11272020Fri
Last updateWed, 25 Nov 2020 4pm

Pulp and Paper: Changing Habits

Different sectors of the pulp and paper industry have reacted differently to conditions during the pandemic, conditions affected by the surging demand for paper products, said Soile Kilpi of AFRY, an international engineering, design and advisory company. Kilpi updated attendees on the status of the pulp and paper market at VMA’s Market Outlook Workshop, held in August.

Larger companies are improving operations and may be closing some facilities and investing in others. Midsize companies are making investments in new assets.

All these steps are related to increases in market pulp and private label products, Kilpi said. High-quality, private label products are now the name of the game for the consumer industry, she said.

Kilpi reviewed the performance of market segments from January through the end of May of 2020.

  • Corrugated boxes and folding cartons were up slightly in the first five months. Factors affecting these markets include manufacturing disruption from COVID-19, a surge in e-commerce sales, panic buying and stockpiling in March and an overall increase in consumer spending in grocery stores.
  • Market pulp (pulp not yet made into paper) was up 11%. Kilpi attributed this to consumers’ panic in buying tissue and hygiene products. Also, with the decrease in office activity, the supply of recycled office paper was down, causing producers to buy more market pulp.
  • Food service board products were down almost ten percent during the same period because of closures and limits placed on restaurants and cancellation of sporting events, concerts and other outside-the-home food and beverage venues. Bars and restaurants experienced lost sales of 50% in April and 40% in May.
  • Publication and office paper were both down more than 17%. This was from widespread layoffs and office closures, a plunge in advertising and a decline in consumer spending.

One factor will likely remain going forward: The coronavirus has changed consumer habits, Kilpi said. Different sectors will continue to show differences in growth. The tissue sector has experienced a change in the volumes of at-home and away-from-home products with capacity being retrofitted to more at-home. The containerboard and carton board markets are likely to increase with the faster growth of e-commerce and the strong grocery channel resulting from people staying close to home. The oversupply in this category that was developing before COVID-19 may mean project delays for the future. The most negative outlook is for printing and writing papers, continuing to reflect changes in how and where people work, some of which were happening already but seem to have accelerated because of the pandemic.

In conclustion, at-home demand of tissue will remain solid during and after the current crisis. Demand and capacity of containerboard will be affected by oversupply. Market pulp demand for graphic papers will be severely impacted.  

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