Global Dissolving Pulp Market Outlook China

Transcription

1 Global Dissolving Pulp Market Outlook China RISI Asian Conference May 2017 Rod Young Chief Economic Advisor

2 China Is The Driving Force Behind Dissolving Pulp Demand Viscose fibers lead the development Solid growth in total textile fiber usage Share gains for viscose fibers, mainly against cotton China accounts for 64% of global viscose fiber output Production of hi-alpha products is also growing Mainly in the cellulosic ethers sector Cellulose acetate limited by drop in cigarette consumption China accounts for 29% of global hi-alpha product output 2

3 World Textile Fiber Demand Million Tonnes Synthetic Cotton Cellulosic

4 Viscose Fiber Production Jumped 7% in China Last Year After slowing to just 2% growth in 2015 Rebound in cotton prices after support program abandoned Accelerating demand growth for all textile fibers Operating rates in viscose fiber sector hit 92% in 2016 Production expected to rise 5% in current year Limited by lack of capacity expansion Acceleration back to 7% growth projected for 2018 More investment in new capacity scheduled for next year 4

5 Growth in Chinese Viscose Fiber Production Thousand Tonnes Annual Production Growth

6 Global Viscose Fiber Production Million Tonnes China Other Asia Europe Americas

7 Chinese Production of Hi-Alpha Products Is Also Growing But on a much smaller scale than viscose fibers Cellulose acetate limited by declining cigarette usage Cellulosic ethers growing along with economy Products such as nitrocellulose and food casings also rising Hi-alpha pulp consumption even lower Due to furnish share being well below one For both major products, acetate and ethers 7

8 Global Hi-Alpha Production Million Tonnes Other Asia China Europe Americas

9 China Is Also a Major Factor on the Supply Side of Dissolving Pulp China is the largest producer of dissolving pulp With total capacity of 2.3 million tonnes in 2016 At 21 producing companies Accounting for 27% of world capacity However, capacity has stagnated since 2012 Declining competitiveness of cotton linter producers Offset by increasing wood-based capacity 9

10 Chinese Dissolving Pulp Capacity Million Tonnes Bamboo Cotton Wood

11 More Dissolving Pulp Capacity Is Coming in China Led by a major initiative by Asia Symbol To support viscose fiber expansion by Sateri Both pulp lines at Rizhao to be shifted toward viscose pulp Adding to supply already coming from Brazil and Indonesia Chenming also building a greenfield pulp mill Expected to be able to produce viscose pulp Chinese dissolving pulp capacity expected to jump 400,000 tonnes in

12 World Dissolving Pulp Capacity Million Tonnes Other Asia Other World Europe China Americas

13 Significant Additions to Capacity Are Also Scheduled Outside of China Sun Paper is building a greenfield mill in Laos APRIL is shifting more capacity to viscose pulp in Indonesia Sappi is swinging toward viscose pulp in the USA Viscose pulp remains attractive for existing swing mills Viscose pulp operating rates to weaken slightly Too much capacity despite good demand growth Hi-alpha pulp capacity utilization stabilizes after extended drop 13

14 World Dissolving Pulp Operating Rates Hi-Alpha Viscose

15 Viscose and Hi-Alpha Pulp Prices Switching Directions Viscose pulp prices peaked in November 2016 Headed downward since then Lower, although still high, cotton linter prices More supply coming into China Record March imports Hi-alpha pulp prices starting upward Supported by higher viscose pulp prices Good growth in cellulosic ethers segment Limited by continuing problems in cellulose acetate 15

16 Dissolving Pulp Prices in China US Dollars per Tonne $2,500 $2,000 Viscose Hi-Alpha $1,500 $1,000 $500 $

17 Viscose Pulp Profitability Will Be Under Pressure Declining cotton linter prices Adjustment to lower Chinese cotton output Slippage in global operating rates Relatively weak paper grade pulp prices by late this year Hi-alpha pulp profit margins stabilize After extended drop in Accelerating demand growth due to ethers market Offset by continuing capacity migration from viscose pulp 17

18 Dissolving Pulp Profitability Price/Variable Cost, Delivery to Shanghai Hi-Alpha Viscose

19 Thank you for your attention! For more information: World Dissolving Pulp Monitor 19