Global paper industry is expected to grow at a CAGR of 1-2% from CY24-CY29 with the paperboard segment emerging as a key driver of growth, according to Crisil Intelligence

Global paper industry is expected to grow at a CAGR of 1-2% from CY24-CY29 with the paperboard segment emerging as a key driver of growth, according to Crisil Intelligence

The global paper industry has grown at a CAGR of 1.3% from CY19 to CY24

The global paper industry has grown from 394 million tonnes in CY19 to 420 million tonnes in CY24, achieving a Compounded Annual Growth Rate (CAGR) of 1-2% from CY19 to CY24. This growth has been primarily driven by the paperboard segment, which has seen its share increase from 73% in CY19 to 77% in CY24. The rising demand for sustainable and eco-friendly packaging solutions, particularly in the e-commerce and food industries, has been a significant factor contributing to the growth of the paperboard segment. Additionally, the increasing focus on reducing plastic waste and promoting circular economy practices has led to a shift towards paper-based packaging, further boosting the demand for paperboards. On the other hand, the newsprint segment and the writing and printing segment have seen their shares decrease from 5% to 3% and 23% to 20%, respectively, mainly due to digitization and the subsequent decline in print media consumption. The widespread adoption of digital platforms for news, entertainment, and communication has reduced the demand for printed materials, leading to a decline in the newsprint segment. Furthermore, the shift towards digital documentation and online communication has also contributed to the decline of the writing and printing segment. Going forward, the global paper industry is expected to grow at a CAGR of 1-2% from CY24-CY29 with the paperboard segment emerging as a key driver of growth.

Overview of key drivers and trends in the global paper industry

Increased focus on sustainability:

The paper industry is heavily dependent on water, the estimated consumption of water in the paper industry very from 30 cubic meter per ton to 60 cubic metre per ton with the usage varying as per type and the raw materials used. In order to reduce the water consumption further, the industry is expected to prioritize water conservation, with a focus on efficient irrigation systems and wastewater treatment technologies. The use of renewable energy sources, such as biomass and solar power, is also expected to gain traction, reducing the sector's reliance on fossil fuels. Furthermore, the rise of circular economy practices, including upcycling and downcycling, will minimize waste and maximize resource utilization.

Rise of E-Commerce and the subsequent packaging needs:

The proliferation of online shopping has revolutionized the paper industry, as consumers' expectations for safe and secure delivery have fuelled a substantial increase in demand for paper based packaging solutions. The production of cardboard boxes, shipping labels, corrugated packaging, and protective materials has increased, creating a domino effect throughout the paper supply chain, from manufacturers of packaging materials to logistics providers handling shipments. Furthermore, the e-commerce phenomenon has also had an impact on the industry beyond packaging, driving the demand for printed promotional materials, such as product catalogues, promotional brochures, and insert cards, as companies strive to capture the attention of online shoppers and build brand awareness.

Circular economy and waste reduction:

The paper industry is under increasing pressure to reduce waste and adopt circular economy practices, with companies seeking to minimize their environmental impact while maintaining profitability. This trend is driven by regulatory pressures, consumer demand for sustainable products, and the need to reduce costs associated with waste disposal. Paper manufacturers are responding by implementing recycling programs, reducing packaging waste, and developing new products made from recycled fibres. Additionally, companies are exploring new business models, such as product-as-a-service, where products are designed to be recycled or reused, reducing waste and the demand for virgin raw materials.

Technological advancements and innovation:

The paper industry is experiencing advancements in digital printing, nanotechnology, and biotechnology driving innovation and investment. Digital printing technologies, such as inkjet and toner-based printing, are enabling paper manufacturers to produce high-quality, customized products with shorter lead times and lower minimum order quantities. Nanotechnology is being used to develop new paper products with enhanced strength, durability, and functionality, while biotechnology is being used to develop new biomaterials and bio-based products. Additionally, the use of artificial intelligence, machine learning, and data analytics is improving manufacturing efficiency, reducing costs, and enabling paper manufacturers to respond quickly to changing market trends.

Overview of raw materials used in the paper industry:

The paper industry relies heavily on raw materials, particularly pulp and wastepaper, to produce a wide range of paper products, with the prices of these materials having a significant impact on the industry's profitability and competitiveness. The global pulp market is influenced by factors such as supply and demand, production costs, and trade policies, with prices varying depending on the type, quality, and location. Wood pulp prices have grown from $590 per tonne in CY19 to $655 per tonne in CY24 growing at a CAGR 2.1% from CY19 to CY24, driven by factors such as increased demand from emerging markets, supply chain disruptions, and reduced supply. Similarly, wastepaper prices, also known as recovered paper, vary depending on the grade, quality, and location. The global wastepaper prices have grown from $180 per tonne in CY19 to $224 per tonne in CY24 growing at a CAGR 4.5% from CY19 to CY24, driven by factors such as higher freight costs, reduced production in the European mills affecting the generation of wastepaper, increasing cost of energy and labour etc. Additionally, trade policies, such as tariffs and quotas, have also played a significant role in shaping the global pulp and wastepaper markets, with the ongoing trade tensions between major economies affecting the prices and availability of these critical raw materials.
 

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