Throughout Timo Teräs’s career, the essence of the pulp business has remained the same: it is all about cooperation between the buyer and the seller. However, there has been a huge leap forward, as pulp is used in more and more speciality products today. Indeed, all wood material is better utilised than before.
As early as 1970, the forest industry beckoned the young business student, and Teräs was recruited by Finncell, the joint sales association of Finnish market pulp mills. There he was, for most of his time, responsible for market research and planning, as well as domestic and international statistics.
“Metsä Fibre, then known as Botnia Pulp, was a member of Finncell, which provided members with forecasts on the development of global demand and supply of pulp. In addition, we showed foreign customers around Metsä Group’s mills, then Metsä Botnia mills, and I also participated in similar visits abroad,” Teräs recalls.
Addressing sustainability is key
Shortly before Finland joined the European Union, Finncell’s operations came to an end, and Teräs started working for Pöyry Management Consulting as a consultant.
Around that time, he was also recruited by the Finnish Options Exchange (FOEX) to establish the PIX indexes, which monitored the development of pulp prices. In 1999, after the exchange operations ended, Teräs became the CEO of FOEX Indexes Oy.
The privately owned FOEX focuses on developing and maintaining price indices for the forest and energy industries to serve the diverse needs of companies and the financial sector.
Although he has reached retirement age, Teräs continues to consult the pulp industry and currently works as Leading Advisor at AFRY Management Consulting. He describes his role as an intermediary between the buyer and the seller, aiming for a mutually satisfactory solution. Today, solutions that support sustainable development are essential.
“For example, we inform our customers about optimal pulp blends and regulations related to environmental protection. We also develop various logistics solutions and consult on where to buy or sell various commodities,” he explains.
Greater focus on refining side streams
Teräs believes that the future of pulp industry production lies in the direction of further processing and utilisation of all side streams.
“For example, Metsä Fibre will be able to use relevant market and end product information, forecasts of future changes, and profitability calculations to develop pulp grades that best suit customer needs, while combating climate change at the same time,” he says.
”One example is solutions where plastic products are replaced with renewable pulp and other fibres, which will increase demand for speciality pulps.”
Teräs also mentions cotton, which requires huge amounts of water to cultivate, as well as polyester, acrylic, and nylon, which are made from oil.
”These and many other products that are harmful to the environment can be replaced by pulp, whose properties in end uses, such as textiles, are very similar to those of cotton.”
A third example of a highly processed product is carboxy¬methyl cellulose, or CMC, which is processed from birch pulp produced by Metsä Fibre’s Äänekoski bioproduct mill at the adjacent Nouryon mill.
“CMC is used in ice cream, washing powder, cement, as a fibre supplement in health products, and so on.”
China needs Finnish pulp
Teräs sees a bright future for Finnish pulp. There are several factors that significantly support the Finnish virgin fibre industry.
“While digitalisation and declining paper use have reduced the market demand for pulp in graphic paper, this is offset by a significant growth in the demand for packaging products, as well as tissue paper. Tissue is now increasingly made of virgin fibre at a time when the supply of white recycled fibre is declining.”
China accounts for another major increase in demand for market pulp, Teräs points out. The country made a decision in 2017 to ban the import of recycled materials. A total ban took effect at the start of 2021.
“Although China has intensified its own recycling operations, much of Chinese board ends up around the world as packaging products, and the country needs Finnish pulp to produce new paperboard.”
Unrivalled strength of Finnish long fibres
Another important success factor of Finnish long-fibre pulp is its strength.
“The strength properties of pulp fibre from many competing countries are suitable for end uses where they do not compete directly with Finnish pulp,” says Teräs.
For example, in Latin America, the USA, China, and Indonesia, pulp producers are shifting to pulp for the textile and hygiene industries, he says. This means that competition in the paper and board industry, which is the main user of Finnish pulp, will decrease, and the sales of Finnish pulp to these sectors will increase, even if overall growth for market pulp will be slow.
“In other words, although the growth in demand for long-fibre pulp is slower than for short-fibre pulp, the shift of competitors to end uses outside the paper industry will increase the demand for Finnish market pulp for its main applications.”
This article was originally published in Fibre Magazine issue 2021-2022.