Global Paper and Paperboard Demand Growing Despite Declines in Graphic Paper

DEREK MAHLBURG

Healthy gains in packaging and tissue outweighed the slide in graphic paper demand in 2016, allowing global paper and paperboard demand to grow by 1 percent, or 3.9 million metric tons. This expansion is somewhat subdued relative to the past 15 years’ average growth rate of 1.5 percent per year, but it represents an improvement compared to the past five years’ average growth of only 0.7 percent per year.

In addition, this growth comes despite global graphic paper demand shrinking by 2.6 percent in 2016, its second-worst performance ever outside of a recession. The worst non-recession performance by global graphic paper demand occurred in 2015, when global paper and paperboard demand’s anemic growth of just 0.3 percent also represented its worst non-recession year ever.

SHRINKING SHARE
Over the past decade, graphic paper’s share of paper and paperboard demand has shrunk from 40 percent in 2007 to 30 percent in 2016, making it easier for growth in packaging and tissue to offset losses and drive total paper and paperboard demand growth. The slower paper and paperboard demand growth of the past five years is not due solely to the decline of graphic paper, as packaging demand growth has decelerated from a 3.2 percent average over the past 15 years to a 2.3 percent pace over the past five years. This is due to slower growth from maturing economies in Asia and Latin America, as packaging demand in North America and Western Europe has accelerated compared to its 15-year average.

However, because graphic paper demand is falling more quickly in these mature markets, and because packaging and tissue demand are not growing as quickly, total paper and paperboard demand still declined in North America, Western Europe, and Oceania in 2015 and 2016. Total paper and paperboard demand also sank in Latin America and the Middle East thanks to weak economic performances, another headwind that makes the global demand growth of 1 percent in 2016 look healthier.

Unlike packaging and graphic paper, global tissue demand growth has maintained its pace of growth over the past 15 years and has continued to grow by around 3.5 percent per year, rising even during recessions and in mature markets with essentially complete penetration, such as the United States, or with limited population growth, such as Japan.

RISI’s Annual Review of Global Pulp and Paper Statistics offers further details on the paper, paperboard and pulp markets for nearly every country in the world, presenting breakdowns of demand, production, exports, imports and capacity by grade for graphic paper, packaging, tissue, other paper and board, market pulp, and recovered fiber.

Derek Mahlburg, senior economist, North American graphic paper, is co-author of the Paper Trader, North American Graphic Paper 5-Year Forecast, and North American Graphic Paper 15-Year Forecast. He works out of RISI’s Charlottesville, VA, office and can be reached at dmahlburg@risi.com.