Leading up to publication of Valve Magazine’s 2010 Market Outlook cover story (mid-October), we take a look at a few of the industries that we did not have room to address in the print edition, but are available for our readers here on ValveMagazine.com. We begin with pulp & paper. Check back in the next couple of weeks for forecasts on commercial construction and mining, which were among the many industries addressed at VMA’s Market Outlook Workshop, held Aug. 13-14, 2009.
Though North American’s pulp & paper industry is large, producing a wide range of products, the industry faced the same challenge most of manufacturing did for 2009: a meltdown in revenues, according to Jim Garner, senior consultant, AMEC Americas.
In 2009, North American’s paper & paperboard industry will generate revenues of about $70 billion. Pulp will post an additional $10 billion market for North America, Garner said, but most of that pulp is consumed in domestic markets, which are starting to stabilize pulp output. Meanwhile, demand for pulp in areas of the world where that demand has grown, such as China, are largely being met by other exporting counties, such as Brazil.
Meanwhile, the entire industry worldwide is being affected by changing paper needs. For example, copy paper, an $11 billion market in North America, is now twice as big a market as newsprint while newsprint is in its tenth year of decline.
“The generation to come is happy to read online,” Garner pointed out, and this development affects not just newsprint, but coated and other graphic papers as well.
“Do the legs of your coffee table still experience the weight of magazines? I think not,” he commented.
For valve manufacturers, the biggest concern is whether mills will continue to close and capacity to fall. Garner said that since 2000, 5.7 million metric tons of capacity have been lost and more than 25 newsprint machines have been idled, a trend that is not likely to go anywhere but further down, Garner said.
The paper market has also been affected by a loss in market share for packaging to the plastics industry, Garner pointed out.
Still, opportunities exist in paperboard packaging in some new areas such as organic foods, products for the elderly and disabled, pharmaceuticals, and products sold over the Internet. And perhaps the brightest spot in the market today is hygienic tissue, which currently makes up only about 9% of the market, but is a growth market in North America. While most tissue is made locally, the market offers opportunity because the pulp for making it is usually made elsewhere, he pointed out.
FORECAST: More paper machines will close in response to decreases in domestic demand, competition from imports and a weakened domestic manufacturing sector. The nation may see another 20 to 25 machines close permanently by 2012. More pulp lines will close because of lessened demand, environmental pressures and offshore competition. The nation may see 8 to 12 pulp lines close by 2012. For the short term, valve sales can be expected to fall below $200 million/year, and they will never get back up to where they were.