BEDFORD, MA , Dec. 13, 2012 (Viewpoint) -
Estimating fluff pulp supply changes net swing to papergrade capacity and conversions to other specialty fibers on an annual basis is challenging, but completing this exercise along with RISI's fluff pulp demand forecast creates a clearer picture of the market. Since 2010 there have been major capacity projects started and/or planned by Domtar, Georgia-Pacific, International Paper and Arauco, as well as Rayonier's conversion from fluff to dissolving pulp. These projects will ultimately result in an estimated capacity increase of 1 million tonnes (net Rayonier's conversion to dissolving pulp) once they are completed. That represents an increase of approximately 20% in fluff pulp capacity. Include an additional project being considered in Latin America a bit further out, and taken at face value, this would point to a major market imbalance with capacity well outpacing demand. However, this is NOT the case after accounting for the closure of smaller mills in the southern hemisphere in the past few years, swing capabilities between papergrade and fluff pulp, the timing of the projects and steady demand growth.
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