risi global paper market trends session · the problem for the folding boxboard ... –creating...

RISI Global Paper Market Trends

Session

March 17, 2015

RISI Session

Ken Waghorne

Vice President

World Paper Packaging

Derek Mahlburg

Senior Economist

North American Graphic

Papers

Paper2015

US Boxboard Outlook

Ken Waghorne, VP World Paper Packaging

March 17, 2015

The RISI US Boxboard Outlook

• Overview of Consumer and Industrial Markets

• Boxboard Markets

– US domestic demand

– Global trade issues

• Select Information From RISI’s New World Recovered Paper Study

US Consumer Spending on Nondurable Goods

Accelerated During the Second Half of 2014

-8

-6

-4

-2

0

2

4

6

8

1,700

1,800

1,900

2,000

2,100

2,200

2,300

2,400

2,500

2,600

2,700

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Nondurable Goods Annualized Growth % (R)

The Problem for the Folding Boxboard Industry in

2014 was the Decline in At-Home Food

Consumption

-8

-6

-4

-2

0

2

4

6

8

450

500

550

600

650

700

750

800

850

900

950

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14


Away From Home Food Consumption Grew

Dramatically in 2014

-8

-6

-4

-2

0

2

4

6

8

250

300

350

400

450

500

550

600

650

700

750

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14


Away From Home Share of Total Food Spending

Has Trended Up Over The Last 45 Years

30%

32%

34%

36%

38%

40%

42%

44%

46%

48%

50%

70 74 78 82 86 90 94 98 02 06 10 14

US Consumer Spending on Foods Is Forecast to

Grow More Evenly in 2015-2016

-8

-6

-4

-2

0

2

4

6

8

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

At Home Away From Home Annualized Growth % (R)

The Purchasing Managers' Index Indicates the

Broad Manufacturing Sector Remains Healthy

30

34

38

42

46

50

54

58

62

66

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Light Bar Indicates Manufacturing Sector Contracting

Industrial Production Is Expected to Grow

Strongly in 2015-2016

0.85

0.90

0.95

1.00

1.05

1.10

1.15

J 04

M S J 05

M S J 06

M S J 07

M S J 08

M S J 09

M S J 10

M S J 11

M S J 12

M S J 13

M S J 14

M S J 15

M S J 16

M S

Nondurable Goods Processed Foods

The Domestic Boxboard Markets Have

Been Low Growth for Decades

• Heavy reliance on foods and persistent competition with other products

• The most difficult conditions have been in the folding cartonboard market

– Demand was 10% below the pre-recession peak in 2014

• Cup & plate stock is benefitting from shift in preferences away from plastic foam cups

– With 2014 demand 18% higher than the 2007 level

• Liquid packaging board demand has trended up steadily since 2010

• Demand prospects for all grades are positive in 2015-2016 – Recovery in consumer spending

– Potential for further wins versus plastic alternatives

5,600

5,800

6,000

6,200

6,400

6,600

6,800

7,000

7,200

7,400

20

05

Q1

Q3

20

06

Q1

Q3

20

07

Q1

Q3

20

08

Q1

Q3

20

09

Q1

Q3

20

10

Q1

Q3

20

11

Q1

Q3

20

12

Q1

Q3

20

13

Q1

Q3

20

14

Q1

Q3

20

15

Q1

Q3

20

16

Q1

Q3

US Folding Cartonboard Demand Has

Been Quite Flat Since 2010 (Thousand Tons, Annual Rate)

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

20

05

Q1

Q3

20

06

Q1

Q3

20

07

Q1

Q3

20

08

Q1

Q3

20

09

Q1

Q3

20

10

Q1

Q3

20

11

Q1

Q3

20

12

Q1

Q3

20

13

Q1

Q3

20

14

Q1

Q3

20

15

Q1

Q3

20

16

Q1

Q3

The Food Service Grades Recorded

Phenomenal Growth Since 2010 (Thousand Tons, Annual Rate)

