A huge jump in new tissue investments in emerging markets will lead to over capacity in the industry between 2012-2014, according to a talk by RISI’s tissue principal Esko Uutela.
Speaking at the first day of the show, Uutela said that growth in the tissue market is clearly focusing on substantial expansion in emerging markets.
Some 44% of growth is in China and there is significant growth in Latin America outstripping that in North America or western Europe.
The average global long-term tissue growth rate is +3.9% per annum; 2009’s recession caused a small break but the next few years are expected to show good global demand growth with a total global growth of 16.6 million tonnes expected.
Uutela said: “There is a real investment peak, but closing capacity and project delays are likely to change the 2013-2014 view from now.
“While major capacity closures could improve the outlook, it will only be marginally.”
In Europe, the tissue business is in a quiet phase with disappointing growth but parts of eastern Europe, Russia in particular, offer expansion opportunities.
Eastern European markets are showing varying trends but sustaining growth, with growth moving to lower-income countries within the region.
The growth rate of Latin American tissue consumption between 2004-2021 is averaging 5.2% after a slow recovery from the recession, with Brazil clearly heading market expansion.
In the MENA region, Turkey is expanding most followed by Saudi Arabia and Iran.
In the Asian Far East, Indonesia is challenging South Korea in terms of volume growth, while India is coming and Vietnam developing but only gradually.
In China, the outlook for consumption growth is promising.
Uutela said: “The market is currently experiencing fast and dynamic growth with expansion to additional provinces, and there is still a lot of untapped potential.
“However, it is expanding very rapidly and currently it looks like too much capacity is coming on stream in 2013-2014, despite several projects having already been delayed and more delays will likely follow.”
In China, consumption is now 7.5 times higher than 20 years ago and the average 20-year growth rate 10.6% per annum.
Average growth is 8.3% and the driving forces for Chinese tissue demand include economic growth, overall welfare and improving purchasing power.
In North American, no return to high growth rates are expected where the average growth rates is 1.4%.
Uutela said: “The North American tissue industry is in an interesting phase, moving toward technologies that decreasingly resemble that of traditional papermaking (e.g. ATD). Sustainability should not be ignored.
“We are curious to see what the next moves by the main players will be – will there be something totally new?
“All in all, the focus of the global tissue expansion is clearly on China and there are a lot of challenges ahead for both the tissue companies and equipment suppliers.”
