What is the future for key pulp grades?

Bleached kraft market pulp will dominate, but unbleached kraft is making a comeback.

Bleach kraft pulps (BKP) dominate the market wood pulp business--a fact that is not about to change. In recent years, BKP has accounted for approximately 83-84% of total virgin fiber wood pulp demand. After 2010, its share should reach 87%. The share of bleached hardwood kraft pulp (BHKP) will grow especially fast. BHKP will surpass bleached softwood kraft pulp (BSKP) as the largest market pulp grade during the second half of this decade. Demand for sulphite pulps will continue to decline. The decline will be primarily supply-driven.

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New end uses outside the traditional paper industry have revived the demand for unbleached kraft pulp (UKP). After falling--even in absolute terms during the 1980s and 1990s, the UKP market has resumed a growth trend. China and Southeast Asia account for almost all the growth. This trend should continue.

Mechanical market wood pulps are also poised for further growth in volume terms. Their share should remain at approximately 6.5% of total market pulp demand. Virtually all future net growth will be in hardwood bleached pulps and chemithermomechanical pulps (BCTMP).

WHY BLEACHED KRAFT?

The key reasons for the growing dominance of bleached kraft grades in the market pulp sector are the following:

* The kraft process is more flexible than the sulphite process in using the raw material base.

* Most paper growth is in white paper grades.

* Most new supply of kraft pulp comes from mills built next to large plantations in the southern hemisphere or in remote natural forest areas, but the paper capacity for using these pulps is near main consumption centers.

* Most products based on unbleached kraft and mechanical softwood pulp are very suitable for integrated production, but many mills using bleached kraft pulps do not have facilities or resources for bleached softwood or hardwood pulp production.

REGIONAL SHIFTS IN CONSUMPTION

Western Europe is by far the largest pulp market in the world. The Asian market is growing rapidly and will eclipse Western Europe in total size by the second half of this decade. China and Southeast Asia will especially take giant leaps in tonnage growth.

North America--including the United States market--is the third major pulp purchasing region. Due to the high degree of integration and low paper production growth, share in North America is gradually falling.

Major differences exist between individual grades. For instance, Europe still dominates as a buyer of BSKP or sulphite pulps, but Asia is already clearly number one in UKP and BHKP.

The key reasons for the fast growth in Asian markets with the exception of Japan include the following:

* Shortage of suitable local wood resources

* Introduction of fast, modern, and large new paper and board machines

* Increasing ownership by non-Asian companies

* Closures of polluting non-wood pulp mills in the region especially in China

* Rapid growth of paper and paperboard demand.

Note: This article is part of a series by Jaakko Poyry Management Consulting, Tarrytown, New York, USA, which provides marketing and consulting services to the global pulp and paper industry. For more information, contact Soile Kilpi by email at [e-mail], or by phone at [phone].