Rising pulp prices and strong global demand will drive marginal growth for the industry
Los Angeles, CA (PRWEB) September 24, 2013
The Wood Pulp Mills industry has experienced volatile contraction in the midst of stagnant domestic demand over the past five years. This industry provides pulp to downstream paper manufacturers, such as paper mills, sanitary paper product manufacturers, cardboard mills and office stationery manufacturers. In addition, this industry is highly globalized and exports are a major driver of demand. According to IBISWorld Industry Analyst David Yang, “Over the past five years, strong growth in the paper products sectors of emerging economies bolstered exports, helping US pulp mills recover from the recession.” In 2009, wood pulp prices fell 25.1%, causing revenue to fall 19.2%. However, exports grew strongly in 2010 and 2011, resulting in revenue growth of 14.4% in 2011. Nevertheless, an appreciation of the dollar over the past two years has limited export growth. As a result, revenue is expected to fall at an average annual rate of 0.1% in the five years to 2013. In 2013, recovering wood pulp prices should benefit revenue. IBISWorld expects revenue to grow 2.7% over the year.
Similar to revenue, profit exhibited some volatility over the past five years. “As the economy deteriorated, profit only marginally declined in 2008 and 2009,” says Yang. Successful restructuring and downsizing efforts helped operators in the Wood Pulp Mills industry mitigate costs during the recession. Since then, profit has recovered as pulp prices and downstream demand picked up. Industry operators also increased investments in automation and technology to bolster efficiency and profitability. Furthermore, firms cut wages as automation technology helped reduce labor demand. Despite falling revenue, the number of enterprises marginally increased over the past five years.
In the five years to 2018, revenue is projected to grow slowly, due to steady demand from emerging economies' paper manufacturers. However, wood pulp prices are anticipated to fall, which will cut into profit and revenue. The dollar is also forecast to appreciate, causing industry exports to lose competitiveness on international markets. As a result, industry profitability is anticipated to fall over the next five years, providing incentive for firms to consolidate.
For more information, visit IBISWorld’s Wood Pulp Mills in the US industry report page.
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IBISWorld industry Report Key Topics
The Wood Pulp Mills industry primarily manufactures pulp without processing it into paper or paperboard. The pulp is made by separating the cellulose fibers from impurities in wood or other materials, such as used or recycled rags, linters, scrap paper and straw.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
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