By Kasia Patel
The paper industry has historically been a huge consumer of
industrial minerals, particularly traditional writing and
printing grades, which use kaolin, talc, ground calcium
carbonate (GCC), precipitated calcium carbonate (PCC) and
bentonite in their production. Minerals are used as coatings,
fillers or as part of the production process, and paper
products can contain more than 50% mineral content, according
to The European Calcium Carbonate Association (CCA
According to the Confederation of European Paper Industries
(CEPI), initial estimates for 2017 show that paper and board
production globally increased by 1.5% in 2017, reaching 420
million tonnes worldwide.
Declining production in Canada, South Korea and India was
more than offset by strong growth in Brazil, Russia and
Chinese growth accelerated, increasing by 4.7% in 2017
compared with 2.9% in 2016, CEPI’s preliminary
statistics for 2017, published in February, show. The
organization also noted moderate production growth in Japan and
stable production in the United States.
For CEPI member countries, which include Finland, France,
Germany, Italy and the United Kingdom, paper and board
production increased 1.5% reaching 92.3 million tonnes in
New capacities and upgrade of existing ones have more than
compensated for closures in 2017, similar to 2016," CEPI
However, in the increasingly digital age of paperless
offices and iPads, paper manufacturers are being forced to
reposition themselves and look to higher-margin and growing
paper end-user markets, such as specialty paper and packaging
As CEPI noted in its recently published statistics, the gap
between falling production of graphic grades and the rising
output of packaging grades continues to widen.
|Production of paper and board by grade in
Total Paper and Board producton 92.3m tonnes
Source: CEPI estimates
Minerals in paper
Lime, in the form of calcium oxide, is used to regenerate
caustic soda in the pulp-making process for paper manufacture.
Kaolin, calcium carbonate, bentonite and talc can be used to
coat paper for high-quality printing applications, while both
kaolin and precipitated calcium carbonate are used as a filler
to increase sheet volume and porosity, which ensures high
whiteness and opacity levels.
According to Girona, Spain-based PCC and limestone producer
Cales De Llierca, global demand for calcium carbonate has been
rising and expected to exceed 110 million tonnes per year in
the near term.
The company said in mid-2017 that demand for both GCC and
PCC is continuing to increase for paper-coating applications,
mineral fillers and in plastics.
It highlighted the paper industry in the US as the leading
consumer of the mineral, accounting for about 1.7 million tpy
compared with less than 1 million tonnes for adhesives,
sealants, paints, rubbers and plastics combined. Globally,
Cales De Llierca said that "Asia occupies an increasingly
import share [of calcium carbonate consumption], particularly
in the paper industries."
According to a report published in February 2018 by
Transparency Market Research, demand for calcium carbonate is
expected to increase at a compound annual growth rate of 5%
between 2017 and 2025.
While the report, Calcium Carbonate Market - Global
Industry Analysis, Size, Share, Growth, Trends and Forecast,
2017-2025, pinpoints other areas of growth for the
mineral, such as plastic, rubber, paints and pharmaceuticals,
it notes that paper and building construction are two sectors
providing the strongest traction.
The value of the global calcium carbonate market, according
to the report, is expected to increase from $15.2 billion in
2017 to $22.3 billion by the end of 2025.
While some paper products have seen a decline in demand,
calcium carbonates market share is growing as it increasingly
replaces kaolin in the paper industry, according to
Transparency Market Research.
Additionally, paper manufacturers are continuing to focus on
increasing mineral loading in paper to offset the higher cost
of pulp, with the Asia Pacific region scheduled to be the most
lucrative region in terms of calcium carbonate
|Not on a roll: According to the most recent figures
from the American
Forest & Paper Association, printing and writing
paper sales are
continuing to decline. Total printing and writing paper
shipments fell 5%
in January 2018 compared with January 2017.
