Global paper, forestry products have a stable outlook, cost offsets high prices

- Mar 24, 2018-

Moody's Investors Service said in a new report that the global paper and forest products industry outlook remains stable. In the next 12 to 18 months, overall operating income will grow moderately, but rising costs will offset the benefits of price increases. In the sub-sector, the prospects for the stability of packaging paper, tissue, wood and wood products as well as the commodity pulp segment continue to be maintained, and the outlook for the paper segment is still negative.

Ed Sustar, Moody’s senior vice president, said: “We expect that in the next year or so, the consolidated revenue of 39 paper and forest products companies worldwide will increase by 2% to 4%. The increase in price and productivity and the acquisition-related collaboration The effect, as well as strong demand for pulp from wood products and packaging paper products, will drive profit growth, but will be partially offset by lower paper demand and higher freight, labor, energy and chemical costs."

At the same time, as the expansion of the US real estate market has accelerated the demand for wood products such as wood, plywood, and oriented strand board, the revenue of wood and wood products companies will increase by about 4%.

Prices will remain at levels close to 2017, but directional particleboard prices in North America will fall as additional supply exceeds demand growth. In Canada, because the tariff imposed on US timber exports will continue for one year, wood producers will see operating profits decline.

The business pulp company's operating income in 2018 will increase by about 3% because of the increase in demand, while the average price of most pulp grades remains flat. The strong prices that emerged at the beginning of 2018 may reverse in the second half of the year as supply growth exceeds demand.