Global Fluff Pulp Market Outlook

  • The top three producers of fluff pulp control ~80 percent of global production 
  • Asia and the Middle Eastern markets are expected to drive demand for fluff pulp in the coming years 
  • North America is a well-matured region, showcasing lower growth rates, characterized by no increase in demand and end-uses demand already ripe


Major Trends

  • Baby diapers remained the most significant end-use market for fluff pulp, due to rising volume and the value of baby diapers market
  • In the coming years, air-laid market is expected to bring a notable growth in demand for fluff pulp, supported by increasing production of air-laid products
  • Increasing ageing population, female population, growth in baby diaper market, increased production of air-laid products, expanding patient population of incontinence, and rising disposable income are expected to propel the global fluff market
  • Key trends of this market include favorable price trends and development of fluff pulp from hardwood
  • There are currently two huge up-and-coming trends that aim to revolutionize the everyday diaper by throwing technology into the mix-Diaper Alert with Smartphone Application, Smart Diapers to Track Child Health

Fluff Pulp Regional Market Overview

  • APAC would continue to be the net importer of fluff pulp from North America. Demand from Asia-Pacific is anticipated to grow at a CAGR of about 5–6 percent until 2020, owing to the increasing consumption of personal hygiene products. Increasing working women population coupled with low penetration rate of diapers will drive the demand of fluff pulp until 2020 
  • Global fluff pulp operating rates moderated to a high 95.4 percent in 2016 and are expected to decrease at 92.4 percent in 2017 and 91.3 percent in 2018, due to capacity additions

Major Players in the Industry

  • There is sufficient capacity to meet the demand of fluff pulp customers, as producers typically switch to “unfluffed” paper-grade pulp production with excess SBSK mill capacity 
  • International Paper and Domtar, are adding a combined potential fluff pulp capacity of 876,000 tonnes through mill conversions. Specifically, IP is adding up to 360,000 tonnes at its Riegelwood, NC mill and Domtar is adding a potential 516,000 tonnes at its Ashdown, AR mill
  • Also, the capacity expansions from Domtar and Stora Enso will push their market share to 13 percent and 4 percent, respectively, as against their current share of 11 percent and 4 percent, respectively. This will also make Stora Enso the fourth largest by market share from fifth position in 2016
  • LATAM is to meet its domestic demand and move away from imports for fluff pulp
  • Sun paper’s entry into fluff will be a major step for China and will become the fourth largest pulp manufacturer by 2019

Reasons for Grade Shift to Fluff Pulp Production –US

  • Less technical knowledge and process understanding required, as the commodity is a “one size fits all” category 
  • As the manufacturers can swing to producing BHK or BSK or fluff pulp as per the market dynamics, enabling the manufacturers to diversify 
  • Due to steady growth of 4-5 percent from 2014 through 2019, driven by Asia and Middle East 
  • Due to premium pricing compared to other market pulp grades, resulting in higher returns (>15 percent ROI) 

Steady Growth

  • Aggressively growing demand with expected 4-5 percent CAGR from 2014 to 2019
  • US manufacturers capitalizing on the availability of raw material (slash and loblolly pine), with 83 percent of the production concentrated in the US
  • Growing disposable income and ease of use, urging emerging middle class population to switch to disposable products
  • Innovation and increased penetration by disposable product manufacturers’ drives the consumption of their products, and thereby the consumption of fluff pulp

Uncomplicated Production

  • Fluff pulp production does not require technical knowledge and process understanding, unlike cellulose specialty grades
  • It is considered an uncomplicated pulp grade, which can be produced by market pulp manufacturers, with addition of some equipment like drying unit, reel, and winder rebuilds
  • The “one size fits all” attribute, enables manufacturers to swing between market and fluff pulp, helping them to leverage on the supply-demand imbalance
  • Fluff pulp requires an ISO brightness of 84-87, lesser than the paper grade’s ISO brightness of 89-90. This results in a significant reduction of chlorine dioxide required for the bleaching process and hence less chemical cost

Premium Pricing and Swing Capacity

  • Fluff pulp is priced at premium to market pulp, enabling manufacturers to lock in extra profits (>15 percent ROI), than producing market pulp
  • Among 5.5 MMT of US fluff pulp capacity, ~2 MMT are swing capacities
  • With a decline in paper consumption, due to advent of digital technologies, many manufacturers are converting their market pulp lines to swing production, to produce both fluff pulp or market pulp, depending on the market dynamics
  • For example, a pulp mill of capacity 500,000 MT/year produces both SBSK and fluff pulp on swing production. If the mill produces 250,000 MT/year of fluff pulp, the company’s revenue is expected to increase by more than $15 mn (currently in H2 2016, fluff pulp is selling at a premium $60 compared to SBSK pulp)