Global Tissue Outlook with Focus on European Developments

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Global Tissue Business Outlook
With Special Focus on European Developments
European Paper Week, Brussels, Belgium
November 17-19, 2015
Esko Uutela, Principal, Tissue, RISI
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Agenda
• Recent Global Trends
• North American Outlook
• Latin American Outlook
• Asian Outlook
• European Outlook
• Summary of Global Outlook
• Concluding Remarks
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RECENT GLOBAL TRENDS
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World Tissue Consumption by Region, 2014
China passed Western Europe in 2014 and is now the second-largest
tissue consuming region worldwide; Latin America is number four
Million Tonnes, Share (%) of the Global Total
6.4 (19.2%)
8.6 (25.7%)
1.9 (5.5%)
6.5 (19.5%)
1.9 (5.8%)
1.2 (3.7%)
2.0 (6.1%)
0.7 (2.1%)
3.8 (11.2%)
0.4 (1.2%)
Global Consumption: 33.5 Million Tonnes (2014)
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Annual Growth in the Global Tissue
Market
Relatively stable growth with the exception of the Great Recession
in 2009, volume growth slightly above 1.0 million tonnes per year
1,200
6
Relative Growth
1,000
5
800
4
600
3
400
2
200
1
0
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
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Relative Growth, Percent per Year
Thousand Tonnes
Volume Growth
Regional Volume Growth of Tissue
Consumption, 2000-2014
Latin America shows
the second-largest
volume growth
One-third
of global
growth in
China!
Total Global Growth: 12.5 Million Tonnes (894,000 Tonnes per Year)
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World Tissue Consumption by Region
China has passed Western Europe in market size, Asia Far East Japan
and soon also Eastern Europe will be larger market than Japan
Global Consumption: 33.5 Million Tonnes (Preliminary Figure for 2014)
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NORTH AMERICAN OUTLOOK
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North American Tissue Market Growth Has
Slowed Down in the Past Five to Six Years
Focus on product value, lightweighting cutting volume growth
3.0
Growth Rate, Percent per Year
2.5
Average Growth: 1.25% per year
2.0
1.5
1.0
0.5
0.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
-0.5
-1.0
-1.5
-2.0
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US Tissue Imports Growth, 2008-2014
Canada continues to be the main US import source for tissue, but
China has taken the second position before Mexico and Indonesia
Average growth rate, 2008-2014: +2.5% per year
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Main US Tissue Import Sources
Relative Shares of Total Imports, 2014
Total Imports: 299,400 Tonnes
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Total Imports: 502,100 Tonnes
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Expected Growth in US Tissue
Consumption by Business Sector
At-Home retailer labels will show strong growth of about 600,000
tonnes in 2010-2017, while At-Home branded volume remains flat
Market Volume
4,5
No Growth
4,0
Million Tonnes
3,5
2010
2011
2012
2013
2014
2015
2016
2017
Growth 1.7% per year
3,0
2,5
Growth 6.5% per year
2,0
1,5
1,0
0,5
0,0
AH Brands
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Retailer Labels
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AfH
Major Tissue Capacity Changes
(>10,000 t/a) in North America, 2014-2016
2014
• ST Tissue, Franklin, VA, USA (capacity creep-up)
• Orchids Paper, Pryor, OK, USA (PM1 & PM2 closures)
• Cascades Tissue, St. Helens, OR, USA (PM conv.)
