Non-wood fibres

Non-wood fibres Global Market Outlook

MARKET OVERVIEW

Global Demand (2023 E): 10.9 MMT

Global Demand CAGR: ~2-3 percent (2023-2027)

• Non-wood pulp produced using sustainable and environment-friendly methods is mainly prominent in Asia, mainly China. The production is expected to slowdown in North America and Europe

• Non-wood pulp market is expected to increase at a CAGR of 2-3 percent, due to an increase in demand for more sustainable packaging among consumers, which is expected to push the suppliers to opt for alternatives present in the market

Downstream Demand Analysis

• The demand for sustainable solutions to paper and packaging is more in developed regions, like Europe, is higher due to more stringent environmental regulation and growing concerns among consumers for environmental-friendly products

• Forestry regulations and faster growth of non-wood fibers, compared to wood trees, will drive the technology development in the non-wood fiber pulping process

• There has been a constant erosion for the non-wood pulp market for the past five years, which is also ascribed to the economic factors and shutdown of non-wood pulp mills

• Non-wood availability is subject to high risk of climate, pests, and disease impact on the annual plants, which make the raw materials highly seasonal and volatile. Also, there are many competing crops, which can be replaced for the non-wood pulp

• Non-wood pulp goes through a complex trading structure and storage issues. The multi-layered raw material trading structure mostly limits the co-ordination between farmers and industrial users

Industry Drivers and Constraints : Non-wood fibres

Drivers

Growing Demand for Premium and Luxury Cosmetics in Europe and Asia-Pacific

• Western Europe is one of the largest markets for premium and luxury cosmetic products, but penetration levels in APAC remained low. But with growing per capita income and increasing number of regional premium brands, the market is poised to grow at 10–12 percent CAGR over the next few years

• Another key growth region for premium and luxury cosmetics is Eastern Europe and Middle East, which has further aided growth in Prestige Beauty Closures

Newer Segments in Personal Care and Cosmetics

• Segments, such as male grooming products, organic cosmetics, are forecasted to grow at about 8–10 percent CAGR over the next five years, especially in developing markets, like Asia-Pacific, where the demand is forecasted to grow at about 8–9 percent, owing to low penetration levels

• As the segments continue to outpace the overall personal care market, it has spurred a number of new designs in personal care closures

Newer Technologies Driving Cost of Packaging

• Consumer demand for more value-added packaging has increased innovations into more functional closures

• Designs, such as YONWOO’s beads dispensing pump and Neville and More’s 360° dispensing pumps have become more common across brands and have enabled brand to overcome design challenges associated with the adoption into specialty segments in facewash and cosmetics

Constraints

Demand from Export Markets may Decrease

• Chinese manufacturers/industry suppliers are investing in old/idled/shutdown or financially troubled mills in North America and Europe, and thereby, reducing their costs and securing fiber for their needs. This might hamper export demand in the future

Penetration of Flexible Packaging in Personal Care Segment

• A number of personal care brands have replaced plastic bottles with pouches for their products, in order to reduce packaging costs and increase its sustainability

• A number of key innovations, like Aptar’s flexible packaging concept Proteo, have aided the shift from rigid to flexible packaging, especially for travel sized packs

Cost Outlook of Non-Wood Pulp

• High raw material prices, along with growing concern over more sustainable packaged goods increases the cost for non-wood pulp than wood pulp. However, increase in cost of non-wood pulp can be compensated with increase in sustainability quotient of its packaging products

Cost Structure of Non-Wood Pulp

• Raw Material Cost – Price of non-wood pulp is generally higher than wood pulp. For instance, bamboo pulp price is higher than hardwood pulp and is usually grown and available in Asian countries. Most of the pulp mills are also located closer to harvest locations to reduce the cost of raw materials and logistics. The demand and price for bamboo pulp is driven by sustainability concerns over using wood pulp.

• Chemicals Cost – Processing of non-wood pulp requires usage of more chemicals to remove and cleanse the non-wood raw materials to remove any undesirable micronutrients and minerals that might affect the quality of pulp and packaged good. Also, pulp is then bleached and processed to be used for packaging

• Fixed and Conversion Cost – The conversion process of non-wood residue (raw material) to pulp is nearly similar to wood pulp conversion process.

• Utility Cost – Processing of non-wood pulp requires lesser water and other resources as compared to wood pulp. For instance, bamboo requires 50–60 percent lesser water than wood pulp processing and wheat straw pulping require 8–10 times less water than wood pulp.

• Labor Cost – The labor wage depends on the area of operation. For instance, for bamboo pulp mills that are mostly located in Asian countries (China and some in India), the labor cost is lesser as wage rates are lower in those countries compared to developed countries but for mills located in developed markets, like many wheat straw pulp mills are located in the US and Canada, the labor cost for those mills will be higher.