Despite overall increasing consumption of calcium carbonate,
a major concern for mineral suppliers to the paper industry is
falling demand in graphical paper grades, particularly in
mature markets like North America, resulting in suppliers
looking both to new end-user markets and geographies for
Minerals Technologies Inc (MTI), a major supplier of PCC to
the paper market, faced a number of restructuring and non-cash
impairment charges as a result of the closure of paper mills in
North America. The company also faced charges related to the
alignment of staff into "higher growth regions," it said in
MTI’s PCC sales declined 2% in 2017 owing to
sales declines in North America, which offset growth in Asia,
Europe and Latin America. Although GCC sales increased 4% due
to higher volumes in construction and automotive markets, these
were partially offset by a 3% decrease in talc sales.
However, indicative of its focus on higher growth
geographies, in 2017 MTI signed two agreements with Asia Pulp
& Paper Group for the construction of two satellite PCC
plants in Indonesia for a total PCC capacity of 305,000
According to the most recent figures from the American
Forest & Paper Association, printing and writing paper
sales are continuing to decline.
Total printing and writing paper shipments fell 5% in
January 2018 compared with January 2017, with a small increase
in shipments of uncoated free sheet not enough to offset
year-on-year declines in coated free sheet, coated mechanical
and uncoated mechanical paper.
Data published by the association in February indicates that
total printing/writing paper inventory levels fell 1% month on
month in January 2018. And total imports of printing and
writing paper fell 5% in the full year 2017 compared with 2016,
although exports increased 5% in the same comparison.
Helsinki, Finland-based Stora Enso is one of the
world’s leading pulp and paper manufacturers and
the company’s recently published 2017 financial
statement reflects the decline in printing and writing
"Structural erosion of paper demand continued in Europe and
North America during 2017," the company said, noting that North
American demand for paper fell by 6% compared with the previous
year, compared with a drop of 2% in global demand.
"However, variation between paper grades is wide," Stora
Enso said. "Uncoated fine paper global demand was stable
whereas newsprint declined by 7%."
Stora Enso said that while the effects of a 10% increase in
pulp market prices would have a positive impact of operational
earnings before interest and taxes (Ebit) in 2018 of €105
million ($129.2 million), a 10% increase in energy prices, wood
prices and chemical and filler prices would negatively affect
2018 Ebit by €13 million, €182 million and €64
However, despite the declines in graphical paper,
diversified paper producers in and raw materials suppliers in
and to North America are benefiting from headwinds in
containerboard and packaging as a result of changing consumer
patterns and the growing popularity of e-commerce.
Westford, Massachusetts-based Kadant manufactures and
supplies processing systems to customers worldwide in the pulp
and paper, oil and gas, construction, rubber and food
industries among others.
The company posted a revenue increase of $41 million for
2017, which a company spokesman attributed to strong market
conditions in most regions of the world, which led to increased
investment in maintenance and capital projects, particularly in
the paper segment.
Kadant saw signs of continued growth and capital products in
the paper industry in most geographical regions including North
America, Europe and Asia, with the exception of South
According to the company spokesperson, healthy
containerboard demand in 2017 allowed packaging mills in the US
to operate at 97% average capacity and enabled producers to
push through several price increases over the past year.
"With packaging making up the largest portion of our
revenue, we benefit from strong demand, largely driven by
e-commerce shipments and the healthy financial position of our
customers," the spokesperson said.
Meanwhile, publication grades have seen continued demand
weakness, the spokesperson added, although Kadant has remained
largely unaffected by changes in filler mineral loading levels
in terms of its technology.
"Minerals are used primarily on printing and writing grades,
which is a relatively small part of our project activity in the
paper industry and has been declining for much of this
century," the spokesperson said.
Meanwhile, the biggest challenge faced by paper producers,
according to Kadant, is the high fixed-cost structure in the
sector, which requires mills to operate efficiently at high
rates and with limited downtime.
Upgrading technology can enable producers to reduce costs by
improving fiber yield, reduce water consumption and improve
energy consumption throughout the paper production process.
|Paper and board production by region,
Total: 407.6m tonnes
*2016 and 2017 figures not available at time of
|Paper and board consumption by region,
Total: 410.7m tonnes
*2016 and 2017 figures not available at time of
According to CEPI, "divergence in the production trends of
graphic grades against packaging grades continues, with a
decline in the production of graphic grades and additional
growth in the output of packaging grades."
