The global pulp & paper industry is evolving, presenting industry participants and technology suppliers alike with both challenges and opportunities. In general, pulp and paper production are shifting from Northern Europe and North America to large, integrated mills in emerging economies in South America and Asia (although we are seeing some targeted investments in the former regions). Markets in Western Europe, Japan, and North America are stagnating or shrinking across the board. Due to the shift to digital media and communications, the global market for newsprint is shrinking, while the markets for packaging materials and hygiene-related paper products are growing.
Overall paper consumption is directly tied to GDP development. This drives demand for new production capacity in emerging markets where regulatory enforcement may be laxer, but appropriate technology and skills are often in short supply. New increasingly stringent environmental regulations force pulp and paper mills to take adequate measures, which typically impact both production and profitability. Regulatory compliance and enforcement varies from region to region. However, in many countries compliance is mandatory to sustain operations.
While the majority of growth for the global paper and paperboard industry will come from Asia, the mature economies will place greater focus on production efficiencies, environmental performance, regulatory compliance, and capacity utilization. Waste production, air and water pollution, energy consumption, and deforestation are concerns that the industry strives to address.
The industry is energy-intensive, raw material-intensive, and increasingly capital intensive; with long investment cycles. Energy costs continue to be a major concern and the main strategies for reducing these costs are to increase use of biomass and modernize existing assets. This is especially true in the developed economies, where aging assets pose increasing challenges. In contrast, pulp & paper producers in emerging economies are investing billions of dollars to install high capacity, state-of-the-art, automated mills to be able to play on a volume basis.
Modernization efforts for brownfield mills in mature economies and greenfield projects for large scale mills in emerging economies will create opportunities for technology suppliers for both products and services; particularly for suppliers that can support the needed innovations.