1Q Pulp and Paper Market Trends
Mergers, Acquisitions and Divestments
- CellMark acquires Lenvale Group with plans to invest in expansion. CellMark is planning to improve the business of Lenvale Group by providing access to international suppliers and markets, as well as implement some expansion plans. CellMark is also considering investment in a new rewinder and saw. Lenvale consists of Lenvale Paper, Blaybourne Converters and furniture sack maker KES Converters.
- Smurfit Kappa Group exists Russia. The Group announced its intention to exit the Russian market on 1 April 2023. Following the approval of the Russian authorities, the Group’s operations in Russia have now been sold to local management, said the company in a statement. The operations include a bag-in-box facility and two corrugated plants in St Petersburg, and a corrugated plant in Moscow.
- Nippon Paper Industries withdraws from graphic paper business in Australia. This is due to a lack of timber supply at its Maryvale mill, Victoria. The mill uses eucalyptus wood as raw material for bleached pulp, the main component of graphic paper, from VicForests (VF), a Victorian state-owned forestry business. In November 2022, the Supreme Court of Victoria, Australia issued orders against VF which impacted VF’s ability to continue its timber harvesting operations, making it impossible to procure eucalyptus wood from VF.
- Paper Excellence follows through with plans to diversify its business with its acquisition of Resolute. Paper Excellence received the Canada's Competition Bureau consent for takeover of Resolute Forest Products and is now exuding confidence in further improving its business in Canada. The bureau approved the proposed acquisition of Resolute, subject to conditions. One of those conditions was that Paper Excellence's wholly owned Domtar division sell its pulp mill in Dryden and divest Resolute's pulp and paper mill in Thunder Bay. "Acquiring Resolute will allow us to diversify our products and clients, thanks to Resolute's expertise in lumber and tissue," Paper Excellence said in a statement. "This is a perfect complement to our current activities," the company added.
Overview and Outlook
To state the obvious: market conditions have been less than ideal recently. And unfortunately, we saw these worsening market conditions accelerate in the latter part of the first quarter of 2023.
As discussed earlier, the printing and packaging segment took a downward turn as capacity and shipments experienced an overall decrease. And while a decline in printing and packaging might be something we already expect at this point, we saw other, somewhat unsuspecting, segments weaken as well.
For example, the packaging market, containerboard demand and consumer board are all showing signs of declining.
Construction challenges are also still occurring, with a lower number of issued building permits and new housing starts. In turn, we expect this to have a temporary impact on demand for the wood products sector during the rest of the year.
With cost pressures and market uncertainties expected to be significantly more challenging in 2023 than 2022, this market situation will continue to weaken consumer confidence. This could ultimately result in lower consumption.
The only way to combat the industry’s volatility is with reliable, historical data, transaction-based raw material price forecasts, and the industry experience to connect the relevant dots and provide meaningful insights – all things Fisher International offers.
How to Position Your Company for Success
Fisher International can provide you with a deeper analysis into these industry developments and how they might impact your business and influence your decision-making. Our consulting services help give you answers to important questions by explaining market movements in verifiable, fact-based and common-sense terms that industry professionals find useful.
To alleviate some of the pressures that have impacted your business over the last several months or years, you need not only a collection of enhanced business tools, but a team of experts with a vast range of experience and expertise. This will enable you to make better decisions with a high degree of confidence.
For more information on how Fisher’s Leveraged Consulting services can help you with your next project, contact us today.