports from 313 Latin America: Exports to 19 Imports from 2,593 Rest of the World: Exports to 122 Imports from 300 Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

17 Pulpwood Consumption by Origin in CEPI Countries Domestic Imported Million m Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

18 RECOVERED PAPER Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

19 Raw Materials in Papermaking in CEPI Countries 2004 Non-Fibrous Materials 15.1% Woodpulp 42.8% Recovered Paper 41.1% Pulp Other than Wood 1.0% Total: Million Tonnes Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

20 Evolution of the Recovered Paper Utilisation and the Recycling Rate in CEPI Countries Recovered Paper Utilisation Recycling rate 58 Recovered Paper Utilisation (Million Tonnes) Recycling rate (%) Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

21 100% Recovered Paper Collection Rate, Utilisation Rate and Utilisation in CEPI Countries in 2004 Collection rate % 90% 80% 70% 60% 50% 40% 30% FI SE PT NO SK PL AT CZ CH BE DE FR IT NL UK HU GR ES 20% 10% 0% 0% 20% 40% 60% 80% 100% Utilisation rate % Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

22 Recovered Paper Trade Balance by UNITED KINGDOM BELGIUM Country GERMANY FRANCE DENMARK IRELAND SWITZERLAND POLAND PORTUGAL NORWAY CZECH REPUBLIC ITALY GREECE HUNGARY FINLAND SLOVAK REPUBLIC NETHERLANDS SWEDEN SPAIN AUSTRIA Net exporter Net importer Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

23 Trade Flows of Recovered Paper to and from CEPI Countries in 2004 '000 Tonnes North America: Exports to 18 Imports from 241 Other Europe: Exports to 359 Imports from 85 Asia: Exports to 5,406 Imports from 5 Latin America: Exports to 16 Imports from 1 Rest of the the World: Exports to 70 Imports from 9 Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

24 Recovered Paper Utilisation by Sector in CEPI Countries 2004 Mixed Grades Corrugated and Kraft Newspapers and Magazines High Grades Utilisation rate (%) Newsprint Case materials Carton Boards Wrappings, other pack.paper Household & sanitary Others Other graphic grades Share of total paper & board production (%) Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

25 Trends affecting the P&P Industry Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

26 Cyclic business Cyclic business with a downward trend of prices Low profitability, overcapacities in many pulp and paper grades Strong impact of exchange rate (ex : USD/Euro) Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

27 Companie's strategies (1/2) Global business and global strategies (especially for commodity grades) Global companies in a process to refocus on a small number of grades Consolidation will continue Investments close to the markets and or/in regions where production costs are lower e.g.: in the pulp sector: most of the investments are in South-America and Asia Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

28 Companie's strategies (2/2) Bleached Chemical Market Pulp- Main capacity expansion projects worldwide (with start-up by ) (As of september 2005). Country Company Mill New Capacity (000 t) Total Capacity (in case of new lines in existing mills) (000 t) Brazil Votorantim Cel. e Papel (VCP) Jacarei Chile Arauco Valdivia 440* Chile Arauco Nuevo Aldea 600 Germany Mercer Zellstoff Stendal 550* Brazil Veracel (Stora+ Aracruz) Eunapolis 900* China Asia Pulp & Paper (APP) Hainan 900* Brazil CENIBRA Belo Oriente Chile CMPC Santa Fe Uruguay Botnia SA Fray Bentos Uruguay ENCE Fray Bentos 500 * Realized Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

29 The average mill capacity will continue to grow Average Size by Pulp Mill (Capacity) in CEPI Countries Average Size Number of Pulp Mills Average Size ('000 Tonnes) Number of Pulp Mills Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

30 Forest certification still at a too low level Forest certification is key for the P&P Industry Certified areas (especially PEFC) are expanding Volume of certified wood remains too low in many countries The number of Chain of Custody also unsufficient Demand of certified pulp and paper products remains low from the consumer side Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

31 Wood for energy generation will increasingly compete with the procurement of pulp mills The use of biomass for energy generation (heat, electricity) is fostered by several drivers (subsidies, price of oil, ) Subsidies for biomass based energy might have adverse effects on wood procurement of pulp mills This would jeopardize the competitiveness of pulp mills But the production of "green energy" on industrial sites also presents opportunities (e.g.: development of bio-refineries) Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

32 Conclusion In Europe, production of paper and pulp continues to increase Global competition also increases Process of consolidation will continue for commodity products Some issues connected to fibre supply and marketing are key to the competitiveness: ability to sell certified paper products, no distortion of compettition between the various uses of wood (energy vs pulp and paper) Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre

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