2015
•
Double Tree Paper/Royal Paper, Gila Bend, AZ, USA
•
Orchids Paper, Pryor, OK, USA
•
Lincoln Paper & Tissue, Lincoln, ME, USA
18,000 t/a
-12,000 t/a
50,000 t/a
56,000 t/a
29,000 t/a
27,000 t/a
-19,000 t/a
37,000 t/a
2016
• First Quality Tissue, Anderson, SC (new TAD PM)
64,000 t/a
• Von Drehle Corp., Natchez, MS, USA (NTT PM)
32,000 t/a
• St. Croix Tissue (APP), Baileyville, ME, USA
120,000 t/a
• Confidential, USA
64,000 t/a
• First Quality Tissue, Anderson, SC, USA (ATMOS PM) 68,000 t/a
348,000 t/a
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Major Tissue Capacity Changes
(>10,000 t/a) in North America, 2017-2018
2017
• Orchids Paper Products, Barnwell, SC, USA (NTT PM)
• Resolute Forest Products, Calhoun, TN, USA
• First Quality Tissue, Lock Haven, PA, USA (TAD PM)
Potential Projects:
• Kruger Tissue, Memphis, TN or Canada (TAD PM)
• Sofidel North America, Circleville, OH, USA
• Procter & Gamble, Box Elder, UT, USA (TAD PM)
• ST Tissue, Franklin, VA, USA
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32,000 t/a
60,000 t/a
64,000 t/a
156,000 t/a
60,000 t/a
70,000 t/a
72,000 t/a
64,000 t/a
266,000 t/a
Net Capacity Change* and Average Tissue
Capacity Utilization in North America
Any new expansion adding to the committed capacity would
change the current outlook to be even more negative
A lot of new capacity to come on stream in 2016-2017,
utilization rate will head south if no closures occur
Thousand Tonnes
300
98
96
94
200
92
100
90
88
0
86
84
-100
Capacity Change
Capacity Utilization
-200
82
80
*Based on committed projects only
15
100
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Capacity Utilization, Percent
400
LATIN AMERICAN OUTLOOK
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Main Latin American Tissue Markets, 2014
The five largest markets accounted for 77% of total consumption
Brazil
30%
All Others
9%
Costa Rica
2%
Ecuador
2%
Guatemala
2%
Peru
4%
Mexico
27%
Venezuela
4%
Chile
6%
Colombia
6%
Argentina
8%
Total Market Size: 3.7 Million Tonnes
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Latin American Tissue Market Shows
Varying Annual Growth but a Positive
Trend
Economic turbulences and political instability causing problems,
dissappointing growth in 2014
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Growth Rate, Percent per Year
10
Average Growth, 4.5%/a
8
6
4
2
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
-2
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Volume Growth of Latin American Tissue
Consumption by Main Country, 2004-2014
In the past 10 years, growth has been strongest in Brazil, followed
by Mexico and Argentina
500
450
Thousand Tonnes
400
350
300
250
200
150
100
50
0
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Expected Volume Growth of Latin
American Tissue Demand by Main
Country, 2013-2017
Thousand Tonnes
Brazil clearly heading the Latin American market expansion
20
200
180
160
140
120
100
80
60
40
20
0
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Net Capacity Change* and Average Tissue
Capacity Operating Rate in Latin America
Project delays and strong demand helping a lot, but emerging new
projects could change the outlook drastically in the medium term
Thousand Tonnes
300
250
Capacity Change
95
Capacity Utilization
90
85
200
80
150
75
100
70
50
65
0
60
* Based on committed projects only
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Capacity Utilization, Percent
100
350
ASIAN OUTLOOK
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Asia Offers Major Potential for Tissue
Asia accounts for 60% of world population and 42% of global GDP,
but only 35% of tissue consumption
Share of Population
Share of GDP
N&M
East
4%
N&M
East
5%
Rest of
the
World
40%
Asia Far
East
35%
Asia Far
East
16%
Japan
5%
China
16%
Japan
2%
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China
19%
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Rest of
the World
58%
Main Asian Tissue Markets, 2014
China dominating, Asia Far East now larger than Japan
N&M East
11%
Japan
16%
China
56%
Asia Far East
17%
Total Market Size: 11.7 Million Tonnes
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Recent Growth Rates of Chinese Tissue
Consumption
The Chinese tissue market has been in a very strong growth
phase, but since 2011 market growth has been disappointing
Growth Rate, Percent per Year
14
Recently, growth has been slowing
