2012 Integrated report - Sappi

Pulp
Share of sales
paper pulp + dissolving wood pulp 14%
Description and typical uses Demand trends Our markets in 2012
Paper
pulp
Main raw material used in production of
printing, writing and packaging paper. Pulp is
the generic term that describes the cellulose
fibre derived from wood. These cellulose
fibres may be separated by mechanical,
thermo-mechanical or chemical processes.
The chemical processes involve removing
the glues (lignins) which bind the woodfibres
to leave cellulose fibres. Paper made from
chemical pulp is generally termed “woodfree”.
Uses include paper, paperboard and tissue.
With gradually improving global demand
for paper products, demand for paper
pulp is expected to recover.
Global demand for paper pulp varied
by region in fiscal 2012. Demand for
paper pulp declined in more mature
economies as paper consumption
continued to decline. In China,
however, demand for paper pulp grew
as non-integrated facilities continued
to come on-line.
Dissolving
wood pulp
Manufactured by a similar process to paper
grade pulp, but purified further to leave
virtually pure cellulose fibres. Dissolving wood
pulp is used in the manufacture of a variety of
cellulose textile and non-woven fibre products,
including viscose staple fibre (rayon), solvent
spun fibre (lyocell) and filament. It is also used
in various other cellulose based applications
in the food, film, cigarette, chemical and
pharmaceutical industries. These include the
manufacture of acetate flake, microcrystalline
cellulose, cellophane, ethers and moulding
powders. The various grades of dissolving
wood pulp are manufactured in accordance
with the specific requirements of customers
in different market segments. The purity of
the dissolving wood pulp is one of the key
determinants of its suitability for particular
applications with the purer grades of
dissolving wood pulp generally supplied into
the speciality segments. Our most significant
customers include Lenzing and the
Aditya Birla Group.
Dissolving wood pulp has a wide
range of applications, demand for
many of which are expected to
continue growing at good rates.
The textile uses in particular are
predicted to show increasing demand
as the growth in the supply of cotton
becomes increasingly constrained.
Timber/
other products
Description and typical uses
Sawn timber for construction and
furniture manufacturing purposes.
Demand trends
Our markets in 2012
The South African Government
continued to focus on infrastructure
spend, mainly housing. Despite this,
the South African lumber market
remained flat in 2012.
Demand for dissolving wood pulp
continues to be strong. We announced
two expansion projects in 2012 due
to come on-line in mid-2013 to meet
the continuing growth in demand for
dissolving wood pulp.
As consumer and housing markets
recover in South Africa, demand for
timber products is expected to recover.
Share of sales
2%
Packaging paper
Description and typical uses Demand trends Our markets in 2012
Packaging
paper
Heavy and lightweight grades of paper
and board primarily used for primary
and secondary packaging of fast
moving consumer goods, agricultural
and industrial products. Products
include containerboard (corrugated
shipping containers), sack kraft
(multi-walled shipping sacks) and
machine glazed kraft (grocer’s bags).
Can be coated to enhance barrier
and aesthetics properties.
Customers are typically converters
of the packaging paper.
Packaging demand is driven by
population growth, higher standards
of living, urbanisation and globalisation.
Paper packaging is seen as playing
an increasingly important role in an
environmentally conscious world.
2012 was marked by flat volumes
and prices in the South African market.
Cost saving initiatives have boosted
margin growth in this business.
sappi Integrated Report 2012 29