A Retrospective on 90 Years and the Future of the Paper ... · North America Paper Machine Capacity...

BETTER INTELLIGENCE. BETTER DECISIONS.

A Retrospective on 90 Years and

the Future of the Paper Industry

Oct 18, 2019

Camilla Abbati, Ph.D.Senior Analyst and Product Manager

Fisher International

Prepared for the exclusive use by

Renewable Bioproducts Institute at Georgia Institute of Technology

© 2019 Fisher International, Inc. 2

• Overview of pulp and paper industrial sector

• The Past: History of paper industry

• The Present

– Products and market trends

• The Future

– Paper products

– Wood-based products

Agenda

© 2019 Fisher International, Inc.

© 2019 Fisher International, Inc. All rights reserved.

Fisher International is an information services and

management consulting firm offering pulp and paper

businesses better performance through the strategic

use of business intelligence.

What We BelieveEvery Company Should Have the Best Possible Business Intelligence.

Our VisionTo enable pulp and paper businesses worldwide to make informed

decisions precisely, fast, broadly, and efficiently.

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THE industry leader in strategic data-informed

decision making

Integrated solutions that increase our customers’

decision making

Industry creator of high-quality data

Expert consulting, coaching

and training from industry

leaders

Deep domain knowledge promoted via Thought

Leadership

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product innovation

We Help Clients Make Significant and Enduring

Improvements to Their Performance

4


Paper Industry in the U.S.

of U.S. manufacturing GDP

Source: U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, U.S. Energy

Information Administration, 2018 data

FisherSolve NextTM

2.5%more than

Employs approx.

95,000people in the U.S.

Represented by

341 manufacturing sites

664 paper machines

Contributes to

Accounts for

6%of U.S. industrial

energy consumption

© 2019 Fisher International, Inc.© 2019 Fisher International, Inc.

U.S. Has One of the Highest Per Capita

Consumptions of Paper in the World

6

Source: World Bank & FAOSTAT

Per Capita Consumption of Paper (kg)

USA 229

Japan 203

China 74

India 13

Indonesia 27

Brazil 43

World 57


The Past: History of Paper Industry


Highlights of Paper Industry History

• 1st Century – Paper invented in China

• 610 - 750 – Paper making in Japan and Arab regions

• 1691 – 1st papermill installed in U.S. (Germantown, PA)

• 1774 – Discovery of chloride as a bleaching agent

• 1799 – Invention of Fourdrinier machine in France

• 1817 – 1st paper machine built in U.S. (Brandywine River, DE)

• 1867 – 1st wood paper mill installed in U.S. (Curtisville, MA)

• 1871 – Z. Wheeler patents rolled and perforated toilet paper

• 1882 – 1st sulphite-pulp plant setup in U.S. (Rumford, RI)

• 1909 – 1st sulphate process kraft paper in U.S.

• 1930 – Invention of recovery boiler by Tomlinson

• 1935 – Northern Tissue invented ‘splinter free’ toilet paper

• 1942 – Andrew’s Paper Mill produced the first soft two-ply toilet tissue

• 1960 – 1st TAD machine used commercially

• 1980 – Shoe Press technology developed after 13 years of study

© 2019 Fisher International, Inc.Source: FisherSolve Next™ © 2019 Fisher International, Inc.

N.A. Operates a Relatively Old Fleet - 60% of the

Capacity Still Running Today Started by the End of 1970s

9

North America Paper Machine Capacity – Start up Date


Europe, Latin America and Asia Fleets are Newer

than North America

10

Capacity Added in North America vs. Other Regions


Paper Machines Got Wider and Faster Over the

Years

11

Paper Machine Widths and Speed by Year Built – WW


Recovery Boiler Rates Also Increased over the

Years

12

Number of Recovery Boilers Installed in U.S. and Average Rate


The U.S. Pulp and Paper Capacity is Mainly

Located in the Southeast

13

Paper Machines in U.S. – Year Built vs. Capacity Added

*Does not exclude closed and demolished sites


Most of Site Closures Happened in U.S. Northeast

and Midwest

14

US and Canada Manufacturing Sites - Site Status


High Production Costs Have Contributed to Mills to

Migrate From The Northeast

15

U.S. Mills Manufacturing Cash Cost as of 2014


Highest Level of Pulp and Paper Integration

Happens in the Southeast in Proximity to the Forests

16

Distribution of U.S. Mills by Type and Region


The present – Current State of Paper Industry


Containerboard and Market Pulp are the Main

Grades Produced in All Regions

18

Current Paper or Market Pulp Production by Paper Grade

North America = U.S. + Canada


Capacity Trends and Consolidation in U.S. Market

19

Tissue & Towel

*Each color represents a company

Containerboard

Newsprint Printing & Writing


Packaging Grades Heavily Rely on Recycle Fiber

Furnish When Compared to Other Grades

20

Machine Furnishes Used on Different Paper Grades in U.S.


Foreign Ownership of North American Mills Doubled

in the Last 10 Years

21

North America: Foreign-Owned Sites (Number of Mills)

0

20

40

2007 Today

* Each color represents a foreign country

Nu

mb

er

of

Fo

reig

n-O

wn

ed

Mills

by C

ou

ntr

y o

f O

rig

in


10 of the Top 15 Global Pulp and Paper Producers

Have Manufacturing Presence in North America

22

Top 15 Global P&P Companies Capacity, Excluding

North American Companies (Metric Tons)

Usually sizable companies look for geographic risk diversification

✓

✓

✓✓ ✓✓

✓

✓

Planned?

