Pulp & Paper Market size is forecast to reach $383 billion by 2026, after growing at a CAGR of 1.8% during 2021-2026, owing to the increasing usage of pulp & paper in various applications such as packaging, construction, hygienic paper, printing, and more. Paper & pulp is a lignocellulosic fibrous material prepared from wood, fiber crops, waste paper, or rags by chemically or mechanically separating cellulose fibers. The industry plays an important role in socio-economic, as well as sustainable environmental development.
The rapid growth of the food & beverages packaging industry has increased the demand for pulp & paper; thereby, fueling the market growth. Furthermore, the flourishing printing industry is also expected to drive the pulp & paper industry substantially during the forecast period. However, with increasing digitization and fluctuation in the availability of raw materials, the market of pulp & paper will be challenged during the forecast period.
Due to the covid-19 outbreak, various countries are under shut down owing to which the market is witnessing a period of low demand from its end-use industries such as packaging, and printing. The continuing wave of capacity expansion in the pulp & paper market has led to oversupply and squeezed profit margins, further putting pressure on the manufactures. Besides, the COVID-19 pandemic is affecting operations of various industries including packaging and printing, as most of the countries have issued “stay at home guidance” i.e., lockdown.
As pulp & paper are extensively used in these industries, the declining operation of these industries is directly limiting the fiber crops based pulp & paper market growth during the pandemic. Thus, with the decrease in packaging and printing production, the demand for pulp & paper has significantly fallen, which is having a major impact on the pulp & paper market during the pandemic.
Pulp & Paper Market Segment Analysis – By Manufacturing Process
The pulping process segment held the largest share in the pulp & paper market in 2020 and is growing at a CAGR of 2.8% during 2021-2026. The main source of effluent in the production process is pulping. This method allows cellulose fibers to be isolated and impurities to be removed. The most flexible method of pulp processing is the Kraft/Sulphate process. It results in a pulp of solid and long cellulose fibers with low lignin content. The primary advantage of chemical pumping is that the generated pulp fibers are long and solid. To make much stiffer, stronger paper goods, these long cellulose fibers can be used. For high-quality white paper and other quality paper items, chemical pulp is used. All these benefits are driving the demand for the pulping process as the manufacturing process of pulp and paper during the forecast period.
Pulp & Paper Market Segment Analysis – By End-Use Industry
The packaging segment held the largest share in the pulp & paper market in 2020 and is growing at a CAGR of 4.6% during 2021-2026, owing to the increasing usage of plant-based additives packaging such as pulp & paper in food, beverages, hygienic paper, and cosmetics. According to the US Environmental Protection Agency (EPA), the production of paper and paperboard containers and packaging totaled 41.9 million tonnes of MSW in 2018, accounting for 14.3% of total MSW generation.
The rapid penetration of the worldwide e-commerce and retail sector has created an enormous demand for both wrapping and packaging paper. In addition, both customers and producers in the developing economies are embracing paper packaging goods with growing environmental consciousness. Also, packaging innovation has been critical in shaping the consumption of soft drinks, paper goods are easy to recycle paper and can minimize air pollution, clean up the atmosphere, leading to a rise in demand from the food and beverage industry for paper packaging.
Food production in Russia increased by 4.7%, while beverage production increased by 3% in 2018, according to the International Trade Administration (ITA). This rise was mainly attributable to import restrictions boosting domestic demand and competitive domestic product prices in the local and foreign markets. Thus, the extensive usage of paper packaging industries is anticipated to drive the paper & pulp market in the packaging sector during the forecast period.
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Pulp & Paper Market Segment Analysis – By Geography
Asia-Pacific region held the largest share in the pulp & paper market in 2020 up to 36%, owing to the increasing demand for pulp & paper from the packaging industry in the region. The rise in e-commerce, food and beverage industry, automotive, health, and cosmetic industry is contributing to the increasing packaging industry of China. The packaging industry in China is anticipated to record a compound annual growth rate (CAGR) of 13.5 percent during the forecast period, according to the Sea-Circular Organization (2020-2025).
China’s food processing sector continued to expand in 2017, according to the United States Department of Agriculture (USDA). Revenue rose to $1.47 trillion, a rise of 6.3 percent compared to 2016. According to the United States Department of Agriculture, total retail food and beverage revenues in Japan totaled $479.29 billion (53,339 billion) in 2018, an increase of 2.3 percent. The increasing population and rapid urbanization in these countries are enhancing the demand for the packaging industry thereby, accelerating the growth of the pulp & paper market in the Asia-Pacific during the forecast period.
