Study Predicts Emerging Markets to Lead Specialty Papers Growth to 2015

Dec. 8, 2010 - Specialty papers will experience the strongest growth in the emerging markets of India, China, Brazil, Turkey and Poland over the next five years. According to a major new study from Pira International, India is predicted to lead the field with a CAGR of 5.5% from 2010-2015.

The study, The Future of Global Markets for Specialty Papers to 2015, quantifies and segments the market for specialty papers across 14 major countries and identifies opportunities and threats facing suppliers in the industry. It includes key trends and technical developments for 38 end-use applications.

Specialty paper markets tend to be niche segments that have the potential for higher average margins than commodity markets, and have fairly stable pricing over time. They are also defined as markets for products that are made in smaller quantities, with their rarity or greater difficulty in manufacture allowing a premium price. The Pira study covers specialties in the following segments: décor, flexible packaging, printing, filtration, electrical, security and 'others'.

According to the study there are signs of continued saturation and stagnation in Western Europe, Japan and the US. In some developed markets such as Spain and the UK some serious falls in tonnage have been evident. Over the period to 2015, Pira predicts a 0.7% CAGR for Western Europe and 0.1% for Japan. In contrast, emerging markets in India, China, Russia and Brazil as well as Turkey and Poland, have been largely unaffected by the downturn in the developed economies, save for some short periods where they changed from dependency on exports to the developed economies to development of their own rapidly growing internal markets.

Pira predicts continued expansion of the Chinese, Indian, Russian and Brazilian economies as well as Turkey and Poland. "Per capita consumption of most specialty papers is relatively low in each of these major emerging markets and as their needs develop, there is no reason to doubt that their economies will absorb more of the specialty papers, which facilitate commerce and industry in the developed world," explains Adam Page, Head of Editorial at Pira.

The downturn in the world economy is the single biggest concern for the specialty paper industry in 2010. It has caused consumer demand to drop and this affected specialty paper segments particularly vulnerable to consumer purchasing patterns. Pira has found that whilst those mills which offer a wide range of specialty papers have survived, those which specialise too strongly in one segment have found conditions tough.

Globally speaking, folding cartons and flexible wraps dominate specialty papers, followed by inkjet papers, labels and tickets. This ranking applies to all markets, although proportions can vary. Much depends on the reliance of each economy on paper-based solutions. In some segments, specialty papers face strong competition from polymer solutions. In others: wallpapers face stiff competition from paints; paper-based protective wraps and bags face competition from linen or canvas sacks; and abrasive papers face competition from metal grinding discs.

Pira expects the highest growth over the next five years will be seen in folding cartons, protective wraps and labels. This is due to the expanding consumer economies in emerging markets. This will also encourage the growth of inkjet and thermal papers as commercial activity increases. As the number of vehicles increases, there is a growing need for engine filtration and industrial filtration is also expected to play a stronger role. These growing economies will require more ticket papers and currency papers, and the growing infrastructure will need more insulation paper. Consumers are expected to indulge more as their disposable income rises, and the evidence points to growing cigarette, fine art paper, photography, wallpaper and gift-wrap paper markets.

"For mills and converters in the developed markets, the potential lies mainly in retaining a premium image in the emerging markets, as consumers there tend to be highly aspirational and in search of high-quality products," explains Page.

In other countries there are also many small market segments which will grow dynamically too such as synthetic paper and industrial filtration papers.

SOURCE: Pira International Ltd