Outlook for Unbleached Kraft Pulp

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Outlook for UKP demand, supply and prices

The Outlook for UKP Demand, Supply and Prices is a paid-for multi-client service which provides subscribers with an in-depth report analysing the global market for UKP

  • Shipments of unbleached kraft pulp (UKP) peaked at just over 2.5Mt in 2002. Shipments dropped to a low of 1.8Mt in 2010 and remained fairly stable through 2014. Part of this decline was supply driven, after certain market UKP mills shut down during this period (e.g. Samoa in 2008, Usutu in 2010, Solombala in 2013). Very little new market UKP capacity has been added since then, although marginal volumes are supplied by swing mills producing bleached grades, or by containerboard mills producing roll pulp. UKP shipments have started to rise again in recent years, reaching 2.3Mt in 2018 and 2019. Several conversion projects are now underway which will result in permanent capacity growth.
  • UKP shipments may be categorised broadly into three product sectors: Packaging paper and board (kraftliner, sack-kraft, kraft paper), Fibre cement and Electrical grade & Filtration paper
  • Each of the end use sectors requires different qualities and fibre characteristics, and commands different prices. Even pulps used for traditional board grades are very often produced to order, with specific parameters relating to strength, stiffness, brightness etc. Although some unbleached pulps are lower grade “fillers”, the market for UKP has become increasingly niche. This helps to explain the apparent narrowing of the price differential between bleached grades and unbleached pulps in recent years. 
  • The major upside risk for UKP demand appears to relate to the board sector. Until recently, demand from the board sector had been contracting as recycled based grades accounted for most of the growth in global containerboard production. Meanwhile integrated kraftliner producers in countries such as the USA, Europe, Australia, and Japan have displaced non-integrated producers. However, there is growing evidence that recycling rates are reaching a peak, and that multiple recoveries are causing yields to deteriorate. Some have concluded that the proportion of virgin fibre in packaging grades must inevitably increase, leading to an increase in shipments of UKP. 
  • China’s recently imposed import restrictions on wastepaper have added a new dimension to the containerboard industry, with dramatic changes to trade flows and investment patterns over the past two years.
  • In this report we describe the market for UKP in the context of the global paper and board industry. We have defined the end use sectors for market UKP by region, describing the historical growth rates and projecting future demand over the next five years. We have described price variations and drivers, and the differentials which exist with bleached grades and recovered fibres. The level of UKP shipments will inevitably be influenced by the amount and location of investment in new capacity, and other supply–side dynamics which are also discussed in this report.
 

Methodology

This report has been prepared using desk research which has been supplemented by interviews with existing UKP suppliers, buyers, traders and other industry participants. We have also made full use of Hawkins Wrights existing information resources, contacts and relevant research material.

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