Tissue World Magazine

The tissue market in the west region of the United States faces unique challenges and opportunities. The presence of imports and large independent converters has created a distinctive competitive landscape that has impacted integrated domestic producers. Lindsay Gervais, consultant at Pöyry Management Consulting (USA), explores the regional supply/demand balances and how imports have grown to impact domestic manufacturers.

In 2010, the estimated market size of the tissue market in the U.S. west was approximately 1.7m short tonnes. Large integrated domestic producers do not have a large manufacturing footprint on the west Coast, and historically this region has been undersupplied, with the balance being met mainly by independent converters and imported products and, to some extent, other regions in the U.S.

Imported products have created a competitive threat for this region.’

Recently, there have been significant capacity closures in the west region, including Kimberly-Clark’s Everett, WA mill and, in Canada, older machines at Kruger’s New Westminster, BC mill. This has left the domestic parent roll manufacturing footprint in the west at approximately 1.1m short tonnes.

COMPETITION FROM IMPORTED PRODUCTS IN THE WEST

Figure 1: Estimated Regional Supply/Demand Balances in the United States. Source: Pöyry

Imports of tissue products from China and other nations, although growing at a fast pace, still only represent a small portion of tissue demand in the United States (8-9%). The west region, compared to other regions in the USA, is a freight-competitive destination for exporting tissue producers. The intensity of foreign competition in this region has created some challenges for domestic producers; especially in Away-from-Home markets as the quality of imported products are a better fit with this segment.

Exports of tissue products from China have grown very quickly. Parent rolls are principally exported to neighboring regions. Only 8,000 short tonnes were imported by the U.S.

Figure 2: Total China Exports of Tissue Products

Converted products from China, however, are exported mainly to the United States. Just short of 170,000 short tonnes of converted products were exported to the U.S. in 2010. Indonesia, an oversupplied market, also exports parent rolls to the United States. This was primarily a direct result of Asia Pulp & Paper establishing two converting operations in the United States (Solaris Paper on the west). However, claims about unsustainable forest practices in Indonesia have caused many key customers to take the product off the shelves, which may limit the imported parent roll volume from Indonesia.

KEY TAKEAWAYS

The competitive landscape in the west differs from other regions in the United States. Similar to the Midwest, however, the market for parent rolls is significant as a result of the presence of independent converters. Imported products have created a competitive threat for this region; however they still represent a small percentage of the market.

Lindsay Gervais, consultant at Poyry Management Consulting (USA) Inc., 52 Vanderbilt Avenue, Suite 1005, New York, NY 10017. Direct: +1 646 651 1551 Email: lindsay.gervais@poyry.com