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Average growth: 7.9% per year
10
8
7.9
7.8
7.0
9.9
8.5
8.0
10.0
9.0
8.2
6.9
6.7
7.1
6.2
6
4
2
0
02/01 03/02 04/03 05/04 06/05 07/06 08/07 09/08 10/09 11/10 12/11 13/12 14/13
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Estimated Regional Division of Tissue
Consumption in China, 2013
Thousand Tonnes
Northeastern Economic Zone
347
Bohai Bay Rim Economic Zone
Western Economic Zone
181
North Central Region
798
Cheng Yu Economic Zone
1,252
Yangtze River Delta Economic Zone
1,094
502
South Central Region
1,019
Pearl River Delta Economic Zone
917
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Estimated Regional Per Capita Tissue
Consumption in China, 2013
Kilograms per Person
9.5
Beijing
Northeastern Economic
3.8
Zone
Bohai Bay Economic Rim
Western Economic Zone
2.8
Northern Central
Region
3.5
Cheng Yu Economic Region
4.5
Southern Central
Region
3.3
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5.0
Shanghai
Yangtze River Delta
Economic Zone
Pearl River Delta
Economic Zone 6.4
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6.9
11.6
Chinese Tissue Exports Growth, 2008-2014
Chinese tissue exports are exploding and are shipped to
practically every corner of the world, with Asia Far East, North
America and Japan being the largest buyers, followed by Oceania
Average growth rate, 2011-2014:
+20% per year, but no growth
expected in 2015
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Comparison of GDP and Tissue
Consumption Growth in China, 2008-2017
Tissue consumption growth will closely follow economic growth
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Expected Growth Rates of Asian Tissue
Consumption, 2014-2017
Growth Rate, Percent per Year
Strong growth in major markets with Japan, South Korea and Taiwan
being exceptions, India to gradually take off, China slowing
30
10
Average Growth: 5.4% per year
8
6
4
2
0
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Chinese Investments Exploding, but
Closures and Project Delays Expected
There is a real investment peak with too much capacity being
built, but currently also a wave of capacity closures in the industry
Effective Capacity Change*
Thousand Tonnes per Year
2,000
1,750
1,500
New Projects
Closures
Net Capacity Change
1,250
1,000
750
500
250
0
-250
2012
2013
2014
2015
-500
-750
-1,000
* PM start-up/learning curves considered
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2016
2017
Net Capacity Change* and Average
Capacity Utilization in the Asian Tissue
Industry
Overcapacity is obvious, although project delays may help
2,500
Capacity Change
Thousand Tonnes
2,000
Capacity Utilization
90
1,500
85
1,000
80
500
75
0
70
*Based on committed projects only, learning curves considered
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95
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Capacity Utilization, Percent
100
EUROPEAN OUTLOOK
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Main European Tissue Markets, 2014
The four largest markets account for exactly half of European
tissue consumption
Germany
17%
All Others
15%
UK
13%
Greece
2%
Poland
5%
France
10%
Benelux
5%
Nordic Countries
6%
Russia
7%
Iberian Peninsula
10%
Total Market Size: 8.3 Million Tonnes
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Italy
10%
Eastern European Importance Increasing
Rapidly in the European Tissue Business
2000
Other
EE
9%
2014e
Russia
7%
Russia
3%
Other
EE
15%
WE
78%
WE
88%
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Forecast European Volume Growth of
Tissue Consumption by Main Country,
2013-2017
Russian growth is stunted by the poor economic outlook
Thousand Tonnes
120
100
80
60
40
20
0
Total Expected Growth: 701,000 Tonnes
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Tissue Trade Balance in Western Europe by
Country, 2014 vs. 2004 (+ Net Exports, - Net Imports)
The UK is the by far largest regional tissue net importer, followed by the
Benelux, Spain is small net exporter, Portugal small net importer
… a lot of characteristics remain similar …
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Major Capacity Changes (>8,000 t/a) in the
Western European Tissue Industry, 2013-2014
Keeping in mind the less than 400,000 t increase in demand for WE between
2013-17, the planned and potential projects are dangerously high & growing!!!
