Pöyry has presented the company´s latest research result on the global graphic paper market.
– This market has entered the declining phase of its life cycle, but new market and product options are going to complement conventional wood products, said Timo Suhonen, Principal of Pöyry Management Consulting recently in Helsinki during the presentation of the study.
Pöyry has concentrates also its activities on power generation, transmission and distribution, forest industry, chemicals and bio refining, mining and metals, transportation, water and real estate sectors. The company is listed on the Helsinki Stock Exchange and is headquartered in Vantaa, Finland.
Global graphic paper firms are, according to Timo Suhonen, facing multiple challenges today; firms are no longer able to enjoy growth without stealing market shares from their rivals.
– Declining demand in the world decreased during the years 2007-2013 with 2.1 percent and so called mature markets even 5.6 percent. It has resulted in increased competition and declining profit rates, Suhonen told.
In this situation the graphic paper industry is developing several options to restore profitability.
– Some of these measures are cost cutting, operational excellence, reducing capacity, production adjustments, and closures of product lines or in the worst case completely exits, Suhonen clarified.
Others are trying to increase efficiency and market power or create better capacity management
And conversions to packaging like new products. Dwindling demand has also resulted in declining LWC paper prices; prices of other graphic papers have, according to Suhonen, shown similar trends.
– However, the Chinese, Asia-Pacific and Latin American graphic paper firms have performed better than companies of western or Japanese background. Overall, profitability of the industry has become weaker since the turn of the decade, said Suhonen.
During the last 20 years, the number of graphic paper firms has decreased by 1.2 percent, and the number of graphic paper machines by 1, percent.
The number of graphic paper manufacturing firms has been declining through consolidation and exits. The size of graphic paper firms has grown through M&A up to the latter part of the last decade. Since then, the largest companies have typically slimmed down in response to dwindling demand.
How to go forward in this situation? What are the corporate strategies? Pöyrys representatives are referring to the graphic paper firms which have adopted various strategies or combination of strategies as they adapt to declining demand.
Esa Sipilä, Senior Consultant of Pöyry Management Consulting, informed about Biorefining Opportunities in Pulp and Paper. According to Sipilä, new market and product options have emerged to complement conventional wood products.
– There are multiple definitions for Bio refining depending on the context. These are new technologies to produce bio based products and replace fossil fuels. In the future we think: Flexible and agile production of biomass based products in volatile global markets focusing on profitability. For pulp and paper industry this means more diversified production processes that enable changes in product portfolio according to prevailing market conditions. Modern bio refinery will create higher profits through the lifecycle of the investment through peaks and valleys of market prices, Esa Sipilä said and introduced two international examples and cases:
CASE 1: BIOVERNO TALL OIL REFINERY
UPM Lappenranta, Finland
The Lappeenranta Biorefinery is UPM's first step in its strategy towards being a key player in advanced biofuels production.
The new facility will use a hydrotreatment technology for crude tall oil from softwood pulping. The first step of the process includes pretreating the tall crude oil to remove metals and water. The pretreated tall oil is fed into a hydrotreatment process (Haldor Topsoe), the gases are separated and recycled back, and the liquids are distilled to obtain the final products.
The bio refinery will produce annually ~100,000 tonnes of renewable diesel for transport. Construction of the bio refinery began in the summer of 2012 at UPM’s Kaukas mill site and will be completed in 2014. UPM’s total investment will amount to approximately 150 MEUR.
CASE 2: LIGNIN SEPARATION BY LIGNOBOOST
Domtar Plymouth, USA
Domtar has started up the first commercial-scale LignoBoost™ lignin separation plant at its Plymouth, North Carolina mill, in the USA.This LignoBoost technology is developed in Sweden by Chalmers University and Innventiaand now owned by Metso that has supplied the Plant. Domtar’s production of BioChoice™ lignin began in February 2013 with a targeted rate of 75 tons a day (~27.000 t/y). Separation of a portion of the mill’s total lignin production also off-loads the recovery boiler, and allows an increase in pulp production capacity. The separated lignin can be used as fuel in the lime kilns or used for resins, thermoplastics or other chemicals production in the future.
