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The Implications of a Changing Raw Material Outlook and its Effects on Containerboard Production, Products and Manufacturing in the Future
ICCA/WCO GLOBAL SUMMIT
22-25 May, 2011
Outi Juntti, Pöyry Management Consulting
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May 2011
ICCA 2
ICCA/WCO GLOBAL SUMMIT 2011
PRESENTATION CONTENTS
Containerboard trends and outlook
Global Fiber Challenges
Containerboard Technology Development
Nanotechnologies
Conclusions
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ICCA 3
PÖYRY INTRODUCTION
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ICCA 4
GLOBAL EXPERTS IN CONSULTING AND ENGINEERING
Pöyry is a global consulting and
engineering company dedicated to
balanced sustainability and responsible
business
7 000 experts in about 50 countries
Project experience in over 100 countries
15 000 projects annually
Net sales in 2010 EUR 682 million
Listed on the NASDAQ OMX Helsinki
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ICCA 5
WIDE RANGE OF DEEP EXPERTISE
URBAN & MOBILITY
Urban planning
Real estate development
Transport planning
Rail infrastructure
Road infrastructure
Construction
management
Building design
WATER & ENVIRONMENT
Water
Wastewater
Waste
Environment
INDUSTRY
Pulp and paper
Chemicals
Minerals processing
ENERGY
Hydropower
Thermal power
Bio-renewables
Oil and gas
Nuclear energy
Transmission and distribution
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ICCA 6
CONTAINERBOARD TRENDS AND OUTLOOK
Market Development and Characteristics
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DEVELOPMENT OF GLOBAL CONTAINERBOARD MARKETS
North
America
Western
Europe
Japan
China
Other
AsiaLatin
America
Eastern
Europe
Rest of
the World
0
20
40
60
80
100
120
140
1990 1995 2000 2005
BY REGION BY GRADE
0
20
40
60
80
100
120
140
1990 1995 2000 2005
Mt
Mature
markets
Emerging
markets
Mt
70%
30%
40%
60% Kraftliner
Semi-chem
Recycled
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ICCA 8
Virgin
White-top
Recycled
7 %
3 %
90 %
36 %
5 %
59 %
42 %
6 %
52 %
66 %7 %
27 %
CONTAINERBOARD MARKETS BY REGION IN 2009
Latin America
9 million tons
Rest of Asia Pacific
25 million tons
Rest of the world
5 million tons
China
32 million tons
Europe
25 million tonsNorth America
28 million tons
20 %
12 %
68 %
4 %
4 %
92 %
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ICCA 9
MARKET AND INDUSTRY CHARACTERISTICS – NORTH AMERICA
Dominance of traditional products
– Virgin fibre based still close to 70% of
the market
– High basis weights
Crusial role in the global markets/
industry
– Kraftliner exports to Asia and Europe
– Fibre source for the Chinese
Role of corrugated
– Higher share of transportation
packaging
– Lower share of white-top
Capacity development
0
20
40
1990 2000 2010
Virgin
White-top
Recycled
Mt
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ICCA 10
MARKET AND INDUSTRY CHARACTERISTICS – EUROPE
Rapid industry development since mid
1990’s
– New recovered fibre based
machines, shut down of old capacity
– Development in corrugating
technology
Clear trend towards higher quality and
consumer packaging
– White-top and coated products,
– Micro-flutes, light-weighting and
multi-wall structures
Environmental and sustainability
awareness
– Packaging reduction
– Recycability
0
20
40
1990 2000 2010
Capacity development
Virgin
White-top
Recycled
Mt
+ 6,3 mt+ 6,1 mt
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MARKET AND INDUSTRY CHARACTERISTICS – ASIA
Massive industry boom
– 200 new machines built since 2000
Fibre is the key industry challenge
– Impact on global trade flows
Product development driven by export
industry
– Large share of transport packaging
– Light-weigting and higher quality
packaging in development phase
Domestic consumption expected to
pick-up
Capacity development
0
20
40
60
80
1990 2000 2010
Virgin
White-top
Recycled
Mt
+ 32 mt
+ 12 mt
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CONTAINERBOARD TRENDS AND OUTLOOK
Trends and Outlook
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17 %
35 %
50 %
40 %
33 %25 %
0 %
25 %
50 %
75 %
100 %
2005 2015E
>110
100-105
<100
Share of total
Containerboard & Corrugated
KEY TRENDS – LIGHT-WEIGHTING
Corrugated board basis weightEstimated RCF-fluting grammage
breakdown in EU25
500
550
600
650
700
750
800
1996 1998 2000 2002 2004 2006 2008
Europe
Germany
USA
Japan
China
Average weight g/m2
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B-flute
37 %
A-flute
3 %C-flute
24 %
Small flute
10 %
Double wall
25 %
Triple wall
1 %
KEY TRENDS – SMALL FLUTE AND MULTIWALL
Tightly linked to light-weighting. Single-wall still dominating structure, but the other
constructions grow faster.
