Global Paper Industry
The global paper industry is forecast to maintain 6% yearly growth for the five-year period ending 2017 to exceed $255 billion, reports Lucintel. The industry is characterized by a high degree of fragmentation and is dominated by the Asia-Pacific region, which witnessed more than 40% growth rate in 2011, fuelled by a rising degree of urbanization, increasing levels of disposable income and improving consumer lifestyles.
Worldwide consumption volume of paper and paper products is expected to surpass 445 million tons by 2015, according to research from Global Industry Analysts. Industry performance is fuelled by demand from emerging countries in the Asia Pacific region. Demand for corrugated paper products and packaging-grade paper in particular are contributing to market growth. Recovery in the consumer goods manufacturing industry in these regions is outpacing that of nations in the West.
Demand for writing and newsprint paper continues to fall due to the rise of electronic media. The internet has vastly cut down paper use worldwide. In addition, inter-office communication now relies more heavily on email than paper. E-commerce and electronic signatures are also driving the decline of paper use. Industry players have turned to capacity rationalization and activity consolidation to deal with stiffening competition. Mergers and acquisitions continue to provide an attractive solution for companies wishing to benefit from economies of scale to maintain or capture market share.
- Global Industry Analysts points to the newfound importance of recycling in the global paper sector. In the EU, 65% of used paper is recycled. North America is another region in which recycling is playing an increasingly important role in the paper industry. Demand for recycled fibers is rising as the industry continues to witness advances in recycling technology. Mineral fillers continue to expand as virgin wood pulp declines. Other factors, such as the introduction of PCC and GCC, have also had a significant impact on the papermaking process. The recycling of waste paper continues to benefit from state legislative measures to favor ecological concerns and for economic reasons within companies. Paper recycling, which represents the world’s second-largest source of fibrous material, is a sector witnessing strong growth.
Regional Market Share
- Though the US was traditionally the world leader in paper production, China has outperformed the US in terms of paper and board production to dominate the market. Global Industry Analysts points to the vast potential of emerging economies in Latin America, Asia, Russia, India and Brazil. Industry growth in China has been driven by strong performance in the consumer goods industry, the low cost of labor and manufacturing, the ready supply of raw materials, and the possibility of rapid capacity expansion.
- Research in China estimated the margin of Chinese papermaking outfits with yearly sales in excess of $3 million, was 13% in 2011, representing less than a 1% drop compared with 2010. This fell to 12% in the first quarter of 2012. Raw material prices in China are expected to fall in the second half of 2012 due to domestic and international pulp projects being set in motion one after the other. Linerboard and corrugated paper are the two most-consumed materials in China’s packaging industry. The country’s papermaking capacity exceeded 9 million tons in 2011. Linerboard made up contributed to 1.8 million of the 9 million tons, while corrugated paper contributed just over 1.7 million tons.
- India’s paper industry has seen demand soar due to developments in the country’s education sector, along with its rising literacy rate, reports Netscribes. Obstacles facing the industry include rising input costs, raw material shortages, low paper recycling rates, and widespread penetration of internet and the rise of the smart phone.
While there were many paper pulp projects scheduled for 2009 and 2010, the global economic recession saw these projects pushed back to 2011 and 2012, reports Research in China. This led to climbing costs of waste paper, wood pulp and other raw materials leading to supply shortages, taking a toll on papermaking companies’ profit margins. However, positive factors such as rising literacy rate, economic growth and recycling all bode well for the industry.
Leading Industry Associations
- Paper Industry Association Council www.paperrecycles.org
- American Forest and Paper Association www.afandpa.org
- Australian and New Zealand Pulp and Paper Industry Association www.appita.com.au