A growth story

By the end of 2017 UPM Pulp will have increased its pulp production capacity by more than half a million tonnes in just four years. Investments are significantly boosting the company’s ability to supply high quality pulp.​

The capacity increase has been accomplished cost-efficiently by upgrading and optimising
available assets and processes. “These highly targeted investments began in 2013. They are evidence of UPM’s growth strategy, and are also a clear statement that we are strongly
committed to the pulp business. Despite the decline in graphic papers, I’m completely convinced that fibre-based products have a bright future,” says UPM Pulp’s Tomas Wiklund, Vice
President for Sales and Marketing.

UPM first invested in a completely new pulp drying machine at its Kymi mill, and is currently further upgrading processes to increase production capacity. Both pulp drying machines have been modernised at the mill in Kaukas, and a new baling line has been built. Related assembly work took place during the autumn shutdown.

“These investments further enhance our ability to serve customers and reliably supply them with pulp when they need it.”

Secured supply

The pulp market is currently in an interesting state, with the supply and demand side seeming to drive the market in differing directions. On the one hand, the supply of pulp is increasingly focused on Latin America, with a stream of fairly similar grades of eucalyptus pulp. On the other hand, customers are insisting on individual pulp solutions.

“It will certainly be exciting to see which trend prevails. Will customers ask for more generic products, or will each and every pulp buyer begin tweaking requirements according to specific preferences,” Tomas ponders and continues:
“It naturally gives us an edge having two very distinct hardwood pulps, eucalyptus and birch, in our portfolio, together with several complementary Nordic softwood pulps from Finland.”

The UPM investment strategy also avoids putting all of the eggs into one basket, with upgrades in production capability spread across all pulp mills. UPM Pulp is accordingly more cost-effective and competitive. Tomas sees this translating into customer benefits.

“I hope we have been able to give our customers peace of mind that their pulp supply is secure.”

Tomas also believes that the customer structure is evolving, together with the structure of the industry as a whole.

“Both customers and suppliers are getting bigger and more selective. Pulp buyers will be increasingly cautious when selecting partners who can keep pace with their growth. Customers want established and reliable partners to minimise their risks in a volatile market.”

Future considerations in Uruguay

As part of its growth track, UPM is considering long-term development options in Uruguay and pursuing discussions with the national government on the critical role of logistics infrastructure.

“We are investigating the prospects for expanding our Uruguay pulp operations in the early 2020s,” Tomas says.

While preliminary studies have shown that Uruguay could accommodate a new large pulp mill with proven environmental performance, the current rail and road networks would need a major upgrade to support large-scale, export-oriented operations in the Uruguayan heartland.

“With growing global demand for fibre, I think expanding in Uruguay would be exactly the right approach to keep us relevant.”



 

This article has been published in Pulp Direct 3/2016 »