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2nd PRIMA - MomentuM Trend Tracking Seminar
Monday, 1 September, 2003
Copenhagen Airport Hilton |
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Global demand for paper and board is definitely on the up say industry experts meeting in Copenhagen on 1st September 2003. A distinct but modest improvement is forecast for 2004 with growth accelerating in 2005 according to the consensus view at PRIMA´s trend tracking seminar. Not so obvious is the impact on prices and exactly who will benefit from increased activity. Regional variations will be very noticeable. Similarly big differences will emerge between grades and the links along the supply chain. The underlying factors behind the mixed picture are the usual industry drivers of economic growth, capacity/demand balance and alternative or substitute media. The devil is in the detail. And once below the headlines of steady improvement expected at a global level, the regional, sector and price assessments reveal dynamic change.
The US economy will lead the upturn with an ideal stimulus package of low interest rates, low inflation, weaker dollar and tax cuts. Production down time and minimal investment in new pulp and paper capacity will result in an improving rate of capacity utilisation and therefore higher prices. Germany and the Euro zone in general lag well behind. A stronger euro, structural economic rigidities and the restrictions of the EU Central Banks; stability pact are all holding back an economic recovery. Compounding the problem is a surge in new pulp and papermaking capacity. Historically low capacity utilisation is expected to maintain downward pressure on prices.
Delegates heard about the contrasting prospects of newsprint and bleached hardwood pulp. According to Magnus Hall, President Holmen Paper AB, Sweden, newsprint is heading for several years of full capacity utilisation. His assessment of the growth in global demand and very limited confirmed capacity increases revealed utilisation rates of 93% and over from 2005 onwards. An Impromptu presentation by Roger Wright, Managing Director of Hawkins Wright, Limited UK, provided graphic evidence of a surge in new bleached hardwood kraft capacity around the world but especially in the southern hemisphere. His conclusion that the capacity is growing faster than demand will have an obvious impact on prices. Even more worrying to traditional producers is that the new capacity is in state-of-the-art, high technology mills operating at significantly lower unit costs. In the longer term the gradual decline in bleached hardwood pulp prices looks likely to continue but disguised by the inevitable volatility of market pulp prices.
Nearly every one of nine speakers, plus moderator, Robert Wilson, President Jaakko Pöyry Consulting UK, listed the risks to their forecasts. Terrorism and war were high on each set of caveats but there were many others and some could result in higher than expected growth. Patrick Andersson CEO Sandberg Starcom, Sweden, presented a more direct threat in the form of new media. His assertion is that we have entered the era of media engagement. What this means is that we will spend more time in front of screens. It is the growing interactivity and increased functionality of electronic media that will draw individuals to their TV/PC/mobile phone and keep them there. However, the threat is in the medium to long term and his demand forecasts for the next two years revealed healthy increases in demand especially for newsprint.
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Conference Programme
Introduction
by chairman Robert Wilson, Jaakko Pöyry Consulting, U.K.
Keynote
Frank Graves, Executive Vice President & Senior Managing Director for Strategic Development, Ilim Pulp Enterprise Inc., Russia
Economic Development
Timo Teräs, Managing Director, FOEX Indexes Ltd., Finland
Advertising Development
Patrik Andersson, CEO, Sandberg Starcom, Sweden
Hedging for Stability
Darren Gurner, Director Pulp & Paper, Tradition Financial Services Ltd. U.K.
Outlook for Publication Papers in 2004
Magnus Hall, President, Holmen Paper AB, Sweden
Printing & Office Papers
Aulis Ansaharju, Senior VP Business Development, Fine Papers, Stora Enso, Finland
Global Pulp Markets
Dries van Wing, Regional Manager, Canfor Europe, Belgium
Containerboard & Corrugated Market Outlook
Ulrich Stepski, Commercial Director, Smurfit Europe Paper Division, Austria
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