Market Overview

Because of its useful features and properties, specialty paper has a solid customer base and stable demand. With a wide range of applications, which extends from printing to various industrial uses, the market has been somewhat insensitive to demand fluctuations.
However, dramatic changes in the demand structure of the pulp industry have drastically reduced the demand for specialty paper for information media applications, which are affected by digitization and cost reduction in enterprises.
In addition, high-performance paper for industrial use is also facing tougher market conditions due to the disappearance of domestic industries caused by overseas relocation and increased competition with local manufacturers where industries have moved. Demand volatility is also becoming severer, impacted by the U.S.-China trade dispute and the pandemic-related global recessions. 

The market size of high-performance industrial paper, based on the shipment volume by domestic manufacturers, is estimated at 116,500 tons for FY2023, 94.5% of the size in the previous fiscal year. Demand for semiconductors and electronic parts has slowed sharply in the fall of 2022, as the surge in demand for digital devices during the pandemic stay-home period came to an end. As equipment manufacturers have built up their inventories as a measure against the semiconductor shortage, inventory adjustments by these manufacturers have been protracted. As a result, demand for high-performance industrial paper has remained sluggish. Against the backdrop of rising commodity prices, stagnant individual spending and heightened cost cutting consciousness have significantly affected the demand for high-performance industrial paper.

Noteworthy Topics

High Expectations for Growing Demand for Specialty Paper for Environmental and Energy Applications

One of the expected growth applications for specialty paper is the environmental energy sector, especially renewable energy related.
To achieve the decarbonized society, each of the countries around the world is striving to attain an energy mix, i.e., to shift from the total use of oil and coal to a balanced use of energy, partially using renewable energy with natural energy sources such as solar power, wind power, etc.
In such a situation, the demand for specialty paper is expected to grow in the medium to long term due to the expanding demand for battery separators resulting from increased installations of photovoltaic and wind power plants. Demand for battery separators is also expected to increase due to energy conservation in applications such as air conditioners and home appliances.

On the other hand, the Japanese government has drastically changed its nuclear energy policy to resume the new plant project amid the worsening global energy crisis triggered by the Russian invasions to Ukraine. This has generated new demand for transformers and rapidly increased the demand for pressboard, which is an insulator for transformers.
Domestic demand for pressboard is expected to continue to grow for the next few years, as the Japanese government has adopted a policy of using the resumption of nuclear power plants as a solution for a stable energy supply, an energy mix that does not rely on thermal power generation, and the realization of carbon neutrality.

Future Outlook

Semiconductors and electronic parts, the main applications for high-performance industrial paper, are expected to have high potential demand, as each of semiconductor manufacturers plan to increase production on a large scale, despite the volatile demand during the past few years. The market for semiconductors and electronic parts is on the road to recovery, caused by the expanding demand for communication facilities related to generative AI investments, promoted capital investment aimed at automation, labor saving, and environmental measures, and advances in automotive electronics technologies.
As a sign of the end of the prolonged inventory adjustment for semiconductors and electronic parts that has been observed since the beginning of FY2024, the size of the high-performance industrial paper market is projected to reach 120,830 tons in FY2024, 103.7% of the size of the previous year, and 122,860 tons in FY2025, 101.7% of the size of the previous year, indicating a period of expansion once again.

Research Outline