2013:
• various projects but also three major closures, net change 84,000 t/a
2014:
• Cartiera Eurotec, Fabbriche di Vallico, Lucca, Italy
18,000 t/a
• FRIPA, Miltenberg, Germany
-17,000 t/a
• Nueva Socarpi (Eurovast), Lanciole, Pistoia, Italy
13,000 t/a
• LC Paper, Besalu, Spain
40,000 t/a
• FRIPA, Miltenberg, Germany
36,000 t/a
• Virtisu (CEL), Bilbao, Aranguren, Zalla-Vizcaya, Spain
26,000 t/a
116,000 t/a
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Major Capacity Changes (>8,000 t/a) in the
Western European Tissue Industry, 2015
2015:
• Cominter Tisu (ex Hernani), Guipuzgoa, Spain (PM3 restart)
• Cartiera della Basilica, Lugliano, Bagni di Lucca, Italy (net)
• Fortissue (SUAVECEL), Viano do Castelo, Portugal
• Fourstones Paper Mill Co., Leslie, Scotland, UK
• Papergroup, San Gennaro, Lucca, Italy
• WEPA Group, Bousbecque, Lille, France
• AMS BR Star Paper, Vila Velha de Rodão, Portugal
• SCA, St.-Cyr-en-Val, France
• SCA, Stubbins, UK (closure plan announced)
• WEPA Group, Giershagen, Marsberg, Germany
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22,000 t/a
16,000 t/a
30,000 t/a
25,000 t/a
26,000 t/a
32,000 t/a
32,000 t/a
-35,000 t/a
-35,000 t/a
32,000 t/a
215,000 t/a
Major Capacity Changes (>8,000 t/a) in the
West. European Tissue Industry, 2016 and later
2016-2017:
• Isma 2000, La Pobla de Claramunt, Spain
• Paper Prime (Trevipapel), Vila Velha de Rodão, Portugal
• Renova, Torres Novas, Portugal (NTT PM)
• Norske Skog, Bruck, Austria
• Portucel, Cacia, Portugal
12,000 t/a
32,000 t/a
35,000 t/a
70,000 t/a
70,000 t/a
219,000 t/a
Potential Projects (2017-2018):
• Goma-Camps, Ejeo de Caballeros, Spain, Italy
• ICT Iberica, El Burgo de Ebro, Spain or other location
• Accrol Paper, Blackburn, Lancashire, UK
• Delipapier (Sofidel), Ingrandes, France
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60,000 t/a
70,000 t/a
60,000 t/a
60,000 t/a
250,000 t/a
Net Capacity Change* and Average Capacity
Operating Rate in Western Europe until 2018
European investments will push capacity utilization down in 2014-2017 and
several planned projects indicate this trend could continue
250
Capacity Change
93
Capacity Utilization
92
91
150
90
89
100
88
87
50
86
Capacity Utilization, Percent
Thousand Tonnes
200
94
85
0
84
* Based on committed projects only!!!, … meaning, the red line development is very likely
to further drop
©
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©
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Major Capacity Changes (>8,000 t/a) in the
Eastern European Tissue Industry, 2014-2015
2014:
• Hanke Tissue, Kostrzyn, Poland
• Petrocart, Piatra Neamt, Romania
• Petrocart, Piatra Neamt, Romania
• SCA, Sovetsk, Tula, Russia
• Paperka, Muniks, Smolevichi, Belarus
• Syktyvkar Tissue Group, Semibratovo, Russia
• Fabryka Papieru Kaczory, Margonin, Poland
• Hayat Kimya Group, Alabuga, Tatarstan, Russia
2015:
• AB Grigiskes, Traku, Vilnius, Lithuania (new PM + closures)
• Fabryka Papieru i Textury Beskidy, Wadovice, Poland
• LLC Pulp Invest, Kazan, Tatarstan, Russia
• Claire's, Nikopol,Bulgaria
• Syassky, Syasstroy, Russia
• SC Metalicplas Impex, Dej, Romania
• ICT Poland, Kostrzyn, Poland
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15,000 t/a
-10,000 t/a
25,000 t/a
60,000 t/a
14,000 t/a
30,000 t/a
21,000 t/a
70,000 t/a
225,000 t/a
21,000 t/a
17,000 t/a
27,000 t/a
16,000 t/a
-20,000 t/a
30,000 t/a
70,000 t/a
161,000 t/a
Major Capacity Changes (>8,000 t/a) in
the European Tissue Industry, 2016-2017
2016-2017:
• Firma W. Lewandovski, Wloclawek, Poland
• Firma W. Lewandovski, Wloclawek, Poland
• Wolma/Paper Recycling, Russia
• Syassky, Syasstroy, Russia
• Arkhbum Tissue Group (APPM), Vorsino, Russia
20,000 t/a
-15,000 t/a
21,000 t/a
38,000 t/a
70,000 t/a
134,000 t/a
In addition, there is a number of potential projects still under consideration
43
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Net Capacity Change* and Average Capacity
Operating Rate in Europe until 2018
European investments will push capacity utilization down in 20142016 and several planned projects indicate this trend could continue
