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With four of the top 10 largest global tissue manufacturers in China, future North American investments are set to target advances in scale and technology, and over 80% of the new capacity is believed to target the private label market. Market trends report by Sanna Sosa, Senior Principal, AFRY USA
Investments in new large-scale state-of the-art tissue manufacturing assets continue to be active in North America, although in terms of the global tissue investment context, Asian and European tissue producers have surpassed North American producers in the race for capacity growth. The private label segment is expected to continue to grow in North America, which includes the US, Canada and Mexico. Many new machinery investments are targeting the sector, especially with ultra-premium quality technologies. The long term financial performance of the tissue sector is healthy, typically at or above 15% EBITDA, but impacted by the cyclicality of market pulp prices. Although pulp is the key cost driver for tissue companies, pulp integration remains rare. Investment: new large scale tissue machines continue to be built in North America Over the past three decades, the global tissue sector has gone through a strong period of growth, capacity build and consolidation. If we take a quick peek down memory lane and think how the global top 10 players` landscape looked like in the 1990s (Figure 1), we only see North American and European companies. In fact, the six largest tissue companies in the world were all North American companies. In the late Nineties we saw Asian – back in the day mainly Japanese – companies entre the top 10 list, and at the same time industry consolidation started to take place and was the driving investment force in the early 2000s. But it wasn`t until the beginning of the 2010s when we saw the Asian companies starting to grow significantly and reshuffling the global leading players` landscape. Currently, four of the top 10 largest global tissue manufacturers are from China. Fittingly, China has become the largest tissue machine capacity base in the world at close to 17 million tonnes of installed capacity, according to AFRY`s global tissue asset database. In comparison, here in North America we are estimating the installed tissue manufacturing capacity at close to 10 million tonnes. As a results of the aggressive growth and investments in the tissue sector in emerging markets, the North American tissue assets have become old (23 years on average on technical age) in comparison to what is found in other regions (the average tissue machine technical age globally is at 15 years; while only eight years in China), although the North American tissue machines are still on average larger (on average at about 56,000tpy) than in other regions (global average tissue machine size at 37,000tpy) (FIGURE 2).
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Privacy statement: Your privacy is very important to Us. Our company promises not to disclose your personal information to any external company with out your explicit permission.