Global OCC Market Outlook - RISI · · 2016-10-2020 25 30 35 onnes OCC MIX ONP Other OCC Share 2000: 27% 2005: 52% 2010: 56% ... 2000 2002 2004 2006 2008 2010 2012 2014 s Virgin

© Copyright 2016 RISI, Inc. | Proprietary Information

Global OCC Market Outlook

Hannah ZhaoSenior Economist, Recovered Paper

International Containerboard Conference

November 2016

Global OCC MarketOCC Import/Export Prices

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

US

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OCC US West Export (FAS)

OCC N. German Export (FAS)

OCC China Import (CIF)

OCC N. German Export in Euros

© Copyright 2016 RISI, Inc. | Proprietary Information 2

Global OCC MarketDomestic OCC Prices

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800

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1,600

2,000

2,400

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40

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120

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200

240

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

US Avg. (US$/Tonne) (L) German Avg. (Euro/Tonne) (L)

China Domestic OCC (RMB/Tonne) (R) Brazil Avg. (Real/tonne) (R)


Global Mixed Paper Market

0

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100

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300

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

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Germany 1.02 in €

US Mix #2

China Mix IM (CIF)


Major RCP Trade Flows

2012 2014 2015

17.7 16.5

17.0 MT

9.5 8.5

9.4 MT

4.9 4.6

4.2 MT

1.8 1.7

1.7 MT


US RCP Market Domestic Demand vs. Net Exports

10%

20%

30%

40%

50%

60%

70%

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Domestic Demand

Net Exports

Recovery Rate (R)

Net export

share

2000: 22%

2004: 27%

2008: 36%

2012: 41%

2014: 39%

2015: 40%

2016: ?


North American OCC Domestic Demand vs. Exports

7

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

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Domestic Consumption

Net Exports

Net export share

2000: 11%

2005: 17%

2010: 28%

2015: 32%


US OCC Exports, Changing Destinations, 2016/2015

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-40

-20

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Pe

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nt


• Total US OCC net exports increased marginally by 1% in the first eight months of the year. Exports to China declined by 4%, while those to most other Asian countries increased significantly.

Chinese RCP MarketDomestic Collection vs. Imports

0.00

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0.20

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0.60

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Domestic Collection Net Imports

Apparent Paper Recovery Rate Import ShareImport share

1995: 10%

2000: 20%

2005: 49%

2009: 44%

2013: 39%

2014: 36%

2015: 37%

China is still far from being self-sufficient in terms of RCP. After rebounding by 6% in 2015, Chinese imports have dropped slightly again this year.


Chinese RCP Imports

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OCC MIX ONP Other OCC Share

2000: 27%

2005: 52%

2010: 56%

2015: 57%

MIX Share

2000: 17%

2005: 19%

2010: 18%

2015: 21%


Western European OCC Domestic Demand vs. Exports

11

0%

20%

40%

60%

80%

100%

120%

140%

0

5

10

15

20

25

30

35

Millio

n T

on

nes

Domestic Consumption Net Exports Recovery Rate Export Share

Net export share

2000: 8%

2005: 15%

2010: 22%

2013: 25%

2015: 28%

Net exports rebounded in 2014 and 2015 after falling by 6% in 2013


Other Asian RCP MarketsDomestic Collection vs. Imports

40%

45%

50%

55%

60%

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Domestic Recovery

Net Imports

Recovery Rate

Net import share

2000: 29%

2010: 18%

2014: 19%

2015: 19%

Net imports rose continuously in 2013-2015. The import share grew again after declining last decade, driven by growing demand from India, Vietnam and other developing countries in this region.


World OCC Markets in the Future

• World OCC demand will grow in 2017-2018, but the growth rate will decelerate

Slow containerboard production growth and limited growth in RCP usage rate

Other fiber options

oUKP

• Market or integrated?

oMixed paper

• Lower cost? Quality? What’s inside mixed paper?

oNon-wood

• Will remain small?

13© Copyright 2016 RISI, Inc. | Proprietary Information

World Containerboard Production

0.70

0.72

0.74

0.76

0.78

0.80

0.82

0.84

0.86

0.88

0.90

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2000 2002 2004 2006 2008 2010 2012 2014

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VirginRecycledOCC ConsumptionUKP ConsumptionOCC Recovery Rate (R)


World Containerboard Markets • How much more recycled capacity

can be added to the global containerboard sector?