Thousand Tonnes
300
Capacity Change
93
Capacity Utilization
92
250
91
200
90
89
150
88
100
87
86
50
85
84
0
* Based on committed projects only
44
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Capacity Utilization, Percent
94
350
SUMMARY OF GLOBAL OUTLOOK
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Anticipated Growth in the Global Tissue
Market
Tissue consumption is expected to benefit from improving global
economic growth
46
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Expected Regional Volume Growth of
Tissue Consumption, 2013-2017
Volume growth dominated by China, followed by Latin America
Thousand Tonnes
2,000
1,500
Latin America clearly #2
growth region
1,000
500
0
Total Expected Global Growth: 4.7 Million Tonnes
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39% of
global
growth in
China!
World Tissue Capacity Change*, 2000-2018
Thinking of some 1 million tons of demand growth, too much capacity coming
on stream in 2015-2017! The outlook is not encouraging for new investments.
3.500
3.000
Thousand Tonnes
2.500
N. America
W. Europe
E. Europe
L. America
N&M East
Japan
China
Asia Far East
Africa
Oceania
2.000
1.500
1.000
500
0
-500
* Based on committed projects only
48
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Project delays
can be expected
Net Capacity Change* and Average Capacity
Utilization in the Global Tissue Industry
Major capacity closures could improve outlook, but only marginally.
Global overcapacity is the name of the game!
Capacity Change
Capacity Utilization
Thousand Tonnes
3.000
88
2.500
86
2.000
84
1.500
82
1.000
80
500
78
0
76
* Based on committed projects only
49
90
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Capacity Utilization, Percent
92
3.500
Concluding Remarks
• China's growth is slowing and also cutting average global
growth to 3.6% per year, which is still good, although down
from 4.0% earlier. But China will continue to be the main
driving force of global tissue industry expansion, followed
by Latin America and the Middle East. Project delays will be
common.
• North American developments are characterized by slow but
steady growth and quality upgrading—now in the AfH sector
as well—and fights between brands and private labels.
• In Europe, the tissue business had a rather quiet phase, with
disappointing recent growth, but now many new plans are
moving forward, we can only hope the consumption will
show a more positive trend than in the past few years.
Europe's outlook is also shadowed by the ongoing political
tension due to the Russian-Ukrainian conflict.
• Latin America is in a good growth phase, despite weaker
economic prospects, driven by Brazil, but Mexico is back on
a growth track again.
50
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Concluding Remarks
• In Latin America, Brazil's recessionary phase has slowed
consumption growth, and problems in Argentina as well as
Venezuela have caused clouds on the horizon. But the longterm outlook continues to be good. However, capacity
additions by so many players mean that competition will
stay tight.
• In Asia, the longer-term prospects are good, and given the
huge population, tissue has great future there. In China,
major restructuring is going on and we expect even more
mills to be shut down, not only for environmental concerns,
but also increasingly for financial reasons.
• APP's expansion in Indonesia does not seem to have any
limits, but soon it will face the simple problem of where to
sell all this extra supply. Overcapacity has hit the global
tissue business, and so new export-oriented tissue capacity
is not needed in the next two to three years.
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Thank you for your attention!
For more information:
Outlook for World Tissue Business
www.risi.com/owtb
World Tissue Business Monitor
www.risi.com/wtbm
US Tissue Monthly Data
www.risi.com/ustm
Special Study Recently Published:
Exploding Chinese Tissue
Business – Opportunities and
Challenges
www.risi.com/chinatissue
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