Oct 15, 2020
COVID-19 Impact on Pulp and Paper in Chemicals and Materials Industry
- Chemical and Materials
- Sep 28, 2020
Covid-19 Impact on Pulp and Paper in Chemicals and Materials Industry
COVID-19 outbreaks have developed across the globe and it hampers the demand of various products around the globe on a wider range. Many countries like Italy, India, U.S. and China have instituted lockdown in their country to reduce the spread of the virus. The virus will first affect the consumer spending patterns, which will cascade across the entire economy. From a pulp and paper perspective, such a pandemic will widely affect the paper and pulp sector. Due to the pandemic the paper sales plunging, as the demand from packaging, education, corporates and the print media has come to a naught with over 80% of the economy is on a standstill.
China accounts one-third of the world’s pulp imports market share. Due to the lockdown in China and halting on the import and export from one country to another the entire paper and pulp market were effected as will have to look to domestic markets to mitigate oversupply issues. This was the major concern for various paper and pulp exporter countries such as the U.S., which was by far the largest exporter of paper and pulp products to China.
FIGURE 1 GLOBAL PULP MARKET CONSUMPTION SHARE
The pandemic will reduce the demand of paper as it can boost the demand of towel and tissue worldwide. Health officials have stressed the importance of washing of hands to prevent the spreading of virus which could have the biggest impact for pulp and paper demand. The COVID-19 pandemics will widely affect the e-commerce industries and packaging industries which required a pulp and paper in bulk quantity. As the government imposed the restriction on travelling the consumer are preferring online grocery and other essential delivery services which required a wide range of paper products.
Demand for written and printing paper is hit by the closure of most educational institutions since the beginning of March and a gradual adoption of work from home. Demand for newspapers has also declined, with many readers avoiding newspapers and housing societies banning the entry of vendors as precautionary measures while some magazines have temporarily suspended editions.
IMPACT OF COVID-19 ON DEMAND OF E-COMMERCE PACKAGING
As lockdown imposed in many countries more than 70% of the industries have shuttered operations due to approval issues, lack of labour and raw material availability, logistics and demand disruption.
Plant closures, logistical disruptions to hit packaging demand in Q1 due to the suspension of operations for several industries, disruptions in production of essential commodities, inland transport and export shipments, the report says, adding the rising demand from e-commerce (for groceries) is not good enough to spike packaging demand at least in quarter of 2020 due to manpower shortage, supply chain issues. Online sale of non-essential items, which form a big chunk of the total demand, would remain completely halted until the lockdown is lifted.
The packaging accounts for more than 50% of the total paper demand, followed by WPP (writing and printing paper) at 30%. Due to the consumer of online purchasing through e-commerce sites the demand of paper can be increased. Long periods of work-at-home, may lead to accelerating penetration of e-commerce into traditional retail outlets. Food in particular shows substantial room for online growth, as people seek some alternative to the food they normally splurge on at restaurants.
IMPACT OF COVID-19 ON TISSUE AND TOWEL
Disposable hand towels should be the preferred method for hand drying in public/shared bathrooms as a 2018 study by the American Society for Microbiology found hot-air hand dryers can disperse bacteria from hands or deposit bacteria on surfaces, including recently washed hands.
The AFH tissue business will suffer drastically this year due to restriction in traveling, vacant hotels, restrictions on dining out, closed schools and people working from home instead of offices are all factors that will depress demand in the AFH tissue segment in 2020, especially during the first half of the year. The only potential bright spot for the segment is increased consumption by the medical care industry.
In the U.S., which is already the largest consumer of tissue products are stocking the toilet paper and tissue in their homes to maintain their home sanitary and the same trend is followed by many countries such as China, Japan, Italy, Germany and others.
IMPACT OF COVID-19 ON PAPER MASK
Due to the pandemic situation all over the world all the doctors and scientist are suggesting the adoption of paper masks as these pear masks protect the body from bacterial contamination. In April 2020, researchers published a paper showing that face-masks completely eliminate the emission of particles. Paper masks filtered viral particles during coughing at about 50-100% of the filtration efficiency of surgical masks.
Paper mask eliminates the bacterial contamination and other respiratory transmissible viruses for the community and healthcare workers and sick patients. Paper masks appeared to be more effective than hand hygiene alone, and both together were more protective. The pandemic situation is surging the demand of paper masks all over the world as nowadays every individual is wearing the masks before going out and even in their homes to reduce the bacterial effect.
COMPANIES INITIATIVES DURING COVID-19
COVID-19 crisis has already created enough distress among the countries globally. Pulp and paper manufacturers are adopting new technologies and creating the awareness among consumers regarding the advantage of paper consumption in this pandemic situation.
- In June 2020, Metso Paper announces that they receive an order to supply a new fibre line to Century Pulp & Paper, a division of Century Textile and Industries Ltd.
- In May 2020, OTORIO, the provider of next-generation OT digital and cybersecurity risk management solutions, announced today a new initiative designed to raise awareness for better cyber-risk management in the pulp and paper industry and help industrial companies navigate through the rough, uncharted waters of the COVID-19 crisis.
- In March 2020, International Paper a manufacturer of renewable, fiber-based packaging, pulp and paper has donated thousands of corrugated boxes for feeding America and their network of food banks across the United States.
- In March 2020 International Paper, producer of renewable, fiber-based packaging, pulp and paper engaged in the partnership with A. Lava & Son Co. company to provide 5,000 paper boxes to transport the estimated 630,000 masks to healthcare workers.
The strategic decision of manufactures can help them to enhance their product portfolio during the COVID-19 crisis on a wider range. During the virus crisis, the consumers are stocking the tissues and other sanitary papers in their homes so various manufacturers in North America and Europe have been running at their capacity limits to fulfill the growing demand of the consumers.
Manufacturers are adopting new technologies and investing in different strategies to gain profit and turn down the situation into their favor. The COVID-19 crisis will affect the entire supply chain of the world paper and pulp market as due to the lockdown there will be a shortage of raw material supply and suspension of operations for several industries, disruptions in the production of essential commodities, inland transport and export shipments due to that manufacturers will not able to fulfill the growing demand of paper tissue and towels.
The logistical disruption can provide a breather, import threat continues with subdued pulp prices and the possibility of overseas manufactures pushing their inventory amid a weak global demand once normalcy returns. Due to the pandemic, the demand for tissue papers has raised in the wake of increased hygiene concerns. In India, the demand for tissue and paper towels market is growing with 6.6% in the first and second quarter.