Overall output of graphical grades in CEPI member countries*
fell by around 1.5%, with preliminary figures from CEPI
indicating that newsprint output declined 5.4% in 2017 (see
The production of packaging grades from CEPI member
countries, however, is estimated by the organization to have
had growth of 3.7% in 2017, despite being affected by an
ongoing trend towards lightweighting and resource
Total packaging production, which includes case materials,
wrappings, packaging paper and other paper & board rose to
51.2%, up from 50.2% in 2016, while graphic grades fell to
36.2% in 2017, down from 37.3% in 2016.
Overall consumption of paper and board increased around 0.5%
for CEPI countries in 2017 compared with the previous year.
"This is the fourth year in a row registering growth, thanks to
the favorable economic environment in the [European Union] and
a stronger global growth and trade," CEPI said.
The decline in demand for graphics and printing paper in
Europe also led producers to diversify into higher margin
segments, such as packaging.
Sappi, a Johannesburg, South Africa-based producer of
dissolving wood pulp, specialty and packaging paper, printing
and writing paper and biomaterials is one such company, having
announced the acquisition of Cham, Switzerland-based Cham Paper
Group (CPG) in February 2018.
Each year, Sappi produces 5.4 million tonnes paper, 2.2
million tonnes paper pulp mainly for internal use and 1.4
million tonnes dissolving wood pulp, with the majority of its
customers located in Europe.
According to the company’s chief executive
officer Steve Binnie, the move to acquire CPG diversifies
Sappi’s product range and strengthens its
specialties and packaging paper business both in Europe and
Binnie told Industrial Minerals that the acquisition was a
response to higher demand as well as higher margins in
dissolving wood pulp (DWP), specialty paper and packaging
paper, which the company plans to now focus on.
Binnie also highlighted demand for products from renewable
sources as driving the company’s decision to focus
on nanocellulose, biochemicals, composite fibers and
"Our strategy indicates that we do not see much growth in
the coated graphics/printing and writing papers segments and we
have improved our operations and product mix accordingly," he
told Industrial Minerals.
However, he said the company still sees value in this
segment, adding that it is an effective tool in the marketing
strategy of any organization trying to communicate their
"The reality is however that this market needs to adjust to
return to equilibrium, which recent closures from other
companies in the US has helped achieve," he said.
Looking ahead, Sappi expects printing and writing papers
will make up 25% of its earnings before interest, taxes,
depreciation, and amortization (Ebitda), while specialties and
packaging is expected to increase to 25% of Ebitda, while DWP
is steady at 40% of Ebitda. Sappi has set a 10% Ebitda target
for its new biotech business.
In terms of raw materials inputs, such as kaolin, talc and
calcium carbonate in paper production, Binnie said Sappi works
with its suppliers and partners to enable the company to "win
the cost game" so it can honor its customer service, innovation
and sustainability commitments.
"The recent emergence of supply chain transparency means
that we also require our suppliers to comply with all the
sustainability requirements of commitments that we and our
customers have," he added.
|European exports of paper and board by
Total: 18.4m tonnes
Although Binnie outlined that Europe remains
Sappi’s largest market, he said "it would be
accurate to indicate that Asia is driving growth and demand
across most sectors."
While demand for graphic paper is falling in North American
and Europe, the paper industry in India is anticipated to drive
consumption for both raw materials suppliers and paper
manufacturers, according to data published by Industrial
Minerals sister publication RISI, a provider of market data for
the global forest products industry, at the end of 2017.
Demand for paper products in India is expanding faster than
Chinese and global averages, and is estimated to grow 3.1%
annually to over 16.3 million tonnes in 2022, according to Li
Meng, economist for RISI and author of the
agency's Outlook for India’s Paper and
The country accounts for around 18% of the
world’s population but only 3.3% of global paper
and packaging consumption.
A number of factors, such as India's rising literacy rates,
increasing wealth and growing population, are likely to drive
consumption, Meng said.
