The Outlook for the Russian Containerboard Industry Alexei Maslikov - - PowerPoint PPT Presentation

The Outlook for the Russian Containerboard Industry

Alexei Maslikov

Product manager «Containerboard» Strategy and Product Management

Chicago, November 2016

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Ilim Group is leading P&P company in Russia

Koryazhma Branch

BHKP UKP KLB Fluting UWF CWF

Mills Offices

Saint-Petersburg Irkutsk Beijing

Ust-Ilimsk Branch

BSKP UKP

Bratsk Branch

BSKP BHKP KLB

Ilim - the largest Russian P&P company in figures >3 Mt >75 Production Destination countries Forest area 100% FSC certified Russian market Pulp >75% #1 Containerboard Capacity

662

BSKP Board

475 Paper

BHKP UKP

1 347 396199

Production by products, kt

15% Containerboard Market

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Private consumption is expected to be the main driver for Russian GDP growth until 2020

Russian GDP and FX dynamics

Sources: EIU, IEA, Central bank of Russia, MED, own estimation *Actual FX rate, OECD statistics

Contribution to GDP growth, %

Growth rate

• 1,5

0,1 1,3 1 1,3

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Level of Containerboard per capita consumption in Russia has good potential to grow

Sources: RISI

Consumption In Russia Peer group1 Peer group2 Major product groups

1 BRIСS 2 Western Europe and UK

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Consumption of containerboard is growing in Russia, but virgin is losing market share to recycled grades

Sources: import&export data, statistics, Ilim estimation

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Significant KLB capacity increase comes during 2018-2019, but OR will remain high at 91-93%

Capacity and operating rate dynamics

Sources: import & export data, statistics, Ilim estimation

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Export volumes decline in 2016 and afterwards

Export volumes, kt

Sources: import & export data, statistics, Ilim estimation

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Imports account for only a minor share of Russian containerboard consumption and are likely to drop in the future

Main import volumes come from Ukraine TL and RF hold the main share in import

Sources: import & export data, statistics, Ilim estimation

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OCC export volume declines being converted to domestic TL production

Russian OCC export declines

Sources: import & export data, statistics, Ilim estimation

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The Russian market is not consolidated—fragmentation at both the mill and corrugated box plant level

Containerboard capacity Corrugated box capacity Market integration

Sources: import & export data, statistics, Ilim estimation

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Ilim develop several strategic projects to increase Containerboard capacity and quality until 2020

Bratsk KLB debottlenecking Total 295kt capacity Koryazhma KLB and SCF quality improvement projects Major projects