EMGE Paper Industry Consultants WOODFREE FORECAST REPORT - INCLUDING FORECASTS OF DEMAND, SUPPLY AND PRICES AUGUST 2016
EUROPEAN WOODFREE AUGUST 2016 Page A - TERMS & CONDITIONS Our products are supplied under the following terms and conditions, which cover material in all forms including paper, electronic, etc.: CONFIDENTIALITY All information provided is strictly confidential unless otherwise stated. The Client is responsible for safeguarding this confidentiality. The information contained in our publications is provided only for legitimate commercial purposes; it is not to be used in legal or anti-trust action against others. COPYRIGHT At EMGE we aim to assist clients in using our information, however it is your individual responsibility as well as that of your company to abide by the rules and regulations as set out under European & International copyright law. Terms for standard usage Making copies of our work is not permitted. No part of any EMGE publication may be reproduced in any form, for external or internal use, without prior written permission from EMGE. None of the material provided may be copied or shown to other companies, industry consultants, finance companies or investment houses, under any circumstances. You do, however, have permission to replicate small samples of non-sensitive information as required, on the condition that you clearly acknowledge the source. If you have any doubts as to the legitimate use of our information, please contact EMGE. Additional Terms for Groupwide Distribution Licence holders only Copies of EMGE publications purchased under a Groupwide Distribution Licence may be distributed internally within the group only. Normally licences are granted under a regional basis, unless specified as a Global Groupwide Licence. It is strictly forbidden to pass any data from EMGE reports in any form whatsoever to anyone outside of the client s company, especially (but not only) to other consulting companies. DISCLAIMER While we aim to ensure that the information contained in our publications is as reliable as possible, we cannot accept responsibility for actions or decisions taken by the client, other company or person arising from our work. EMGE & Co. Ltd. PO Box 200 Truro Cornwall TR1 1FN United Kingdom Tel: +44 (0)1872 581000 Email: post@emge.com URL: www.emge.com
Page B EUROPEAN WOODFREE AUGUST 2016 Table of contents Page Introduction 2 Changes to the forecast 3 1. Forecast Summary: Data 5 Annual Forecast Summary: Europe-30 6 Annual Forecast Summary: W. Europe-16 7 Annual Forecast Summary: E.Europe-14 8 Annual Forecast Summary: Russia 9 2. Forecast Brief Overview 11 3. Caveats 21 4. Capacity 23 4.1. Forecast Capacity Overview 23 4.2. Capacity Projections, CWF - tonnage details 24 4.3. Capacity Projections, CWF Other Europe 25 4.4. Capacity Projections, UWF - tonnage details 26 4.5. Capacity Projections, UWF Others 28 4.6. Investment Details - Listing of Plans 29 5. Supply-Demand Balance 31 5.1. Delivery Lead Times 31 5.2. Supply-Demand Outlook (Quarterly) 33 5.3. Supply-Demand Outlook (Annual) 34 5.4. Supply-Demand Outlook (Base vs. Forecast) 36 5.5. Historical Context Capacity Gap per Forecast Capacity 37 5.6. Cut-size Papers Demand Supply 39 6. Consolidation & Leading Suppliers 41 6.1. Consolidation Trends, Pi-HHi 41 6.2. Consolidation - Leading Companies 43 6.3. Cut-Size Leading Companies 44 7. Trade 45 7.1. Trade Forecast 49
EUROPEAN WOODFREE AUGUST 2016 Page C Table of contents (continued) 8. Paper Prices 53 8.1. Paper and Pulp Prices 57 8.2. Exchange Rates 59 9. Pulp Price & Paper Margins 61 9.1. Market Pulp Prices 61 9.2. Paper-Makers Converting Margins 62 Appendix 1 : Market Indicators 65 Appendix 2 : Demand Forecast Grade/Region 67 Appendix 3 : Quarterly Forecasts 97 A3.1. Market Forecast Quarterly Coated Woodfree 97 A3.2. Market Forecast Quarterly Uncoated Woodfree 102
