With the declines in graphic markets, the specialty sector has become an area of increasing interest for paper companies whose graphic products are experiencing slumps in demand.
According to Smithers Pira's most recent report on the specialty paper industry, The Future of Specialty Paper Markets to 2018, the global end use market in 2013 was dominated by packaging related applications. For example, flexible packaging, labels and printing related applications, such as inkjet papers and thermal papers. A wide range of other specific applications constituted the other key categories.
The landscape of the specialty paper market is therefore complex and ever-changing. Whether you are a paper mill or are looking to invest in specialty papers, our new bulletin gives you an exclusive insight into the current state of the industry, and what paper mills can do to survive uncertainty.
A shift in decline and expansion
In some markets, the pattern is for a general decline in a particular segment. For example, book printing; perhaps due to an increase in internet-based and electronic readers, and paper filters, which are losing share to polyester filters in automotive applications.
In contrast, some segments have benefitted from changes in retail and manufacturing technology which have improved their prospects. Labels and release liners are now increasingly necessary; coffee and tea bags have been expanding their share, replacing traditional loose-fill; and the emphasis on reducing air pollution has increased demand for industrial filtration.
In some areas, such as electrical applications, specialty papers are used in infrastructure. Therefore consumption is clearly higher in the developing world and stagnant in the developed world. Similarly, security papers, currency, cheque paper and postage stamp paper are growing in emerging areas but remain static in more developed ones. The use of specific specialty papers is universal in other segments, so gift-wrap papers, glassine and crepe papers have buoyant consumption levels in all markets.
Continuous market growth is not assured
The diverse nature of the specialty paper industry is reflected in the variations of growth rates observed for different end use products. Specialty paper is misleadingly synonymous with the ability to generate high growth rates; while some grades perform well with sustained annual growth rates, this may be due to a switch in technology favouring this grade. The reality is that many specialty paper grades have a shorter production lifespan than commodity papers, and this is to be expected where specialty grades are developed in conjunction with evolving technologies. Many grades which once showed high growth are now almost extinct, including dielectric coated, thermal fax paper, tabulating cards and carbon paper.
In some cases, the growth of specialty paper is related to fashion trends, such as wallpapers, (décor changing from painted walls to the use of paper or plastics or textile wall coverings); others are influenced by changes in health concerns (cigarette papers, filtration); and others by changes in economic development (filtration grades introduced where no filtration existed before building and construction grades).
The impact of mergers and acquisitions
In production terms, Europe accounted for almost half of all production in 2013 with North America and Asia generating most of the remainder. With the diversity of products, no paper supplier has greater than 5% share of the specialty paper market. In addition, the specialty sector, although thriving in many end use markets, has not been immune from the commercial and economic factors affecting the paper sector as a whole.
Mergers, acquisitions and the development of operational alliances have grown in number, for example, the formation of Expera Specialty Solutions through a merger of Wasau Specialty Paper and Thilmany. The combination of these mergers and other players looking to enter the arena is making the space more competitive for all.
How can paper mills survive?
For mills to survive in this increasingly competitive market, the future has to lie in retaining a premium image, maintaining flexible production and cultivating strong relationships with converters who have most direct contact with end users.
Additionally, product development has to be continuous to ensure products meet the ever-demanding needs of a diverse customer base. The part of third party technology providers will increase to enable paper products to evolve and compete more effectively with alternative materials and substrates.
If you want to know more about the future of the specialty papers market, purchase our new report, The Future of Specialty Paper to 2018 now.