Trade Issues Will Remain a Significant

Issue in 2015 and 2016

• A Massive Oversupply Situation Has

Developed in the Far East

– Creating disruptions in the global export

market

– Increasing the potential threat from imports

China: Announced Cartonboard Capacity

Expansion in 2014-2016 Thousand Tonnes

Company Capacity Date Grade

Foshan Huafeng Paper -150 2014:Q1 Coated Duplex

Ningbo APP 1,000 2014:Q2 Ivoryboard

Hangzhou Dongda Paper 250 2014:Q2 Coated Duplex

Henan Shangqiu Xinhao Paper 100 2014:Q2 Ivoryboard

Asia Symbol (Shandong) Pulp & Paper 350 2014:Q2 Liquid Packaging Board

Sichuan Yibin Paper Industry 350 2014:Q2 Cupstock

Jiangmen Xinghui Paper 300 2014:Q2 Coated Duplex

Henan Xinxiang Xinya Paper Co., Ltd. 400 2014:Q2 Ivoryboard

Fujian Liansheng Paper 300 2014:Q2 Coated Duplex

Hubei Paima Paper 200 2015:Q2 Ivoryboard (Cigarette Board)

Zhanjiang Chenming Paper Pulp Co., Ltd. 180 2015:Q3 Cupstock

Shandong Sun Honghe Paper 500 2015:Q4 Coreboard

Guangxi Stora Enso Forest 450 2016:Q1 Liquid Packaging Board

Virgin Grades

Recycled

Grades All Grades

Subtotal 2014 2,200 700 2,900

Subtotal 2015-2016 830 500 1,330

16 © Copyright 2015 RISI, Inc. All rights reserved.

China Has Become a Net Exporter of

Boxboard, and Its Surplus Will Grow Million Tonnes of Net Exports

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016


The Rest of Asia Can Provide a Home for Only

a Small Portion of China’s Net Exports Million Tonnes of Net Exports

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

China

Rest of Asia


Western European Producers Export

Boxboard Around the World, Although

Europe Dominates Exports by Destination, Million Tonnes

19

0

2

4

6

8

10

12

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Western Europe Eastern Europe The Americas Africa

The Middle East Asia Oceania

© Copyright 2015 RISI, Inc. All rights reserved.

Latin America, Africa and the Middle East

Will Be the Battle Grounds for Virgin

Boxboard Exports Net Imports, Thousand Tonnes

0

100

200

300

400

500

600

700

800

900

1,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Latin America

Africa

Middle East

Oceania


Displacement of North American Boxboard

Exports in Overseas Markets Is Likely to

Continue Million Tonnes

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

US SBS US CUK All Other NA Exports


Will Imports Become a Bigger Factor in

the US Cartonboard Markets?

• Challenges faced by imports: – Lack of distribution system for overseas producers

– High transportation costs to converting plants

– Concerns about quality and market commitment

– Differences in performance characteristics of overseas board compared to US board

– High integration levels between mills and carton plants

• Can imports overcome these challenges? – Overseas producers are making an attempt

– Folding imports increased 11% in both 2013 and 2014

Overseas Imports Have Struggled to Gain

Share in the North American Market Import Share of Demand

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

US/Canadian Trade

All Others


Imports Will Likely Capture Most of the Growth In

Apparent Consumption in 2015-2016

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Bleached Unbleached Recycled Import

Million Tons

RISI’s Conclusion: Folding Cartonboard Production is

Likely to Weaken Further in 2015-2016

(Annual Growth, 000 Short Tons)

