After a year of decline in both paper production and sales in Brazil, the sector expects 2016 to be at least stable compared to 2015. This is due, however, to specific factors, such as the Olympics and municipal elections. Last year, while pulp production grew 4,5%, paper production fell 0,5%, driven by a 7,6% drop in newsprint and 4,8% in printing and writing paper, according to data from the Brazilian Tree Industry (Ibá).
Sales in Brazil had an even more negative performance: -4,6% overall and -11,5% for printing and writing paper. Nilson Cardoso, commercial director of International Paper (IP), says that demand for printing and writing paper has been falling in recent years worldwide, due to the arrival of substitutes, such as e-books. In Brazil, however, the decline is aggravated by the economic slowdown. “Paper consumption is linked to the economy. Since things are challenging (in Brazil), with a drop in GDP (Gross Domestic Product), demand will remain the same as in 2015, around 1,3 million tons,” he said. One of IP’s focuses in Brazil is printing and writing paper.
According to Cardoso, sales in the country should remain stable in 2016 due to some specific events this year, such as the Olympics and municipal elections, in addition to the distribution of textbooks from the National Textbook Program (PNLD). Vitor Paulo de Andrade, president of the board of directors of the National Association of Paper Distributors (Andipa), emphasizes that the Brazilian economic crisis and the arrival of electronics have affected the paper sector in general. In 2016, however, Andrade also believes that the elections and the Olympics will have a smaller impact. “I think the drop will be smaller this year, but it will still be there,” he said.
In the long term, however, the American multinational is betting on Latin America, according to Cardoso. “Although paper consumption is falling by 2% in the United States and Europe, it is growing in other regions, such as Asia, Africa and South America. It is growing enough to make global consumption grow by 1% per year,” he said. To demonstrate this potential, Cardoso reports that in the United States per capita consumption is 24 kg of paper, while in Brazil it is 6 kg.
São Paulo is slightly above the national average, between 13 kg and 14 kg per person per year. “There is still a basic need for paper,” said the director of International Paper, who adds that the annual demand for printing and writing paper in Brazil was 1,3 million tons, while the total production capacity of the factories is 2,2 million tons. International Paper has a production capacity of 1 million tons. Prices According to Andrade, from Andipa, the paper industry is also affected by the increase in the prices of pulp and some types of paper, such as cut size and offset, which rose by around 24% at the beginning of 2016. “There was a very high price increase this year, especially with pulp and the dollar.
It is worrying, but it is the reality,” he said. In early February, the Brazilian Association of the Printing Industry (Abigraf Nacional) even sent a letter to the leaders of the Brazilian Tree Industry (Ibá) and the National Association of Paper Distributors (Andipa) expressing the printing sector’s concern about the increases, of 24,3% in cut size paper and 23,8% in offset, according to increases made by Suzano Papel e Celulose. Regarding the pulp input, both Suzano and Fibria made four increases last year, of US$ 20 per ton each. Nilson Cardoso, from International Paper (IP), said that the company does not disclose the adjustments applied this year to the price of paper, but explained that they occur as a way of correcting for inflation, increases in the cost of electricity, dollarized chemical inputs and equipment. “Customers are aware of the price adjustment.”
CI Florestas – 04/04/2016
Access Market Reports for Free: http://blog.costdrivers.com/free-reports/