Pulp and paper markets in Europe P.A. Lacour AFOCEL Economics Department Domaine de l Etançon 77370 NANGIS Tél.: 01 60 67 00 35 Fax.: 01 60 67 00 36 Paul-antoine.lacour@afocel.fr Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre 2005 1
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 2005 2
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 2005 3
PAPER Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre 2005 4
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: 328.1 Million Tonnes Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre 2005 5
Turnover and Paper Production in CEPI Countries 1991-2004 85,000 80,000 Turnover Paper Production 120 115 Turnover (Million Euros) 75,000 70,000 65,000 60,000 55,000 50,000 45,000 40,000 35,000 110 105 100 95 90 85 80 75 70 Paper Production (Million Tonnes) 30,000 65 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre 2005 6
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 2005 7
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 2005 8
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: 327.9 Million Tonnes Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre 2005 9
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 2005 10
PULP Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre 2005 11
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: 186.4 Million Tonnes Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre 2005 12
Number of Pulp Mills and Pulp Production in CEPI Countries 1991-2004 Number of Pulp Mills Pulp Production Trend in Pulp Production 320 46 Number of Pulp Mills 280 240 200 160 120 80 40 +1.9 % 44 42 40 38 36 34 32 Pulp Production (Million Tonnes) 0 30 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre 2005 13
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 2005 14
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: 187.2 Million Tonnes Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre 2005 15
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 2005 16
Pulpwood Consumption by Origin in CEPI Countries 1991-2004 Domestic Imported 160 140 120 100 Million m3 80 60 40 20 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre 2005 17
RECOVERED PAPER Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre 2005 18
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: 113.2 Million Tonnes Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre 2005 19
Evolution of the Recovered Paper Utilisation and the Recycling Rate in CEPI Countries 1991-2004 50 Recovered Paper Utilisation Recycling rate 58 Recovered Paper Utilisation (Million Tonnes) 45 40 35 30 25 20 15 10 5 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 56 54 52 50 48 46 44 42 40 38 Recycling rate (%) Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre 2005 20
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 2005 21
Recovered Paper Trade Balance by UNITED KINGDOM BELGIUM Country 2000 2004 GERMANY FRANCE DENMARK IRELAND SWITZERLAND POLAND PORTUGAL NORWAY CZECH REPUBLIC ITALY GREECE HUNGARY FINLAND SLOVAK REPUBLIC NETHERLANDS SWEDEN SPAIN AUSTRIA Net exporter Net importer -1000-500 0 500 1000 1500 2000 2500 3000 Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre 2005 22
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 2005 23
Recovered Paper Utilisation by Sector in CEPI Countries 2004 Mixed Grades Corrugated and Kraft Newspapers and Magazines High Grades Utilisation rate (%) 100 90 80 70 60 50 40 30 Newsprint Case materials Carton Boards Wrappings, other pack.paper Household & sanitary Others 20 10 Other graphic grades 0 1 11 21 31 41 51 61 71 81 91 Share of total paper & board production (%) Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre 2005 24
Trends affecting the P&P Industry Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre 2005 25
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 2005 26
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 2005 27
Companie's strategies (2/2) Bleached Chemical Market Pulp- Main capacity expansion projects worldwide (with start-up by 2007-2008) (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 150 1 100 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 200 1 140 Chile CMPC Santa Fe 780 1 130 Uruguay Botnia SA Fray Bentos 1 000 Uruguay ENCE Fray Bentos 500 * Realized Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre 2005 28
The average mill capacity will continue to grow Average Size by Pulp Mill (Capacity) in CEPI Countries 1991-2004 Average Size Number of Pulp Mills 220 300 210 290 Average Size ('000 Tonnes) 200 190 180 170 160 150 280 270 260 250 240 230 Number of Pulp Mills 140 220 130 210 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Contact : P.A. Lacour (paul-antoine.lacour@afocel.fr) UNECE/FAO, 26 septembre 2005 29
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 2005 30
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 2005 31
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 2005 32