-600

-500

-400

-300

-200

-100

0

100

200

0 2 4 6 8 10 12 14 16

Total Folding Cartonboard

A Significant Amount of Capacity Has Been Closed

Over the Last 15 Years Annual Change, Thousand Tons

-1000

-800

-600

-400

-200

0

200

400

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

SBS Removals

Recycled Removals

CUK Removals

Net Capacity Change

US Bleached Folding Boxboard Operating Rates

Are Expected to Trend Down Through 2016

80%

84%

88%

92%

96%

100%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

US Boxboard Summary

• US domestic demand will creep upward in 2015-2016

• But imports will capture most of the growth in the folding cartonboard segment

• Virgin producers are facing increased competition in the export

markets, but modest increases in costs

• Recycled producers are expected to be hit by rising recovered paper

costs, once paper and board demand in the developing world starts

to rebound

World RCP Demand

-15%

-10%

-5%

0%

5%

10%

15%

0

50

100

150

200

250

300

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Volume (L)

Percent Change (R)

Million Tonnes

29 © Copyright 2015 RISI, Inc. | Proprietary Information

Will RCP demand growth reaccelerate

after decelerating in recent years?

• Little or even negative demand growth from the developed regions – Constrained paper and board demand increase

– Exception: North America?

• Slowing demand growth in the developing world – Decelerating economic growth and therefore the paper

and board demand growth

– Fiber furnish change in certain paper and board grades: tissue and boxboard

• Recycled and virgin fiber balance – RCP vs. wood fiber

– Cost, availability, environmental concerns …

– How about non-wood fiber?

30 © Copyright 2015 RISI, Inc. |

Proprietary Information

Global Supply for RCP

• Rising world paper recovery rate – Has world recovery rate hit its plateau?

• Limited growth from the developed regions – Recovery rates in certain developed regions have reached their

plateau, such as Japan, Oceania, even Western Europe?

– There may still be room for higher recovery rate and more RCP supply in North America?

• The developing markets – Asia: most developing countries in Asia have quite low recovery

rates and fast-growing demand, such as India and Vietnam

– China: how much more can China improve its domestic supply?

– Latin America: demand/supply balanced? How about future?



Paper Recovery Rates by World Region

20%

30%

40%

50%

60%

70%

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13

World Europe North America Latin America Middle East Asia Asia

© Copyright 2015 RISI, Inc. |


Recovery Rates by RCP Grade

40%

50%

60%

70%

80%

90%

100%

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

ONP OCC Average



World average recovery rate

for OCC should be very

close to its practical

maximum level.

RCP Demand and Supply by Region in

2013 (Million Tonnes)

0

10

20

30

40

50

60

70

80

Western Europe

North America

Japan China Other Far East

Eastern Europe

Latin America

Middle East

Demand

Supply

34 © Copyright 2015 RISI, Inc. | Proprietary Information

Chinese RCP Domestic

Collection vs. Imports

0.25

0.30

0.35

0.40

0.45

0.50

0

10

20

30

40

50

60

70

80

Mil

lio

n T

on

ne

s

Domestic Collection

Net Imports

Apparent Paper Recovery Rate

Import share

1995: 10%

2000: 20%

2005: 49%

2009: 44%

2013: 39%

Will the Chinese

import share

continue to

decline?



Other Asia: RCP Domestic Collection vs.

Imports

35%

40%

45%

50%

55%

60%

0.0

10.0

20.0

30.0

40.0

50.0

Mil

lio

n T

on

ne

s

Domestic Consumption

Net Imports

Recovery Rate Net import share

2000: 22%

2005: 18%

2010: 15%

2013: 15%

Will the import

demand from Other

Asia grow further?



North American RCP Domestic Demand

vs. Exports

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

70%

0.0

10.0

20.0

30.0

40.0

50.0

60.0

Mil

lio

n T

on

ne

s


Net Exports

Recovery Rate

Net export

share

2000: 18%

2005: 27%

2008: 33%

2012: 42%

2013: 40%

Any increase

in the

exports? USA

or Canada?



