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Graphic papers: Uncovering growth opportunities in a declining market


August 5, 2020
By Nick Ince & Tom Hayden

Topics
The imPressID additives on specialty paper. Photo: Solenis

If you’re at all familiar with the graphic papers market, then you’ve been hearing for years that it’s in a decline – and that’s true. On average, the global market has been dropping by roughly 3.2 per cent CAGR (compounded annual growth rate) for the last five years.

However, the good news is that there are “hot spots” where potential growth opportunities exist in this declining market.

Focus on viable assets

First, it’s important to consider the top, most viable paper machines. These are the assets that will operate long-term, providing good, stable business. The Fisher Viability Index Ranking Value chart (below) shows all the graphic paper producers in the world, with the higher value also being the greater risk.

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Fisher Viability Rating Chart. Photo: Fisher International Inc.

The machines in red are at high risk of being shut down or converted to more financially stable paper grades.

The most viable machines will typically be the modern, large machines that are the lowest cost and most efficient to operate. However, smaller machines producing higher value specialty grades are also viable.

Focus on growth subsegments

Second, it’s important to understand that not all segments of this market are equal. While the market as a whole is declining, there are growing subsegments. For example:

  • Newsprint: -7.5% CAGR
  • Graphic Papers: -1.5% CAGR
  •  Specialties: +1.3% CAGR
  • Digital Print: +16.4% CAGR

The digital print market, especially, should be a target segment. This includes the new, high-speed, roll-fed, inkjet printers and HP Indigo printing. The number of pages printed on these have been growing at 20 per cent plus annually.

The advent of new printing techniques requires changes in paper properties, and both high-speed inkjet and HP Indigo printing require paper with specific surface treatments to ensure the highest print quality.

There are additives to help paper producers achieve the necessary print quality and printer runnability for their end customers. For example, Solenis has developed the imPress paper additives, with imPress IJ technologies for high-speed inkjet printing and imPress ID technologies, for HP Indigo printing.

Aligning with market needs

For paper producers seeking to increase growth, it’s important to work with suppliers and technology providers that can offer a broad array of capabilities for specific applications.

It’s also important to understand and align with market needs, especially in the areas of cost reduction, development of new grades and machine conversions.

Cost-reduction projects

The lowest-cost producers will always be more viable, so it’s important to work on cost-reduction projects while continuing to maintain paper quality.

Being a low-cost producer does not mean using low-cost additives. Bigger savings can be realized in higher-spend areas, such as energy reduction, fibre optimization and improving machine efficiency. Examples include advanced retention and drainage solutions and microbiocides.

New grade development

Even within a declining market, there are opportunities to launch new products or differentiate offerings to grow market share. Specialty chemical companies that are experienced in paper production can support paper producers in developing these new grades.

For example, Solenis helped a specialty paper mill seeking to expand into the HP Indigo printer paper market. This specific paper requires special additives to improve Indigo printer performance and the paper used on these printers needs to be certified by HP.

The testing includes ink adhesion to the paper, printer runnability and print blanket compatibility. Solenis recommended an additive for the mill’s standard size press solution. The results exceeded expectations with near-perfect results in all categories. Following this trial, the mill received three-star certification – the highest rating possible.

Machine conversions

Ultimately, if a machine is no longer viable to produce printing and writing paper, there could be opportunities to convert the equipment to produce alternative grades.

While this can be a significant investment, chemicals companies can help mills by collaborating on a market analysis to ensure the right grades are selected for production before deciding to convert a machine. They can also help to design a wet-end chemistry program to accelerate the project’s start-up curve.

Nick Ince is marketing director, Asia-Pacific at Solenis and Tom Hayden is global market director, graphic & specialities and pulp at Solenis.