E, F, G, N
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ICCA 15
KEY TRENDS – WHITE-TOP, HIGH-QUALITY PRINTING, SHELF-
READY PACKAGING
0
25
50
75
100
White-top Liners by End Use
Processed
food
Fresh
food
Consumer
durables
Bever-
ages
IndustrialPaper good,
direct mail
Shelf-ready packaging provides new opportunities for corrugated and has brought
it closer to the consumers. Required high-quality printing has increased used of
white-top linerboards.
Non-
food
Share of total corrugated markets
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ICCA 16
MARKET OUTLOOK UNTIL 2020
Healthy growth prospects globally
– Demand in Asia and otheremerging markets still growing
– New packaging solutionsprovide opportunities in maturemarkets
Prevailing product trends willcontinue
– Increasing demand on white-topgrades
– Increasing demand on recycledbased grades
– Increasing demand on light-weight grades
Good growth prospects;
CAGR 3 %/a
Increasing quality
requirements
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ICCA 17
FIBRE CHALLENGES
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DEVELOPMENT OF GLOBAL FIBRE MARKETS
0 %
25 %
50 %
75 %
100 %
1980 1985 1990 1995 2000 2005
RCP Share of Total Fibre
RCP
Pulp
0
50
100
150
200
250
300
350
400
450
1980 1985 1990 1995 2000 2005
Total Fibre Demand
RCP
Pulp
million t/aCAGR
1980-2009
Total
53 %
4.7 %/a
0.3 %/a
2.2 %/a
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RCP USE IN PAPERMAKING
51 % 50 % 46 %54 %
13 % 11 %12 %
19 %
13 %10 % 18 %
9 %7 %
13 % 7 %3 %
16 % 16 % 17 % 15 %
Glo
bal
Nor
th A
mer
ica
Eur
ope
China
Other
Tissue
Newsprint
Cartonboard
Containerboard
RCP Consumption by Paper Grades
Deinking
22 %
Mixed
18 %
High
grades
10 %
OCC
50 %
Consumption of RCP Grades
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ICCA 20
DEVELOPMENT OF GLOBAL RCP TRADE FLOWS
Million ton/a
-30 -20 -10 0 10 20 30
North America
Europe
China
Other Asia
Rest of World
1990
2005
2009
IMPORTERS EXPORTERS
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ICCA 21
0
10
20
30
40
50
60
70
80
90
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
%
COLLECTION RATE BY MAIN REGION 1995-2020
World average
N. America
Latin America
W. Europe
Asia
E. Europe
Forecast
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IMPLICATIONS ON CONTAINERBOARD INDUSTRY
Increasing collection rates impact on
both production process and
technolgy as well as on production
efficiency and economics
→Lower yield, more fibre needed
→More fines lower strenght, more
chemicals needed
→Quality fluctuations, focus on stock
preparation
Increasing global competition affect on
local availability
→Price pressure
→Volatility
→Larger sourcing areas
→Middlemen
Better products from lower quality raw material
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ICCA 23
NEXT GENERATION CONTAINERBOARD MILL – MEETING THE NEEDS AND EXPECTATIONS
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ICCA 24
CONTAINERBOARD PRODUCT DEVELOPMENT IN EUROPE
-LINERBOARD
UNBLEACHED
WHITE-TOPSTrend towards better print quality
1-2 layer coating
Cartonboard liners
Trend from testliner 2 to testliner 3
Typical basis weights: 90 g/m2 onwards
Increasing share of mixed paper
Kraftliner substitutes
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ICCA 25
CONTAINERBOARD PRODUCT DEVELOPMENT IN EUROPE
-MEDIUM
LIGHT-WEIGHT
RECYCLED
SEMI-CHEMICAL
SUBSTITUTES
Diminshing share of virgin fibre based
production - >Semi-chemical substitutes for
eg. Frozen food
Furnish: pre-consumer (kraftliner) clippings
From light weight (below 100 g/m2) to
ultra light-weight down to 65 g/m2
Furnish up to 100% mixed paper (EU
1.02)
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ICCA 26
DEVELOPMENT OF CONTAINERBOARD MACHINE CONCEPTS IN
EUROPE
Start-up Year 1980 1990 2000 2010
Technical
concept
W-type HB
2 Foudriniers
Conv 3 nip
press
Converflo
Bel Baie
(horizontal
double wire)
Extended nip
Dilution control
HB
Gap former
Shoe press
Hydraulic HB two
ply
High speed gap
former
Double shoe
press
Dimensions
Trim
Design speed
Capacity
4 900mm
450 m/min
75 000 t/a
7 460 mm
1000 m/min
230 000 t/a
7 600 mm
1 500 m/min
350 000 t/a
10 100 mm
1 900 m/min
650 000 t/a
Typical basis
weight
130-150 g/m2 110-120 g/m2 90- g/m2 65 - g/m2
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ICCA 27
CURRENT STATE- OF- THE-ART CONCEPT
STOCK
PREPARATION
HB & FORMING
PRESS SECTION
SIZE PRESS
Fractionation
→Better yield, lower contaminants
Hydraulic HB and Gap Former
→Formation, runnability
Two Shoe presses
→Dry content, productivity
Film sizer
→Higher speed, better control
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RECENT PROJECTS AND FUTURE OUTLOOK
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A FEW RECENT PROJECTS GLOBALLY
PROPAPIER
Germany 2010
VISY
Australia 2009SAICA
UK 2012
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DIMENSIONS
Testliner and fluting in the grammage 70-130 g/m2
100 % recycled fiber
Trim width after winder 10 000 mm
Design speed 1 900 m/min
CONCEPT
Dilution HB (OptiFlo)
High Speed Gap Former (OptiFormer)
Double Shoe Press (OptiPress)
Film Sizer (OptiSizer)
PROPAPIER, EISENHÜTTENSTADT PM2, GERMANY
On July 23, 2010 PM2 produced
2,099 tonnes of corrugating medium
and testliner 3 at an average basis
weight of 109 g/m2. Machine
efficiency reached 99.2 %.