Western European RCP Domestic

Demand vs. Exports

20%

30%

40%

50%

60%

70%

80%

0.0

10.0

20.0

30.0

40.0

50.0

60.0

Mil

lio

n T

on

nes


Net Exports

Recovery Rate

Net export share

1996: 2%

2000: 6%

2009: 19%

2013: 14%

Will net exports

continue to drop?

38 © Copyright 2015 RISI, Inc. All rights

reserved.

16.6 MT

10.5 MT

4.9 MT

1.6 MT

Global RCP Trade Flow in 2013



Impacts of Trade in World RCP Markets

• Change of recovery rates in different regions – North America, Western Europe, Japan and Oceania

– Developing regions

• Price developments worldwide – Net exporting regions

– Net importing regions

• Structure developments of recovered paper business – Consumers, suppliers, and traders

• Regulations – Limit exports

– Quality controls on imports



Global RCP Market

0

40

80

120

160

200

240

280

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

US

Do

lla

rs p

er

To

nn

e

OCC China Import (CIF)-$

OCC US (FOB)-$

1.04 Germany (FOB)-€

41

OCC Prices in Different Regions



25

75

125

175

225

275

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

US

$ p

er

To

nn

e

SOP-Germany-€ SOP-US-$

Data sources: RISI and Letsrecycle.com


Proprietary Information 42

Global RCP Market

SOP Prices in Different Regions

Fast-rising Chinese RCP Imports,

Changing Sources

0

4

8

12

16

20

24

28

32

1992 1995 1998 2001 2004 2007 2010 2013

Mil

lio

n T

on

ne

s

58%

14%

2%

4%

1%

9%

2% 1% 2%

1%

6%

USA Japan UK Holland

Canada Hong Kong Australia Italy

Belgium France Other 45%

12%

11%

5%

5%

3%

4%

3%

2% 2%

8%

2002

6.9 MT

2013

29.2 MT



Future Trends Covered in RISI’s

Recovered Paper Study

• Will the demand/supply balance tighten?

• What are RISI’s price projections?

• Emerging new buyers

• Potential new sellers

• Regulations

44

Outlook for Global Recovered

Paper Markets

www.risi.com/recoveredpaper

Email: [email protected]

Thank you for your attention! For more information:

45

Derek Mahlburg, Senior Economist

March 2015

Global Graphic Paper Outlook

© Copyright 2015 RISI, Inc. | Proprietary Information

Derek Mahlburg, Senior

Economist,

North American Graphic Paper • Has covered North American graphic

paper markets with RISI since 2008

• Co-author of the monthly Paper

Trader and North American graphic

paper forecasts

• Special studies include Global

Newsprint Risk of Closure Study and

The Impact of Media Tablets on

Publication Paper Markets


Proprietary Information 47

World Printing & Writing Paper Demand Is the global market in decline? Yes, its just a matter of degree.

-12%

-6%

0%

6%

12%

80

90

100

110

120

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

Volume (L)

Percent Change (R)

Million Tonnes


Yet, Global UFS May Still Be

Growing… Mechanical grades appear to be flat or declining

globally

10

20

30

40

50

60

99 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

UFS CFS

Cme Ume

Global Demand, Million Tonnes


Global UFS Demand Growth for 2015 and 2016

Varies by Region Thousand Tonnes, Percent per Year

Global: 211 (0.2%)

76 (2.9%)

-140 (-1.0%) 576 (1.0%)

138 (4.3%)

-42 (-0.7%)

-21 (-2.3%)

-478 (-2.9%)

102 (1.4%)


Newsprint Demand Now Declining in Most

Global Markets for 2015 and 2016 Thousand Tonnes, Percent per Year

Global: -1,893 (-3.6%)

-2 (-0.2%)

-658 (-5.5%)

-382(-1.7%)

14 (+1.0%)

-155 (-4.5%)

-39 (-4.3%)

-592 (-7.5%)

-80 (-2.8%)


