Already started the accommodation of new pulp projects

The postponement of the deployment schedule of the first eucalyptus pulp mill Braxcel, GMR group, to some point from 2022, was not the first sign of accommodation of new industry projects over the next ten years. Before that, Suzano Papel e Celulose, at the beginning of last year, already had suspended indefinitely the deployment of a new plant, in Piauí, originally scheduled for 2016.
Even if motivated not only by market-related issues with emphasis on the fear that many undertakings will result in oversupply and pressure on margins, but also by individual aspects of each project or undertaking, a new distribution of pulp mills in the timeline has started to be outlined-and there is a possibility that other movements are advertised in the short and medium terms.
Some time ago, as far as both Suzano, Fibria's largest producers of raw material, openly advocating a new round of industry consolidation rather than the unruly growth of supply. This positioning comes on the heels of additional high-volume producers intended, considering projects already in progress or just announced. The size of the new machine that, in technological terms, it can reach 2 million tons per year each-also contributes to "steps" of increasing supply, which extends the initial pressure on raw material prices.
Throughout this year, a total of 2.8 million tons, from the Suzano plant in Maranhao and of Montes del Plata, in Uruguay, should hit the market. That without considering the 350 thousand tons per year of Oji Paper in Nantong, China, that can go into operation in 2014. Next year will be the time of expansion of 1.3 million tonnes of Pulp CMPC Riograndense. In 2016, Klabin intends to inaugurate the factory of Ortigueira (PR), with production of 1.5 million tons per year, and there is possibility of Fibria put into operation the second line of Três Lagoas (MS), with 1.75 million tons.
For 2017, the Eldorado Brazil has already announced plans for a new line of 2 million tons, in Três Lagoas (MS), which will be followed by another round of growth in 2020. Between 2017 and 2018, Eco Brazil Forests also wants to put in your project activity in Tocantins, of 1.5 million tons a year.
Even if you consider the closure of factories of high cost, especially in the northern hemisphere, is increasing the perception that until there would be space for additional volume total planned by the producers, but in a time interval wider than the sketchy currently. It was in this context that the debate about the consolidation of the sector, which in the past have motivated studies within the Banco Nacional de Desenvolvimento Econômico e Social (BNDES), gained strength.
Between producers, there is no expectation of a "disaster" in the relationship between supply and demand – though all admit that prices should retreat as projects reach the market. Still, there are many signs that margins will remain under pressure for a long period and that the return on investment might be affected so important if there are calendar tweaks.