While the paper markets in Europe and North America are in decline, Asia is still a growing market, with annual fine paper demand totalling some 35 million tonnes and office papers growing at a rate of 2-4 per cent a year. For labelling materials, market growth is even stronger. The global growth rate for glassine papers was 3-5 per cent in 2014, but growth in Asia-Pacific was twice as high.
With the PM3 UPM’s sales organisation is now looking forward to being able to offer its Asia-Pacific customers not only office paper and graphic paper, but also label paper and wood-free uncoated speciality paper produced in China. Previously, all label papers had to be imported from UPM’s Tervasaari or Jämsänkoski mills in Finland.
“With the added capacity that PM3 brings, we will have very good opportunities to continue supporting the growth of our customers,” says Jaakko Nikkilä, Vice President, Sales, Fine Papers APAC.
“An investment such as PM3 is always based on a long-term perspective with a life span of at least 20 to 30 years. Underlying fundamentals such as China’s GDP growth, ongoing urbanisation and the increase in domestic consumption will benefit us. New companies and offices will be established, increasing the consumption of copy papers. Paper consumption at home is also expected to grow. Label consumption will benefit from the same trends. More goods are being packed and e-commerce is gaining ground, which requires additional logistics labelling. All this is resulting in growth in overall label consumption,” says Nikkilä.
Even though the labelling materials market is still relatively small compared to many other paper market segments, it has great potential. Asian label paper customers with their multiple end-use applications clearly represent new opportunities for UPM . For example, the manufacturing industry is increasingly replacing traditional fasteners such as screws with self-adhesive tapes, which will increase the demand for release liners.
“In addition to self-adhesive label applications, there are manifold opportunities for release liners in graphic arts, industrial, tape, hygiene, medical and other end uses. We have a great deal of confidence in the future growth potential of a variable range of release liners,” says Nikkilä. Office papers hold a significant share of UPM’s business in the Asia-Pacific region. UPM Paper Asia regards China as its home market and is focusing on the high and upper mid-range segments, where the company is a market leader. Also in other APAC regions UPM is a sizeable player in office paper markets.
Within the graphic paper segment, which includes paper for magazines, books, brochures and advertising material, UPM has chosen a more selective approach, and is concentrating on lower substance papers. “We feel that we have the expertise for this segment,” says Nikkilä. “It also gives us a sustainable approach to focus on paper that consumes less material.”
New applications for speciality paper
“We will also produce wood-free uncoated speciality papers and thereby enter new market segments by tailoring new products for our customers. These paper grades can be stronger, smoother and bulkier, with tailored properties such as higher density or different shades. There are vast opportunities for speciality grades in different converting applications. We have the necessary expertise in the company and are familiar with the targeted applications,” says Nikkilä.
Even though Chinese economic growth is slowing down, he believes there will always be certain segments and “growth pockets” that will offer new opportunities for UPM.
“We have a reputation for consistently delivering high quality both in our products and in how we serve our customers. For UPM, this is a long-term business. Our environmental and sustainability performance is the strongest promise we can give to our customers. Many of them choose us because of that,” says Nikkilä.
“Our environmental and sustainability performance is the strongest promise we can give to our customers. Many of them choose us because of that.” Jaakko Nikkilä, Vice President, Sales, Fine Papers APAC.