2

7

12

17

22

27

32

00 02 04 06 08 10 12 14 16

Mil

lio

n T

on

ne

s

UFS 1.0%*

CFS 0.4%*

Cme 1.1%*

Ume 2.5%*

Asia: Growth Is Slowing

Remarkably from Past Trends

Freesheet grades dominate

the region

• Mechanical paper needs

softwood and is often

imported

P&W paper growth rate has

slowed considerably…1% in

2012 and 2013, -0.8% in 2014

• Average growth had been 4%

China slowing, Japan decline

accelerating * Annual growth rate, 2015-2016


Europe…Moderating Rate of Decline;

UFS Outperforming Other Grades •Annual growth rate, 2015-2016 (Combined Western and Eastern Europe)

4

5

6

7

8

9

10

11

12

13

14

0 2 4 6 8 10 12 14 16

Mil

lio

n T

on

ne

s

UFS -0.9%*

CFS -2.6%*

Cme -2.8%*

Ume -2.1%*

Eastern Europe buffering sharp

decline in the West

UFS usage rates per capita

starting at much lower level

than N. America and have less

room to fall

Region slightly more protected

from new technologies, but

equally exposed to mature

economies


US P&W Demand Accelerated

Down as Expected in 2014 US Apparent Consumption, Thousand Tons, Seasonally Adjusted

Coated

Freesheet

Coated

Mechanical

Uncoated

Freesheet

Uncoated

Mechanical

2013 3,927 3,526 8,832 3,991

% Change -0.6% -7.9% +0.2% +4.8%

2014 3,900 3,252 8,339 3,884

% Change -0.7% -7.8% -5.6% -2.7%


2

4

6

8

10

12

14

16

00 02 04 06 08 10 12 14 16

Mil

lio

n T

on

nes

UFS -2.9%*

CFS -0.6%*

Cme -4.4%*

Ume -2.5%*

North America Decline Is

Here for the Long Term

UFS and Cme are the most

impacted grades

Main declining threats are

new technologies,

exacerbated at times by a

weak economy

UFS seesaw of 2013/2014 to

stabilize at 2.9% decline in

2015/2016

* Annual growth rate, 2015-2016


US Publisher Sales of Books Digital stabilizing at 21% of all sales of books in dollars, 2014 preliminary

numbers show good growth

0%

5%

10%

15%

20%

$0

$5

$10

$15

$20

$25

$30

2008 2009 2010 2011 2012 2013 2014 (e)

Billio

n D

ollars

Physical Digital Bundled % Digital (R)

5.5%

Source: Bookstats/AAP

-0.5% -0.8% -2.5% +3.3%

+2.3%


Net Uncoated Woodfree Capacity

Changes for 2011-2013 vs.

Demand Growth for the Same

Period Thousand Tonnes

-1,000

0

1,000

2,000

3,000

4,000

5,000

Europe N. America Asia, ME, OCE, Afr

Latin America Global

Capacity Growth

Demand Growth


Note: Asian capacity expansions exclude the offsetting effect of government mandated closures of small, old, polluting mills

Leading to a Rise in Exports from

Asia While Brazil’s Net Exports of

Uncoated Freesheet Stagnate

-500

0

500

1,000

1,500

2,000

2,500

3,000

1999 2001 2003 2005 2007 2009 2011 2013 2015

Th

ou

sa

nd

To

nn

es

of

Ne

t E

xp

ort

s

Brazil

Indonesia

China



Shipments of Cut Size Uncoated

Freesheet to the North American

Market Imports now supply over 20% of demand

0%

5%

10%

15%

20%

25%

30%

0

50

100

150

200

250

300

350

400

450

2009 2010 2011 2012 2013 2014 2015

Imp

ort

Sh

are

, P

erc

en

t

Th

ou

sa

nd

To

ns

pe

r M

on

th

Import

Domestic

Import Share (R)


UFS Demand and Capacity

Changes for 2015-2016 Announced Net Uncoated Woodfree Capacity Changes for 2015-2016 vs. RISI

