Security paper market to reach $6.58bn in 2025: Smithers

09/11/20

Worldwide 914,000 tonnes of specialty paper grades will be used in different security document applications in 2020, according to the new Smithers report – The Future of Security Papers to 2025. This will have a projected value of $6.27 billion.

It is forecast to increase to $6.58 billion in 2025 at a compound annual growth rate (CAGR) of 1.8%, even as volumes fall and suppliers adjust to new priorities in a commercial landscape altered by Covid-19.

Smithers’ analysis dissects the growth prospects across all major end-uses: banknotes; cheques; personal identity documents; postage and tax stamps; transportation, event, and lottery tickets; and other applications.

It finds that coronavirus lockdown orders will have the biggest impact on ticket papers; and cheque papers, as consumers move to more online and contactless payment options in response to infection risks. Event and transportation tickets have been similarly affected by ongoing travel restrictions, and the shift towards paperless or fully electronic ticketing moving forwards. Demand in banknotes and personal ID documents – principally passport visa pages – will be much less affected and continue to benefit from wider use of identity documents and the cash economy in developing regions through to 2025.

The 2020s will pose some specific challenges to suppliers of security paper grades. Postage stamp volumes will continue to decline, but the segment will benefit from the wider use of tax stamps as authorities look to clamp down on illicit and grey market trade. The EU’s Tobacco Products Directive (EUTPD) and the WHO’s Framework Convention on Tobacco Control (FCTC), will continue to provide a welcome stimulus in particular.

Banknote demand saw a peak in H1 2020, as economic uncertainty led consumers to withdraw and hold cash. In the medium term, paper banknote printing volumes will remain stable. Polymer substrates are now in use for all denominations in two G8 countries; but no other changeovers for major currencies are anticipated. More importantly, central banks are increasingly looking for full-service providers to supply note substrates, security features, and design expertise, as a single package; opening new revenue potential for larger, integrated security print firms. 

Conversely for those governments that retain a state-owned banknote paper mill; the impetus is to adopt a more commercial outlook and compete with private-sector security printers for contracts.

Across 2020-2025 genuine volume increases will be confined to growth economies in Asia and Eastern Europe. Asia-Pacific specifically will expand its share of the security paper market by volume from 41% to 47% across the Smithers forecast period. This will prompt existing suppliers to diversify their sales forces and pursue new joint ventures in the region.

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