Page D EUROPEAN WOODFREE AUGUST 2016 List of tables Page 1. Woodfree Demand Long-Term Forecast, by Grade 3 2. Woodfree Paper Market Forecast 5 3. Woodfree Paper Market Summary, EE-30 6 4. Woodfree Paper Market Summary, WE-16 7 5. Woodfree Paper Market Summary, EE-14 8 6. Woodfree Paper Market Summary, Russia 9 7. Demand Forecast W.Europe-16 15 8. Demand Forecast E.Europe-14 20 9. Capacity Forecast Changes, by Region 23 10. Capacity Forecast Changes, by Mill - CWF 24 11. Capacity Forecast Changes, Other Europe CWF 25 12. Capacity Forecast Changes, by Mill - UWF 26 13. Capacity Forecast Changes, Others UWF 28 14. Investment Listing 29 15. Major Woodfree Paper Capacity Changes, 2015-16 32 16. Woodfree Quarterly Operating Ratios 33 17. Forecast Operating Ratios, by Region 35 18. Base and Unspecified Capacity Forecasts 38 19. UWF Cut-Size Market, Europe-30 39 20. Quarterly UWF Cut-Size Market, Europe-30 40 21. Fine Papers - Leading W dfree Paper Companies 43 22. Cut-Size - Leading Companies 44 23. Trade Forecast, Europe by Grade 45 24. Offshore Imports/Exports Forecast, Europe-30 49 25. Offshore Import Sources Uncoated Woodfree 51 26. Import Projections Unc. Woodfree, Europe-30 52 27. Import Projections UWF A4 Cut-Size, Europe-30 52 28. Import Projections UWF Reels/Folio, Europe-30 52 29. Paper and Pulp Price Forecast Euro 57 30. Paper and Pulp Price Forecast - UK 58 31. Exchange Rates 60 32. Pulp Price Forecast 61 33. EMGE s Economic Forecast 66 34. Trends - GDP & Paper Demand, Europe-30 68 35. Trends - GDP & Paper Demand, W.Europe-16 69 36. Trends - GDP & Paper Demand, E.Europe-14 70 37. Grade Demand Outlook 71 38. Grade Demand Outlook (% Growth) 72
EUROPEAN WOODFREE AUGUST 2016 Page E List of tables (continued) 39. Grade Demand Forecast - CWF, Europe-30 73 40. Grade Demand Forecast - CWF, W.Europe-16 74 41. Grade Demand Forecast - CWF, E.Europe-14 75 42. Grade Demand Forecast UWF, Europe-30 76 43. Grade Demand Forecast UWF, W.Europe-16 77 44. Grade Demand Forecast - UWF, E.Europe-14 78 45. Demand Forecast - CWF Sheets 84 46. Demand Forecast - CWF Reels 85 47. Demand Forecast - CWF 2-Side 86 48. Demand Forecast - UWF Reels 87 49. Demand Forecast - UWF Folio 88 50. Demand Forecast - UWF Cutsize 89 51. Demand Forecast UWF Papers 90 52. Demand Forecast Germany 91 53. Demand Forecast France 92 54. Demand Forecast UK 92 55. Demand Forecast Italy 93 56. Demand Forecast Nordic 93 57. Demand Forecast Benelux 94 58. Demand Forecast Iberia 94 59. Demand Forecast Other W.Europe 95 60. Demand Forecast W.Europe-16 95 61. Demand Forecast E.Europe-14 96 62. Demand Forecast Europe-30 96 63. CWF (2-Side) - Quarterly Market, Europe-30 97 64. CWF (2-Side) - Quarterly Market, W.Europe-16 98 65. CWF Reels & Sheets (2-Side) Q. Demand, Europe-30 99 66. CWF Reels & Sheets (2-Side) Q. Demand, W.Europe-16 100 67. CWF Reels & Sheets (2-Side) Q. Demand, E.Europe-14 101 68. UWF - Quarterly Market, Europe-30 102 69. UWF - Quarterly Market, W.Europe-16 103 70. UWF - Quarterly Market, E.Europe-14 104 71. UWF Reels, Folio & Cut-Size Q. Demand, Europe-30 105 72. UWF Reels, Folio & Cut-Size Q. Demand, W.Eur-16 106 73. UWF Reels, Folio & Cut-Size Q. Demand, E.Eur-14 107
Page F EUROPEAN WOODFREE AUGUST 2016 List of charts Page I. European WF Paper Demand vs. OECD Leading Indicators 2 II. Historical W dfree Paper Demand Growth, Europe-30 11 III. Woodfree Paper Demand Growth, Europe-30 12 IV. Magazine Advertising Spend Growth 13 V. GDP Growth - Russia 14 VI. Woodfree Demand Growth EE-14 19 VII. Delivery Lead Times Europe 31 VIII. Shipments vs. Capacity 34 IX. Operating Ratios Base vs. Forecast 36 X. Forecast Operating Ratio Gap, Europe-30 37 XI. Cut-Size Supply-Demand, Europe-30 39 XII. Industry Consolidation Fine Papers 41 XIII. Consolidation Historical Pi-HHi 42 XIV. Uncoated W dfree Cut-Size Prices 46 XV. Coated W dfree Offshore Imports, Europe-30 47 XVI. Uncoated W dfree Offshore Imports, Europe-30 48 XVII. Uncoated Woodfree Exports x-europe-30 49 XVIII. Coated Woodfree Exports x-europe-30 50 XIX. Exports x-europe-30 50 XX. Uncoated W dfree Offshore Imports, Europe-30 51 XXI. Comparative Cut-Size Prices GB /T 53 XXII. Historical CWF Reels and Market Pulp 55 XXIII. Historical Monthly Paper Prices 55 XXIV. Pulp to Paper Price Ratios Europe 56 XXV. Exchange Rates Euro vs. US Dollar 59 XXVI. Exchange Rates Euro vs. GB Pound 59 XXVII. Margins Integrated vs. Non-Integrated, CWF 62 XXVIII. Margins Integrated vs. Non-Integrated, Cut-Size 63 XXIX. Market Pulp Price Forecast 63 XXX. Purchasing Managers Indices, Europe 65 XXXI. Consumer Confidence Indicator, Europe 65 XXXII. Share Prices 66 XXXIII. Coated Woodfree Demand Growth, Europe-30 79 XXXIV. Uncoated Woodfree Demand Growth, Europe-30 79 XXXV. UWF Paper Demand, Europe-30 by Region 80
