The pulp and paper industry is growing as a whole, because of innovative companies filling the graphic paper gap with other products like packaging, tissue paper, pulp for hygiene products, and even pulp for textile applications. Experts around the world are searching for new applications and uses for wood and its components—the industry is not disappearing in the slightest, but it is changing. The change we’ve seen in the industry in recent years is arguably the most significant transformation the industry has seen in decades.
While changes in the structure of pulp and paper manufacturing don’t seem huge standing alone, the sum of all the changes that have occurred over the years is making quite a big difference. Consolidation has been a major factor in this transformation. Larger companies are narrowing in on fewer segments—so the individual segments they’ve chosen to focus on are growing.
A grouping of companies has emerged during these changes, very similar to the group of largest companies present in the industry, and they’re drawing from various geographies and market segments. Through high margins and low debts, these companies have positioned themselves for further growth. The financial resources available to those in this group for strategic capital expenditure could be five to 10 times greater than other major companies in the industry.
There’s no doubt this could represent a major change. How these companies choose to spend their resources is certainly something to watch for over the next few years, because some of them might even find it challenging to find opportunities that match the scale of their resources.
Regardless of company size or profitability, growing demand for paper and board products is said to continue over the next 10 years. While industry research suggests that graphic paper may never bounce back, the industry can rely on an increased demand for packaging and tissue products for continued growth.
Demand for fiber-based products is increasing on a global level, although some segments like packaging papers and hardwood pulp are growing faster than others.
While supply movements are famously difficult to predict, even from just a few years out, experts project the following:
Consumer packaging and tissue will be driven by demographic shifts, and changing consumer trends. This includes the demand for both convenience and sustainability. Innovation, again, is a critical success factor here, especially in light of rising concerns over plastic waste. This will hold opportunities for fiber-based consumer packaging.
Transport and industrial packaging will also see opportunities for innovation at the intersection between sustainability requirements, e-commerce, and technology integration. Research estimates that e-commerce will drive about half the demand over the next several years.
For more of the latest news in the pulp and paper industry, visit our website.