The country’s population is forecast to hit 1.4
billion in 2022 based on growth rates of 1.3% over the past
five years. Currently, only 6% of Indians are over the age of
65, and India is entering a "sweet spot" for economic growth
much like China 30 years ago, Meng said. Additionally, plans to
provide every Indian with at least eight years of education by
2022 is likely to increase paper consumption further, which
rises with literacy rates.
"Also, the infrastructure to support digital media use is
still lacking," she added. "This will drive increased
consumption of graphic papers - even newsprint, for which
demand is falling in most countries." Obstacles to e-media
adoption in the country include limited infrastructure and poor
access to electricity and the internet, particularly in rural
Indian paper manufacturers face growth constraints such as
high woodfibre and energy costs in addition to infrastructure
issues. As such, Meng anticipates opportunities for
international producers to grow market share, particularly for
Indonesian and Chinese suppliers in coated and uncoated
woodfree, mechanical, tissue and boxboard grades.
The US also has a strong competitive position to supply
India with packaging grades, while Europe is well poised to
supply the country with mechanical and boxboard
Meanwhile, Russia and Canada are well-positioned to export
newsprint grades to India. The total share of imports
accounting for Indian paper and packaging consumption is
expected to rise to 20% over the next five years, up from
13-17% between 2012 and 2016, Meng said.
In China, although the country’s economic
growth continues, its economic boom has slowed and paper
producers have responded with mergers, overseas expansions and
new product development.
Previously home to over 200 small paper mills, Zhejian
province saw significant consolidation in 2016, while in
Dongguan, millions of tonnes of paper capacity shut down in
2015, RISI data shows. And China, traditionally the
world’s leading producer and consumer of paper
products, is also feeling the shift in demand from graphical
paper products to packaging.
One of China’s leading paper producers, Lee
& Man Paper Manufacturing said in its 2017 earnings
statement that the company plans to invest additional resources
into the overseas packaging paper market, which "possesses
Lee & Man has invested in the construction of overseas
paper factories to supply growing markets in Southeast Asia.
Production of its 400,000-tonne paper manufacturing site in Hau
Giang, Vietnam came online last year, bringing total output
from the company to over 6 million tpy.
The company also anticipates additional consolidation in
paper capacity in China as a result of stricter environmental
monitoring policies by local authorities, in addition to
overcapacity leading to the shut-down of obsolete capacity in
"Despite the slowdown in economic growth in China, local
demand for packaging paper is expected to grow steadily in the
long run," the company said. It added that the development of
e-commerce and online shopping has led to changes in
consumption, which are benefiting the consolidating packaging
"Looking ahead, overall paper consumption still possesses
considerable room for growth, thus the group is optimistic
about the outlook of both the packaging paper segment and the
paper industry as a whole," it said.
Nine Dragons Paper Holdings Ltd, China’s
largest producer with paper products capacity of 14.08 million
tpy, echoed this positive outlook for Chinese growth in
production in its 2017 results statement. The company has made
several investments in China and Vietnam, which will bring its
total production capacity to more than 17 million tonnes by the
end of 2018.
In 2017, the company saw its sales increase by 34% to a
record high of 25.6 billion yuan ($4.04 billion) as the push by
the Chinese government for economic and environmental reform
resulted in the supply-demand dynamics of the packaging
paperboard industry seeing further improvements.
"The profitability of [the] packaging paperboard industry
has basically been stabilized at a reasonable level," the
Chairman Cheung Yan added that the continued closure of
facilities with lower environmental standards is creating
additional opportunities for the packaging paperboard
industry to produce high quality products, replacing lower
quality output on the market.
As with many industries, Asia is anticipated to play a
continued growing role in both the consumption and production
of paper products. Although much of the conversation around
paper has centered around the decline in demand in
printing, writing and newsprint grades, major suppliers
leading the charge by repositioning themselves to take
advantage of the digital age, and focusing on specialty and
packaging products both in maturing and mature markets.
*CEPI member countries in 2017: Austria, Belgium, Czech
Republic, Finland, France, Germany, Hungary, Italy,
Netherlands, Norway, Poland, Portugal, Romania, Slovakia,
Slovenia, Spain, Sweden, UK.