Brian McClay, Principal at Brian McClay & Associates Inc., a market intelligence consultancy focused on pulp and related end-uses, has been involved with the field since the late 1970s. He has witnessed how the paper business – deemed a sunset industry by many – has managed to reinvent itself.
“We used to say you can make anything out of paper except money, but nowadays the business is doing quite well. We are seeing more and longer periods of higher pulp prices than in the past. But while the demand is rising, there are, for example, no large-scale mills coming on-stream before 2021. This means we are facing a pulp supply gap,” McClay points out.
He notes that the demand for pulp in China has been driving the business already for the last decade, growing on average by around 10% each year.
“Currently China amounts for about 35% of the global demand for pulp. The growth will continue as China’s expanding group of middle-class, urban consumers are beginning to adopt a more paper-centric lifestyle. Rising incomes lead to, for example, an increased demand for tissue and hygienic products.”
Paper demand is driven also by e-commerce, which is expected to continue surging, along with other specialty packaging needs, where fibre-based materials are the preferred choice.
COOPERATION IS KEY
Another long-term development that McClay points out is how the share of recovered paper is “peaking”, giving way to accelerated demand for market pulp.
“Recycling has been gaining a greater share of our business ever since the 1960s. I believe that development is now evening out, and market pulp is going to take over some of that growth. Since the share of market pulp is relatively small in the overall fibre furnish for the industry, even small gains are significant.”
All in all, McClay sees tremendous opportunities for pulp and all its derivative products in the future. In his view, Metsä Fibre’s Äänekoski bioproduct mill is a groundbreaking example of a fossil-free, resource efficient production model that makes use of every part of the wood raw material.
“Not only does it show leadership with regards to environmental performance, but also social sustainability. It’s really unique how the bioproduct mill supports forest-based communities throughout the whole supply chain.”
Sustainability will be increasingly positive for the business, but in order to maximise its benefits, leading companies will need to work more closely together.
“Realising the opportunities will be much slower if we all operate individually. It’s a good thing we’re discussing sustainability but going forward, we also need a common way of measuring our products against other competitive materials, offering third-party verified information.”
With a growing global consensus towards the generation of less plastic, cellulose fibre has huge potential to gain market share as a replacing material, for example, in fast food packaging. The startling estimate that there will be more plastic than fish in the oceans by 2050 has spurred efforts to find sustainable solutions.
McClay has worked also with the global apparel industry, one of the biggest sources of microplastics. These non-biodegradable particles can be found even in the deepest parts of oceans. McClay believes that the pulp industry is in an excellent position to answer to this challenge.
“Apparel producers are only starting to realise the opportunities offered by cellulosic fibres, which have a tiny share of the textile business today. Also, the current production process of viscose fibres derived from cellulose is not wholly sustainable.”
With this potential in mind, McClay believes that the establishment of Metsä Group’s innovation company Metsä Spring for taking forward an environmentally friendly production method for textile fibres is exactly the right decision.
“The industry is at a good starting point for responding to many of the megatrends that we are facing today. The opportunities are limitless. It’s just a question of imagination and innovation.”