Pulp prices and non-integration of the industry
The household paper industry is capital intensive, and the cost of fiber raw materials is the main factor determining the production cost of household paper and paper towels, as shown in Figure 1. Fiber raw material costs account for 67% of the total cost of household paper production, followed by energy at 16%.
In the past few years, the price of raw fiber has skyrocketed, rising by nearly 50 percent. This has had a huge impact on the global household paper processing and manufacturing industry, among which non-integrated sanitary paper mills have been greatly affected.
In addition, as the cost of fiber increases, the competitiveness of paper machines using traditional technology is also declining. Paper mills that use this equipment are expensive and risky, and some of them are expected to face some pressure in the future, especially in terms of profit margins.
So, since non-integrated factories have been hit hard, why are there so many pulp mills not integrated? One obstacle to process integration in the industry is the size of the pulp mill.
To make matters more complicated, many of the world's tissue mills must mix a variety of pulp (including coniferous wood pulp, hardwood pulp and waste pulp, etc.) to meet multiple standards for the performance of tissue products, and must purchase types of pulp that the factory does not produce. As shown in Table 1, different grades of toilet paper and paper towels have different requirements for fiber raw material types.