Largest RCP based machine in the world – 650 000 t/a
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ICCA 31
SAICA
PARTINGTON PM11, UK
A greenfield mill of 425 000 t/a with a CHP
DIMENSIONS
Testliner and fluting in the grammage 75-125 g/m2
Raw material: Recovered fibre
Trim width after winder 7 500 mm
Design speed 1 700 m/min, operating speed 1600 m/min
CONCEPT
Dilution HB (OptiFlo)
High Speed Gap Former (OptiFormer)
Trinip with shoe
Film Sizer (OptiSizer)
Lower energy and water consumption Start-up scheduled beginning of 2012.
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ICCA 32
VISY, TUMUT PM10, AUSTRALIA - KRAFTLINER
Most recently started kraftliner machine – started in the end of a year 2009.
DIMENSIONS
Unbleached and white surface kraftliner; 150-400 g/m2
Raw material: virgin (plantation softwood) and recovered fiber
Trim width 7 490 mm
Design speed 1 200 m/min
CONCEPT
Hydraulic HB
3 Fourdriniers
2 shoe presses
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ICCA 33
WHAT CAN WE EXPECT FROM THE FUTURE
DIMENSIONS
– Width:
– Four corrugator roll machine a maximum;
– Speed:
– Size press and fiber quality are limiting going forward from 1600 m/min
onwards
CONCEPTS - NO MAJOR CHANGES
– Gap former
– Shoe press
– Film sizer
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ICCA 34
WHAT CAN WE EXPECT FROM THE FUTURE (CONT.)
• PRODUCTS
• Light-weighting will grow, BUT
• New machines eaching the limits around 60 g/m2
• Limited capabilities of the existing machines
• Better printability
• White-top
• Coating, 1-2 layers
• Fibre furnish:
• Deterioration of fibre quality; focus on stock preparation
• Flexibility
• Sizing helps but strenght properties can not be compensated
• Need for kraft
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ICCA 35
NEW TECHNOLOGIES
NANOTECHNOLOGY
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R&D IN FOREST CLUSTER RELATED TO NANOTECHNOLOGY
Main drivers
• Cost effectiveness
• Improved product quality, i.e.
value-added products
• Completely new products
including different by-products
Application areas
• Pulp/fibre
• Chemicals
• Pulping and paper machine
technology
• Paper, packaging and tissue
• Wood processing and products
• Specialties
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ICCA 37
TIMELINE FOR NANO-ENHANCED FIBER BASED PRODUCTS
2030+
2020+
2010+
• Dimensional stability,
homogenous structure
• Thinner/lighter paper
• Printability, e.g. control of surface
structure, printing ink consumption
• Optical properties
• Strength/stiffness
properties
• Replacement of
unit operations
2010+
2020+
2030+• Smart packaging, e.g. food
packaging, use of visible
indicators
• Mouldability
• Active barriers
• Barrier properties
• Speciality papers
• Sandwich structure
• Active packaging
• Self-adhesive labels
Value-added and quality
New products
Cost effectiveness/ process
improvements• Printing surface, which learns
• Catalytic properties
• Integration of new
materials into paper web
• Antibacterial papers
• Self-release papers
• Odour and taste
properties
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ICCA 38
NANOTECHNOLOGY – A FEW EXAMPLES OF APPLICATIONS
Papermaking machinery
– Reinforced composites
– Nano-structured surfaces
– Nano-sensors
Pulp and paper
– Nano-fibres to form extraordinary properties
– Nano-sensors for enhanced recycling
– Functional paper coating
– Smart paper
Packaging
– Active packaging
– Security applications
Metso
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ICCA 39
CONCLUSIONS
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ICCA 40
INDUSTRY OPPORTUNITIES AND CHALLENGES
Healthy growth opportunities
– Industrial production and retail development on emerging markets
– New packaging solutions in mature markets
Fibre challenges vs. quality requirements
– Increasing recovery rates and lowering RCP quality
– Inreasing containerboard quality requirements -> need for kraft
Focus on margin improvement
– Capacity and capex optimisation
– Efficiency throughout the value chain
– Other costs: energy, fixed
Sustainability – a Key Succes Factor Against Plastics
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ICCA 41
CONTACT:
NAME: OUTI JUNTTI
TITLE: PRINCIPAL
MAIL: [email protected]
PHONE: +358 10 33 22994
Thank You !