fastmarkets risi global paper packaging outlook · global economy growing unevenly, risks...
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Fastmarkets RISI Global Paper Packaging Outlook
2019 | Fastmarkets | Global Packaging Outlook
Key issues from the seminar and conference
1
Factors that are affecting global paper packaging demand
• Uncertain macroeconomic environment
• Challenges for consumer product companies
• Policy changes in China
2019 | Fastmarkets | Global Packaging Outlook March 20192019 | Fastmarkets | Global Packaging Outlook
Global economy growing unevenly, risks heightened
2016 2017 2018 2019 2020
USA
2016 2017 2018 2019 2020
Europe
2016 2017 2018 2019 2020
China
2016 2017 2018 2019 2020
Latin America
Annual Real GDP Growth32019 | Fastmarkets | Global Packaging Outlook March 20192019 | Fastmarkets | Global Packaging Outlook
The changing face of retail:
US food preferences
2019 | Fastmarkets | Global Packaging Outlook
The changing face of retail:
E-commerce, a US example
2019 | Fastmarkets | Global Packaging Outlook
US corrugated box shipments and containerboard cutup outpaced manufacturing from 2014-2017
ANNUAL GROWTH, PERCENT
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
11 12 13 14 15 16 17 18Industrial production Corrugated Containerboard
2019 | Fastmarkets | Global Packaging Outlook
Just how large is the boost from e-commerce?
2019 | Fastmarkets | Global Packaging Outlook 7
HARD DATA ARE DIFFICULT TO FIND, LEADING TO SUBJECTIVE ESTIMATES
• Discernable upturn in ratio of shipments to nondurable goods production
• What would shipments have been if the ratio remained at the 2004-2013 level?
30,500
31,000
31,500
32,000
32,500
33,000
33,500
34,000
34,500
35,000
35,500
04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
Box shipments relative to nondurable goods production,
million square meters per index unit
Just how large is the boost from e-commerce?
2019 | Fastmarkets | Global Packaging Outlook 8
BOX SHIPMENTS WOULD HAVE BEEN UP 4.5% FROM THE 2014 LOW JUST FROM GROWTH IN NONDURABLES
• Actual 2018 shipments were up 7.7%
• E-commerce estimated to have added 2.1 billion square meters of demand by 2017
• Boost from e-commerce was not discernable in 2018 31,000
32,000
33,000
34,000
35,000
36,000
37,000
10 11 12 13 14 15 16 17 18
Box shipments, million square meters
Baseline E-commerce
Downside from e-commerce: shifts in product design
2019 | Fastmarkets | Global Packaging Outlook 9
AMAZON FRUSTRATION FREE PACKAGING• August 2019 initial certification
deadline
• Overpackaging will begin to abate
• Boxboard demand can be undercut when packaging gets an e-commerce redesign
The changing face of retail: The war on disposable plastic waste
2019 | Fastmarkets | Global Packaging Outlook
Plastic products are beginning to be replaced by paper products
Single use plastic bags
Take home food containers
Beverage can rings?
Hot drink cups
Drinking straws
Water bottles?2019 | Fastmarkets | Global Packaging Outlook
Non-paper alternatives also exist
• Reusables top the list
International trade issues:
China’s shifting recovered paper import policy
2019 | Fastmarkets | Global Packaging Outlook
The impact of China’s paper for recycling import policy changes
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WILL CHINA BAN ALL PFRIMPORTS BY 2020 OR 2021?
• Chinese boxboard producers were hit hard by the ban on mixed paper imports
• Containerboard producers are struggling with the ongoing issues with OCC
0
5
10
15
20
25
30
35
11 12 13 14 15 16 17 18 19 20
China PfR imports, million tonnes
ONP OCC Other Mixed Paper
?
Regulatory Loss
How has China dealt with the 2017-2018 decline in paper for recycling imports?
DEMAND DESTRUCTION FOLLOWING STEEP PRICE INCREASES OF 2017 HELPED EASE THE PAIN IN 2018
Increased domestic PfR
collection
Market pulp imports
Paperboard trade position shifts
2019 | Fastmarkets | Global Packaging Outlook
China’s boxboard trade position is already shifting dramatically
2019 | Fastmarkets | Global Packaging Outlook 15
PRODUCERS TOOK A BIG HIT FROM THE LOSS OF MIXED PAPER IMPORTS
-400
-200
0
200
400
600
800
1,000
1,200
1,400
1,600
10 11 12 13 14 15 16 17 18
Chinese net exports, thousand tonnes
Asian boxboard exporters could only pick up a small amount of the slack from the shift in Chinese policy (net exports to world)
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
10 11 12 13 14 15 16 17 18
Net
exp
orts
, milli
on to
nnes
Asian suppliers
South Korea Taiwan India Indonesia
0.0
1.0
2.0
3.0
4.0
5.0
6.0
10 11 12 13 14 15 16 17 18
Non-Asian suppliers
North America Western Europe Brazil Chile
2019 | Fastmarkets | Global Packaging Outlook 16
The adjustments in China’s containerboard market are more challenging than for boxboard
2019 | Fastmarkets | Global Packaging Outlook 17
REDUCED OCC IMPORTS HAVE HUGE IMPLICATIONS
• Chinese companies have begun buying overseas assets that can supply pulp or containerboard to China
• But buyers have had to reach into the export market to find sufficient supply
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
10 11 12 13 14 15 16 17 18
Chinese net imports, million tonnes
Boxboard Containerboard
The smaller exporters to the world reaped most of the benefits from the shift in Chinese policy(net exports to world)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
10 11 12 13 14 15 16 17 18
Milli
on to
nnes
Nontraditional containerboard exporters
Japan South Korea Taiwan Indonesia Thailand India
0
1
2
3
4
5
6
7
8
9
10
10 11 12 13 14 15 16 17 18
Milli
on to
nnes
Traditional containerboard exporters
North America Western Europe Brazil South Africa Oceania
2019 | Fastmarkets | Global Packaging Outlook 18
Global Packaging Summary
1.9%• RESOLUTION OF TRADE DISPUTE BETWEEN USA & CHINA SHOULD FUEL
REVIVAL IN GLOBAL ECONOMIC GROWTH
• SHIFTS IN RETAIL PROVIDING BOOST TO CORRUGATED DEMAND
• GROWING NUMBER OF BANS ON DISPOSABLE PLASTIC PRODUCTS PROVIDING GROWTH OPPORTUNITIES FOR BOXBOARD AND KRAFT PAPER
• POLICY SHIFTS IN CHINA WILL CONTINUE TO ALTER GLOBAL TRADE PATTERNS
Projected global packaging demand growth, 2019-2020
2019 | Fastmarkets | Global Packaging Outlook