Pulp & Paper Market Drivers
Increasing Demand for Eco-Friendly Packaging Material
There are various factors as to why the demand for green packaging materials is increasing globally in recent years. Eco-friendly packaging materials such as paper releases fewer carbon emissions during production than traditional packaging does, and it also uses fewer energy-heavy resources. Also, eco packaging may be recycled and often even repurposed or composted if it is extremely biodegradable, unlike many other packaging types. And since paper-based packaging is recyclable, reusable, and has consistently had the highest recycling rate in recent years, it is one of the most sustainable and biodegradable materials available.
According to the United States Environmental Protection Agency (EPA), in 2018, approximately 32.1 million tons of corrugated boxes were recycled out of 33.9 million tons of total paper and paperboard recycling. The recycling rate for corrugated boxes was 96.5 percent. The demand for paper packaging as an eco-friendly alternative is increasing subsequently. Thus, the increasing demand for eco-friendly packaging material acts as a driver for the pulp & paper market during the forecast period.
Favorable Government Regulations
Various international Governments are trying to find a sustainable way to be environment friendly for which a series of policies are published under the usage of conventional plastics. And the demand for paper bags has increased as a potential & cheap substitute for plastic bags In May 2019, Nigerian house representatives banned the import, use, and manufacture of plastic bags in the country. A tax on plastic bags was enforced by Cambodia in October 2017. Large retailers are expected to charge consumers in Israel in January 2017 for plastic bags with handles.
In 2018, Taiwan revealed its plan to ban petroleum-based plastics in stores by removing bags from stores in 2020, raising prices in 2025, and then eventually banning petroleum-based bags altogether by 2030. In 2019, the government of Thailand approved a roadmap for reducing scrap plastics by 2030. The government has agreed to ban cups, plastic shopping bags thinner than 35 microns, and even plastic straws by 2020 as part of the scheme. All these regulations are increasing the acceptance by retailers, supermarkets, and storage vendors of paper-based packaging. As such, some legislation to restrict the use of standard plastics has been adopted by almost 127 countries and the door to the paper packaging market has been opened.
Pulp & Paper Market Challenges
Shifting Trend Towards Digitalization
Printing markets is changing; many publishing companies have shifted towards electronic versions and replaced previously printed volumes. Major portions of their respective markets are taken up by e-books, online newspapers, and magazines; while directories, catalogs, and brochures have electronic alternatives; more electronic transactions are reducing demand for currency and cheques; and advertisement investment is expanding into new areas, including online. In addition to the continued growth of social networking, these variables contribute to decreasing volumes of several print items, such as magazines, catalogs, books, and more. These factors are pulp & paper market growth.
Pulp & Paper Market Landscape
Technology launches, acquisitions, and R&D activities are key strategies adopted by players in the pulp & paper market. Major players in the pulp & paper market are International Paper, Georgia-Pacific Corporation, Nine Dragon Paper Ltd., Stora Enso Oyj, Kimberly-Clark Corporation, UPM-Kymmene Oyj, Svenska Cellulosa Aktiebolaget, Oji Holding Corporation, Nippon Paper Industries Co., Ltd., and Procter & Gamble.
In March 2020, at its Darlington, South Carolina, Dixie facility, Georgia-Pacific spent more than $145 million to expand its plate and bowl-making operations. This investment was focused on the demand for well-known household goods from clients and customers.
In September 2019, Nine Dragons Paper Ltd. planned to build a unit in the vicinity of Paradip, its first facility in India. They set up a facility near Paradip, as they could conveniently import the raw material needed to operate the plant from the location.
Asia-Pacific dominates the pulp & paper market, owing to the increasing demand for commercial printing and food packaging in the region. The rising population and increasing urbanization in APAC is the major factor driving the demand for commercial printing and food packaging.
Owing to increasing environmental concerns across the world along with the rising need to reduce toxic emissions; fiber crops based recycled paper packaging is being extensively used to manufacture hygienic paper. This, in turn, is expected to propel the market growth, during the forecast period.
A rise in the demand for paper packaging, owing to growing consumer awareness regarding the harmful effects of plastic on the environment along with the eco-friendly nature of fiber crops based paper packaging, is also projected to flourish the pulp & paper industry.
Due to the Covid-19 pandemic, most of the countries have gone under lockdown, due to which the demand for personal care and food packaging have decreased, which is hampering the pulp & paper market growth.
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