Overcapacity creates risk of closure in global tissue markets despite growth in demand
The global tissue market is at risk of capacity closure due to a “serious overcapacity threat”, according to a report from RISI.
In the ninth edition of the Outlook for World Tissue Business that forecasts tissue growth until 2021, RISI said such closures may be necessary despite continued growth in demand.
Growth prospects in the global tissue business continue to be “excellent” in many regions as consumption grew at an average annual rate of 3.8% from 1991 through 2010. Such demand is expected to continue to grow by an average of 4.1% annually between 2010 and 2021.
However, supply from capacity expansion investments, particularly in China, Latin America and North America, will send the global tissue capacity utilisation rate into decline after 2012.
Despite the overcapacity threat, RISI said that restructuring could help.
‘Forthcoming tissue capacity closures, such as those expected in North America and China, could improve the global demand/supply outlook.’
Forthcoming tissue capacity closures, such as those expected in North America and China, could improve the global demand/ supply outlook.
However, it added that many new projects will still emerge.
In 2011, RISI found that around 360,000 tonnes of Chinese tissue capacity had closed, mostly from mills which it had never been able to identify. The closures are expected to continue.
Kimberly-Clark continues to be the largest tissue supplier globally, based on capacity, while Georgia-Pacific still occupies second position on the suppliers’ list as the deal with SCA concerning its main European assets has not yet been completed.
When the SCA deal closes, SCA will occupy the second position in RISI’s ranking. Metso Paper continues to be the largest supplier with a market share of around 25% in deliveries/orders since 2000.
Its position is dominating, as the second largest supplier Andritz does not have a market share higher than about half of Metso’s relative share.
RISI concluded that the global tissue industry is in “a very competitive phase” which it believes will continue through the next four to five years.