Trends to Watch in Pulp Integration, Paper360º May/June 2018

Global paper and board production is about 500 million tons, with market pulp making up roughly 25 percent of the fiber requirement. In the five years to come, nearly 30 million tons of new market pulp capacity is expected to start up, far more than will be needed for the expected 60 million tons of new paper capacity (Fig. 1). Will this create an imbalance between supply and demand?

Two points are crucial. First, paper capacity is growing fastest in regions where the consumption of market pulp is also the highest, notably Asia Pacific. Second, growth tends to be somewhat skewed toward grades that are more commonly not integrated, such as tissue.

Granted, some announced projects may not be completed or may produce less than expected and we don’t know how that will play out from either side of the pulp/paper equation. But given the supply-demand balance in place today, there are two questions we can ask: Will existing producers shut down pulp capacity? And, will any paper producers integrate further with pulp?

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