RCP usage rate

• 90% worldwide in 2014 compared to 86% in 2009

• How high can it go?

Planned new recycled containerboard lines and converted capacity from graphic paper sector

Cost

• Will current low prices for bulk grades, including OCC, be long-lasting or temporary?

15

RCP Usage Rate in Containerboard

Region 2009 2015

Western Europe

95% 96%

EasternEurope

75% 87%

China 107% 112%

Japan 95% 97%

Other Asia 107% 110%

Latin America 86% 88%

NorthAmerica

45% 48%

Oceania 75% 62%

World 86% 90%


Estimated OCC and Wood Fiber Costs in the US South

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Wood Fiber Cost

OCC Fiber Cost

Headbox softwood fiber and OCC costs, excludes costs other than fiber costs (chemicals, energy, labor, maintenance, overheads, etc.)




Asia, particularly China and Other Asia, will continue to be the main driving force behind world RCP demand growth, but even Asian RCP usage growth will decelerate


Capacity Expansions and Operating Rates in Asia Growth in Million Tonnes and Operating Rate (%)


75.0%

77.5%

80.0%

82.5%

85.0%

87.5%

90.0%

92.5%

95.0%

97.5%

100.0%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

10 11 12 13 14 15 16 17

Rest of Asia

75%

78%

80%

83%

85%

88%

90%

93%

95%

98%

100%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

10 11 12 13 14 15 16 17

China

Demand Capacity Operating Rate (Right)

Chinese Containerboard Industry Was Slow to Recognize Changes in Demand


Creating disruptions in the market

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

Demand Growth

Capacity Growth

World Containerboard Production

21%

15%

5%29%

13%

6%

11%

2018

22%

16%

6%28%

12%

6%

10%

2014

N. AmericaW.EuropeJapanChinaOther AsiaL. America

2014: 154 Million Tonnes 2018: 168 Million Tonnes




Other developing regions, such as Eastern Europe and Latin America, will also see growing OCC demand

The developed regions, such as North America and Western Europe, will generate OCC usage growth as well

• New recycled fiber based capacity


Containerboard Production by Region

22

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

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2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

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N. America W. Europe

Japan China

Other Asia L. America

Other RCP Usage Rate



• Supply Already very high OCC recovery rate in the developed

world (>100%)

OCC recovery rate in the developing regions• Not very low compared to other grades

• Not much room to improve

• Real OCC recovery rates

World average OCC recovery rate is about 85%

• Quality issue and yield rate Higher recovered paper usage rate in containerboard

sector higher recycled fiber content and lower virgin fiber content weaker and shorter fiber in OCC

Overall lower yield rates


OCC Recovery Rate by Region

0%

20%

40%

60%

80%

100%

120%

140%

2000 2002 2004 2006 2008 2010 2012 2014

N. America Other Asia W. Europe Japan

China Latin America World Average



• Upward pressure on OCC pricing

Higher OCC recovery rate will push up OCC collection costs, along with rising transportation and labor costs

Limited supply worldwide will give OCC prices more running room

• Global demand/supply imbalance

Possible fiber furnish change in some regions

Trade will remain a big part of global OCC market

• Risks


OCC/UKP Market Analysis and Outlookwww.risiinfo.com/occ-ukp

Thank you!For more information:


Outlook for Global Recovered Paper Marketswww.risi.com/recoveredpaper

The China Recovered Paper Market: A Comprehensive Analysis and Outlook www.risi.com/chinarcp

World Pulp and Recovered Paper 5-Year & 15-Year Forecastswww.risi.com/WPRP5www.risi.com/WPRP15

World Recovered Paper Monitorwww.risi.com/wrpm

The information in this presentation comes from these sources unless otherwise cited

Documents

Global OCC Market Outlook - RISI · · 2016-10-2020 25 30 35 onnes OCC MIX ONP Other OCC Share 2000: 27% 2005: 52% 2010: 56% ... 2000 2002 2004 2006 2008 2010 2012 2014 s Virgin