EUROPEAN WOODFREE AUGUST 2016 Page G List of charts (continued) XXXVI. Cut-Size Paper Demand, Europe-30 by Region 80 XXXVII. UWF Reels Paper Demand, Europe-30 by Region 81 XXXVIII. UWF Folio Sheets Paper Demand, Europe-30 by Region 81 XXXIX. Coated W dfree Paper Demand, Europe-30 by Region 82 XL. CWF Sheets Paper Demand, Europe-30 by Region 82 XLI. CWF Reels Paper Demand, Europe-30 by Region 83
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EUROPEAN WOODFREE AUGUST 2016 Page 1 Regional Classifications The EMGE European Woodfree Report is structured to include both Western Europe and Eastern/Other Europe region (excluding Russia), together with European-wide totals. We show selected forecasts separately for Russia. Specifically, there are 3 main geographical groupings in this report (W.Europe-16, E.Europe-14 and Europe-30), which are composed as follows: W. Europe-16: Germany, France, UK, Italy, Finland, Norway, Sweden, Belgium, Luxembourg, Netherlands, Spain, Portugal, Austria, Switzerland, Denmark, Ireland. Within this: Nordic = Finland, Norway, Sweden Benelux = Belgium, Luxemburg, Netherlands Iberia = Portugal, Spain Others = Austria, Denmark, Ireland, Switzerland E. Europe-14: Poland, Greece, Czech Republic, Hungary, Romania, Slovakia, Estonia, Latvia, Lithuania, Slovenia, Bulgaria, Cyprus, Malta, Iceland Europe-30: All of the above. In addition to the above regions, we include a separate market forecast Russia (see page 9). Quarterly Market forecast tables have been organised into their own section (see page APPENDIX, pages 65 onwards). However, the Cut-Size quarterly Supply-demand forecasts are provided on pages 39 and 40. EMGE & Co. Ltd. 2016
Page 2 EUROPEAN WOODFREE AUGUST 2016 Introduction In W.Europe, the OECD CHART I. EUROPEAN WF PAPER DEMAND vs. OECD LEADING INDICATORS composite leading indicator (CLI) has been flat and close to zero for the past 12-18 months, while Woodfree Paper demand was mainly negative, % pa 16% 12% 8% 4% 3 MMA Annual Growth - W.Europe Woodfree Paper Demand vs CLI (W.Europe) Composite Leading Indicator 2-3 month lag but improving into zero/positive territory towards the latter part of 2015. 0% -4% -8% -12% WE W'dfree Paper Demand (to Jun-16) -16% -20% 1999-01 2000-01 2001-01 2002-01 2003-01 2004-01 2005-01 2006-01 2007-01 2008-01 2009-01 2010-01 2011-01 2012-01 2013-01 2014-01 2015-01 2016-01 * The OECD Composite Leading Indicator is based on a various financial and business factors, which are calculated statistically to provide a few months advance notice of economic activity in this instance we have used the OECD W.European series. EMGE & Co. Ltd. 2016 This forecast report ( EUROPEAN WOODFREE AUGUST 2016") is an update in the EMGE series EUROPEAN WOODFREE FORECASTS. In this report, we present updated new forecasts for the European Woodfree paper market to 2020 (base year is 2015). Based on all the data available (to JUNE 2016) and combining the latest developments in the markets, we present an updated outlook for demand, trade, investment, capacity, operating rates and prices for the European Woodfree paper markets. We also include Quarterly Supply-demand forecasts for Cut-Size papers (see page 40), in addition to our usual CWF and UWF Supply-demand Forecasts. The regional coverage is Europe-30, sub-divided into Western Europe-16 (WE-16) and Eastern Europe (EE-14). Russian markets are covered separately (see page 9). The sub-grades covered include Coated Woodfree Sheets and Reels, as well as Uncoated Woodfree Cut-Size, Folio Sheets and Reels. The report does not cover speciality grades or 1-side Coateds. The companion report EMGE World Graphic Papers evaluates the outlook for the global supply-demand balance for all Printing/Writing paper grades, including Coated Woodfree (CWF) and Uncoated Woodfree (UWF).