UPM-Biofore-Magazine-3-2016-EN

the demand for pulp-based products,” says Petri Jokinen , Senior Principal at PöyryManagement Consulting. A rapidly growing product group are tissue products such as toilet paper, facial tissue, hand towels and paper handkerchiefs. The demand for pulp-based board and other packaging materials is also growing. “The lifestyle of the increasingly wealthy middle class is becoming more westernized. Instead of buying products from traditional outdoor markets, consumers increasingly buy packaged products at supermarkets,” Jokinen describes. The rapid growth of e-commerce will also push demand for packaging materials, which are needed for the transport of ordered goods. Growing packaging needs will also increase demand for pulp-based labels and other specialty products. Consumption on the rise in China China is an increasingly important player in the global pulpmarket, already accounting for approximately one third of global pulp consumption. According to Jokinen, the recent deceleration of China’s economic growth will not have the same effect on pulp as it will on the demand for metals and other capital goods. “In China, the focus of the economy is shifting from investment to household consumption. This means that the demand for packaging and personal care products will grow.” Jokinen expects the Chinese pulp market to remain on a growth track for a long time. “It will take decades before the country’s standard of living is at the western level.” Jokinen adds that the demand for pulp is also growing in other emerging economies, including other densely populated countries in Asia. “Indonesia, Vietnam and India are at different stages of development, but the middle-class populations of all three countries are growing

and becoming more affluent. The expansion of the pulpmarket will continue for several decades in these countries.” Less recycled fibre, more pulp “Contrary to what might seem logical, reduced consumption of printing papers does not reduce the demand for pulp. In fact, the demand for pulp may even increase,” Klinga says. Printing papers are recycled after use, and the recycled fibre is used as rawmaterial for making products such as tissue and board. When the amount of available printing paper decreases, there will be less recycled fibre available, and hence more need for pulp. The decreased consumption of printing paper is thus perhaps surpris­ ingly beneficial for pulp demand, because only a small portion of pulp is used in the production of printing paper, whereas new pulp will be needed to make up for the decreased availability of recycled fibre. Pulp bales travel best UPM’s recent investments will further strengthen the company’s position as an international pulpmarket leader, says Klinga. “A growing volume of pulp is needed for products that are manufactured close to consumers. For instance, in the case of tissue, it is not profitable to transport the end product fromEurope to China, so local production plants do the manufacturing.” Pulp bales are the most cost- efficient solution for transporting raw material, even over long distances to markets that have no rawmaterials available locally for pulp production. The majority of the pulp that UPM sells in China arrives in bales from the Fray Bentos mill in Uruguay. China lacks sufficient rawmaterials to cover its growing pulp demand, whichmeans that pulp imports will continue in the future.

Recent investments will further strengthen UPM’s position as an international pulp market leader.

Increase in end use

THE COMPETI- TIVE EDGE OF ECOLOGICAL PULP Corporate responsibility is becoming increasingly important in the pulp market, states Anssi Klinga, Senior Vice President at UPMPulp. The raw material used for manufacturing UPMpulp is wood that complies with the principles of sustainable forestry. The company furthermore always knows the precise origin of all of the wood that it uses. “Responsibility starts with sustainable wood sourcing, but it is also critical to act responsibly along the entire production chain, from forests to pulpmills and pulpmills to customers. Corporate responsibility is also benchmarked by performance in areas such as work safety, employee competence, continuous improvement at mills, transparent reporting and dialogue with stake­ holders,” Klinga emphasizes.

Mt 500

Megatrends accelerate the demand for wood fibres

Decline in Graphic papers

400

Strong growth in Container­ boards (brown fibre) Healthy growth in other White Papers & Boards

300

High population growth areas in Asia, Africa and the Middle East enter the world of “disposable products” (tissue & hygiene products, food packaging)

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200

100

0

The ageing population is a driver of the growing hygiene segment (products for the elderly)

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2010 2020 2030

Source: UPM

Pulp demand is expected grow in the future. The trend is supported by urbanization and the increasing purchasing power of consumers.

The urbanisation trend is going strong. Growing urban demand for food and other consumables is increasing the need for packaging products (carton board, container board, tissue, specialty)

+++

Market to grow 2.5% per year Consulting company Pöyry estimates that the global demand for bleached chemical market pulp will grow by approximately 2.5% per year for the next ten years. This trend is supported by global megatrends, first and foremost urbanization and the increasing purchasing power of consumers. “The disposable income of the middle class is growing, particularly in emerging markets. This will increase

Fast growing e-commerce requires increasing amounts of cost efficient and sustainable packaging solutions (carton board, container board, specialty)

++

Continued penetration of digital solutions is reducing demand for graphic papers demand and decreasing the availability of white recycled fibres

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