Forecast of Demand Growth for the Same Period,

Thousand Tonnes

-1,000

0

1,000

2,000

3,000

4,000

5,000

Europe N. America Asia, ME, OCE, AFR


Capacity Growth

Demand Growth


Note: includes prorated capacity changes for 2014

Uncoated Woodfree Operating

Rates Import pressures and strong dollar pressuring North American shipments

83% 84% 85% 86% 87% 88% 89% 90% 91% 92% 93% 94% 95% 96% 97% 98% 99%

100%

2008 2009 2010 2011 2012 2013 2014 2015 2016

N. America

W. Europe

Asia

Brazil


Tariff Suit Against Offshore

Importers of Cut Size Paper into

the USA



Country 2012 2013 2014 2012 2013 2014

China/Hong Kong 52 89 141 40 74 117

Indonesia 108 118 231 104 112 227

Brazil 141 199 221 138 197 218

Portugal 142 160 158 141 160 157

Australia 50 52 83 46 49 76

Totals 493 618 834 469 592 795

Percentage Growth 25% 35% 26% 34%

US Imports of Uncoated Freesheet from Selected Offshore Countries

Thousand Tonnes

Total Uncoated Freesheet Only Cut Size and Folio Sheets

Notes: Classification of grades into uncoated freesheet, cut size and folio sheets are RISI estimates

and are not necessarily the exact categories to be used by the ITC in this investigation.



the USA • CVD against China and Indonesia

– To offset government subsidies

• Preferential lending

• Income tax rebates

• VAT tax rebates

• Government provision of goods or services, including electricity, chemicals and land, at less than adequate remuneration

• Provision of standing timber at low prices

• Government prohibition of log exports

• Debt forgiveness by the government

– Likely to be in place by June/July 2015

– Could be around 18% if similar subsidies given to UFS mills compared with calculations for CFS mills in 2010 CVD





the USA • ADD against China, Indonesia, Brazil,

Portugal and Australia – Much less clear what the result will be

• Are these companies selling at “less than fair

market value”?

• These mills are not losing money on US sales

• Did these companies fill a gap left by Courtland or

did they cause the Courtland shut?

– RISI’s guess is that no significant ADD will be imposed



Circulation of Printed Magazines in N. America (Includes consumer, farm, and religious, paid & verified and analyzed nonpaid;

Excludes digital)

-8%

-6%

-4%

-2%

0%

2%

4%

300

320

340

360

380

400

420 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Mil

lio

ns

Circulation

Source: Alliance for Audited Media & RISI

65

-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

2008Q

1

2009Q

1

20

10

Q1

2011Q

1

2012Q

1

2013Q

1

2014Q

1

Percentage Change in PIB Magazine Ad Pages

%Ch Year Ago

Annual

2012 -8.2%

2013 -4.1%

2014 -10.4%

2015 -5.8%

2016 -2.5%

66

US Magazine Ad Pages Accelerating

Downward…Year-over-year declines of 11-12% in final

three quarters of 2014 when including magazines that have shut

or switched to digital

US Catalog Mailings Showing Only Moderate

Declines

-20%

-15%

-10%

-5%

0%

5%

10%

2007Q

1

2008Q

1

2009Q

1

20

10

Q1

2011Q

1

2012Q

1

2013Q

1

2014Q

1

Percentage Change in Catalogs Mailed

%Ch Year Ago

Annual

2012 -4.7%

2013 -4.6%

2014 -1.1%

2015 -1.0%

67

US Postal Mail Volumes Standard mail surprisingly flat, periodicals falling

5

6

7

8

9

10

11

60

65

70

75

80

85

90

95

100

105

110

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

20

11

2012

2013

2014

2015*

Bil

lio

n P

iec

es

Postal Fiscal Years

First Class

Std A Mail

Periodicals (R)

* 2015=USPS forecast from operating plan

USPS

Forecast

2015

Pieces of

Mail

First Class -5.2%

Standard

Mail

+1.2%

Periodicals -9.8%

Total Mail -1.4%

68

Coated Woodfree Demand Holding

Up Much Better than Coated

Mechanical Demand for Coated Paper in Magazines & Catalogs, Thousand Tonnes

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Coated Freesheet

Coated Mechanical


Announced Net Coated Woodfree

Capacity Changes for 2015-2016 vs.

