BOSTON, March 20, 2018 /PRNewswire/ -- Cut size uncoated freesheet remains the most profitable segment in graphic paper, and economic growth, rising pulp prices and global trade conditions are pushing cut size prices toward recovery. Prices for cut size uncoated freesheet should continue to rise in 2018 and beyond, and Asian and European prices are already closing the $120-220/tonne gap with US prices that opened up in 2015, according to the latest Global Outlook for Cut Size Uncoated Freesheet Paper Markets, published today by RISI, the leading source of market intelligence for the global forest products industry.
"Tariffs have become an issue throughout the world, as the fallout from US tariffs on cut size has shifted global trade flows. Other key countries have imposed or are investigating restrictions on cut size imports as well, including Australia, Turkey, Brazil, Mexico, and India," said John Maine, RISI Vice President of Economic Analysis for Graphic Paper, and co-author of the new study, along with RISI Senior Economist Derek Mahlburg.
"In addition, economic growth and heavy competition for pulp supplies have revived cost inflation, pushing up prices despite demand declines," said Maine. "We expect the fight for market share in both growing and mature cut size markets to remain intense."
As the region that has added the most capacity in recent years, Asia's exports will continue to affect every other cut size market. Led by Indonesia, Thailand, and China, Asia will be responsible for 43% of all global cut size production by 2027, according to the Outlook. Capacity growth will continue to make oversupply an issue for the Asian industry, as new machines in Asia and the Middle East have the potential to further disrupt world markets and force even more capacity adjustments.
"Exports from low-cost Asian mills put pressure on domestic cut size freesheet production in every major market, though tariffs, currency fluctuations, and other regional factors complicate the picture," John Maine explained. "For example, many mills in Indonesia and Brazil have lower costs than the US South, even for deliveries within the USA – but a weaker dollar and tariffs of more than 22% erase this advantage. Pulp costs have also caused major shifts in global and regional competitiveness over the past two years."
Now in its 6th edition, RISI's Global for Cut Size Uncoated Freesheet Paper Markets was developed to support analysis of the complex interactions that define the cut size category, which represents more than 32% of the world's total uncoated freesheet market. Its 10-year forecasts for prices, demand, production, capacity, and trade are supported by research and data of unmatched scope, covering 133 countries and all 250 machines that produce cut size globally.
For more information, visit www.risi.com/cutsize
About RISI (www.risi.com)
RISI is the leading information provider for the global forest products industry. The company works with clients in the pulp and paper, packaging, wood products, timber, biomass, tissue and nonwovens industries to help them make better decisions. Headquartered in Boston, MA, RISI operates additional offices throughout North and South America, Europe and Asia.
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