To

ns

pe

r Y

ea

r (F

MT

)

APP Nine

Dragons

UPM Suzano Stora

Enso

Smurfit

Kappa

Lee &

Man

Nippon

Paper

Sappi Mondi Sun

Paper

Chenming CMPC Shanying DS Smith

✓✓


What Is Coming Ahead for the Paper Industry?


Fiber, Pulp, and Energy Represent more than 60%

of Production Costs for Major Grades in U.S.

24

Average production costs by Paper Major Grade in U.S.

Raw material fiber32%

Pulps1%

Energy19%

Labor21%

Chemicals15%

Materials11%

Overhead1%

CARTONBOARD

Raw material

fiber40%

Pulps0.4%

Energy23%

Labor18%

Chemicals

4%

Materials14%

Overhead1%

CONTAINERBOARD

Raw material

fiber49%

Energy11%

Labor19%

Chemicals11%

Materials10%

Overhead0.5%

MARKET PULP

Raw material fiber13%

Pulps51%

Energy16%

Labor13%

Chemicals3%

Materials4% Overhead

0.4%

TISSUE AND TOWEL


How Will Recovered Paper Restrictions Impact the

North American Market?

https://www.euwid-paper.com/news/singlenews/Artikel/indonesia-to-set-impurities-limit-for-rcp-imports-at-2-per-cent.html


China Ban on Recovered Fiber Imports Had a Major

Impact on the U.S. Exports

26

Sum of Trade Amount of Recovered Paper from U.S. to China

MP = Mixed Papers, OCC = Old Corrugated Containers, ONP = Old Newspaper, OMG = Old Magazines, SOP = Sorted Office Paper


Increased Sustainably Awareness Has Created

Opportunities for Our Industry

https://stories.starbucks.com/press/2018/starbucks-to-eliminate-plastic-straws-globally-by-2020/

https://www.nestle.com/media/news/nesquik-launches-all-natural-cocoa-

powder-in-recyclable-paper-packaging

https://www.millercoorsblog.com/news/millercoors-testing-

biodegradable-six-pack-rings-colorado

https://www.prnewswire.com/news-releases/carlsberg-moves-a-step-closer-to-creating-

the-worlds-first-paper-beer-bottle-300934970.html


Will Water Risk Impact Mills Operations?

28

U.S. Mills vs. Overall Water Risk by State

*Each symbol represents an operating site

Water risk information from World Resources Institute


Carbon Taxation May Bring Additional Impact for the

Paper Industry

*ETS = emission trading systems


Globally, Carbon Emissions Varies by 10x for Kraft-

Producing Countries

Carbon Emissions for Kraft Pulp Producing Countries


In United States, There is a 5x Difference in

Emissions at the Company Level

Carbon Emissions for U.S. Kraft Pulp Producers, by Company

*Each block represents a company


At $30/t CO2, This Can Quickly Mean Real Money ($15-30/mt for Kraft Producers)


Paper Industry has the Potential to Lead the

Development of the Bio-based Industry

Fiber Supply AbundanceAsset Availability for Conversion

(from stressed segments)

Alternative fibers in the marketBiomass “breakdown” technology

available

AVTG / iStock / Getty Images Plus / Getty Images


New Products Beyond Pulp and Paper Were

Recently Launched in the Market

Nanomaterials

Source: http://www.nippon.com/en/genre/economy/l00151/

CNF supplier:Nippon Paper Group

(Japan)


More Than 40 Countries Are Investing in Strategies

to Develop the Bio-based Industry

35

Source: Baumes (2016) - Emerging Biofuels and Bioproducts: Can they Jump Start the Bioeconomy?, German Bioeconomy Council (2015)

– Bioeconomy Policy (Part II): Synopsis of National Strategies around the World

Countries with programs to develop the bio-based industry


• Traverse the “valley of death”

• Be able to offer a profitable product

• Identify major risks limiting forest-based new materials “business”

• Understand opportunities for optimization

There are Challenges Involved in New Product

Development Activities


Major P&P Courses In U.S. are Expanding to

Bioproducts Research in Addition to P&P

Department of Wood and Paper Science created on 1948,

and renamed to Department of Forest Biomaterials in 2010

Founded in 1929 as Institute of Paper Chemistry (IPC)

Renamed as Renewable Products Institute (RPI) in 2014

Founded in 1965 as Pulp and Paper Technology, subsequently

changed to Bioresource Science & Engineering


• Historical context and accurate data make it possible to understand what will be coming next

• Paper industry in U.S. is developed, however improvements in technology and production costs will define competitiveness in the industry

• With lowering transportation costs, the paper industry is becoming more global than before

• The paper industry has potential and assets to develop new technologies and the fiber availability makes it easier to develop renewable markets

• Changes will not happen overnight, investments in technology and cost improvements are still needed.

The Future Ahead is Promising, Challenging, and

Innovative for the Paper Industry

Corporate Headquarters

50 Water Street

Norwalk, CT 06854 USA

T +1 203.854.5390

www.fisheri.com

Fisher International is an information services and management consulting firm

offering pulp and paper businesses better performance through the strategic

use of business intelligence.

NORTH AMERICA • LATIN AMERICA • EUROPE • NORDICS • ASIA

BETTER INTELLIGENCE. BETTER DECISIONS.

Camilla Abbati, Ph.D.

Senior Analyst and

Product Manager

Fisher International, Inc.

[email protected]

M +1 984.289.7697

T +1 203.854.5390

A Retrospective on 90 Years and the Future of the Paper ... · North America Paper Machine Capacity...

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Transcript of A Retrospective on 90 Years and the Future of the Paper ... · North America Paper Machine Capacity...