RISI Forecast of Demand Growth for

the Same Period Thousand Tonnes

-1,000

-800

-600

-400

-200

0

200

Europe N. America Asia, ME, OCE, AFR


Capacity Growth

Demand Growth



Coated Woodfree Operating Rates

80%

82%

84%

86%

88%

90%

92%

94%

2008 2009 2010 2011 2012 2013 2014 2015 2016

N. America

W. Europe

Asia


Announced Net Coated Mechanical

Capacity Changes for 2015-2016

vs. RISI Forecast of Demand

Growth for the Same Period Thousand Tonnes

-800

-600

-400

-200

0

200

400

Europe N. America Asia, ME, OCE, Afr


Capacity Growth

Demand Growth



Coated Mechanical Operating

Rates

75%

77%

79%

81%

83%

85%

87%

89%

91%

93%

95%

97%

2008 2009 2010 2011 2012 2013 2014 2015 2016

N. America

W. Europe


Announced Net Uncoated

Mechanical Capacity Changes for

2015-2016 vs. RISI Forecast of

Demand Growth for the Same

Period Thousand Tonnes

-400

-300

-200

-100

0

100

200

300

400

Europe N. America Asia, ME, OCE, Africa


Capacity Growth

Demand Growth



Uncoated Mechanical Operating

Rates Massive shuts in Europe; recent shuts also announced in Canada

75%

80%

85%

90%

95%

100%

2008 2009 2010 2011 2012 2013 2014 2015 2016

N. America

W. Europe


US Dollar Has Sharply

Appreciated Against Most

Currencies…

Index Jan-13 = 1.00

40%

50%

60%

70%

80%

90%

100%

110%

Chinese Yuan

Euro

Canadian Dollar


…Which is Pressuring North

American Net Exports of Printing &

Writing Paper Thousand Tonnes

1,600

1,800

2,000

2,200

2,400

2,600

2,800

2010 2011 2012 2013 2014 2015 2016

Imports Exports


US Newspaper Circulation…Total

circulation holds steady at -1% in 2014, while print circulation forecast to lose

another -5.9%

50

60

70

80

90

100

110

Total Circulation

Print Only

Source: Editor & Publisher, AAM, RISI

78

US Newspaper Circulation Index, 1985=1

North American Newsprint

Shipments… As North American demand slides 9-10% annually, US mills lose share domestically and

abroad due to strong currency

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

North American Exports

Domestic Shipments

US Share of Total Shipments

79

Thousand Tonnes

Announced Net Newsprint Capacity

Changes for 2015-2016 vs. RISI

Forecast of Demand Growth for the

Same Period Thousand Tonnes

-2,000

-1,800

-1,600

-1,400

-1,200

-1,000

-800

-600

-400

-200

0

Europe N. America Asia, ME, OCE, Africa


Capacity Growth

Demand Growth



Newsprint Operating Rates Stable North American Operating Rates Since 2010

75%

80%

85%

90%

95%

100%

2008 2009 2010 2011 2012 2013 2014 2015 2016

N. America

W. Europe

Asia


World Graphic Paper

5-Year Forecast

www.risi.com/worldgraphic

Global Cut Size Uncoated Freesheet

Study

www.risi.com/cutsize

China’s Influence on World

Graphic Paper Markets in the

Coming Decade

www.risi.com/chinagraphic

Thank you for your attention! For more information:



RISI Global Paper Market Trends

Session

March 17, 2015

risi global paper market trends session · the problem for the folding boxboard ... –creating...

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