Outlook for Woodchip Imports in China

Transcription

1 Outlook for Woodchip Imports in China Bob Flynn Director, International Timber, RISI JOPP Seminar, Tokyo, June11, 2013

2 Thousand BDMT As recently as 2003, China was the fourth largest supplier of hardwood chips to Japan; but since 2006 China has been a net woodchip importer, and is now the 2 nd largest chip importer 8,000 China: Imports and Exports of Hardwood Chips 7,000 6,000 5,000 4,000 3,000 2,000 1,000 Imports Exports 0-1, ,000

3 Agenda Why does China need to import woodchips? World s biggest producer of paper and paperboard Growing domestic pulp production Shortage of domestic timber resources Historical trend in woodchip imports in China Hardwood Softwood Outlook for woodchip imports in China

4 Million Tonnes China has become the world s largest paper and paperboard producer; 70% of furnish is recovered paper, but consumption of wood pulp has also been increasing rapidly China: Fiber Consumption for Paper and Paperboard Production Non-Wood Pulp Wood Pulp Recovered Paper

5 What s ahead for China s paper industry? China s 12 th Five-year Plan provides strong guidance for the paper industry: Primary focus on domestic market, rather than producing for export. Forest-Paper integration includes acquiring forest resources outside of China. Recovered paper collection and consumption is encouraged. Industry consolidation to increase. Effluent reduction, energy conservation and mill closures.

6 Kg/Person China s growth in per capita income will mean rising consumption of paper--- although electronic media will have an impact 140 Graphic Paper Consumption and Per Capita Real GDP Japan South Korea China Source: RISI, China Pulp Market: A Comprehensive Analysis and Outlook, ,000 10,000 15,000 20,000 25,000 30,000 35,000 Per Capita GDP in US Dollars

7 RISI projects that newsprint production and demand in China will decrease over the next decade 5,000 China's Newsprint Production and Demand Forecast, Production Demand 4,000 3,000 2,000 Source: RISI, China Pulp Market: A Comprehensive Analysis and Outlook, ,

8 P&W paper production will increase, but net exports will decline as domestic consumption increases China's Printing & Writing Paper Forecast, Million tonnes Net Exports (Rt) Production (L) Demand (L) Source: RISI, China Pulp Market: A Comprehensive Analysis and Outlook,

9 Containerboard will be one of the fastest growing segments of the industry, with consumption keeping pace with production Thousand Tonnes Chinese Total Containerboard Consumption and Production 90,000 80,000 70,000 Consumption Production 60,000 50,000 40,000 30,000 20,000 Source: RISI, China Pulp Market: A Comprehensive Analysis and Outlook, ,

10 Thousand Tonnes Boxboard production seems set to expand faster than domestic consumption, so net exports will increase 25,000 Chinese Total Boxboard Consumption and Production Consumption Production 20,000 15,000 10,000 Source: RISI, China Pulp Market: A Comprehensive Analysis and Outlook, ,

11 Thousand Tonnes Tissue is a smaller segment, but rapidly growing in China- which will become the world s leading consumer China Becomes the Leading Consumer of Tissue 14,100 Western Europe North America China 12,100 10,100 8,100 6,100 4,100 Source: RISI, China Pulp Market: A Comprehensive Analysis and Outlook, ,

12 China s imports of wood pulp have been growing rapidly, but domestic production has also been increasing, with output growing 8% annually since 2004, to more than 9 million tonnes 16 China: Production and Imports of Wood Pulp Imports Production

13 Index: 2004 = 1 But imports of woodchips have been growing much faster than pulp imports, increasing 49% annually since China: Index of Pulp Production and Woodchip Imports 25 Pulp Production Woodchip Imports E

14 Million Hectares China s area of eucalyptus plantations doubled between 2006 and 2012 but will it be enough to meet demand? Other Guangxi China: Area of Eucalyptus Plantations E

15 Some eucalyptus plantations in China are relatively high quality Stora Enso has helped to introduce high-quality eucalyptus forestry to China, using modern technology from the first step. While most harvesting in China is still done by hand, Stora is developing some plantations for mechanical harvesting.

16 But other plantations are more difficult Plantations are often located on steep slopes, with poor road connections to markets. Agriculture still has priority in China, with forest plantations stuck with less productive sites.

17 And some plantations are really bad Many Chinese companies think "cheaper is better", but with eucalyptus this can be a problem. Even some flat ground may not be well suited for growing trees, due to very infertile soils, lack of rainfall, etc.

18 Eucalyptus in China has a problem with frost, and may also have future problems with pests and disease due to very narrow genetic base Frost damage to a young plantation Bacterial wilt damage to a Eucalyptus plantation

19 Pulpwood is expensive in China, as even very small (8cm+) eucalyptus logs like these are used for veneer, and can cost US$100/cubic meter or more

20 Thousand BDMT The vast majority of China s woodchip imports have been hardwood, not softwood 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 China Woodchip Imports Hardwood Softwood In January-April 2013, Imports of hardwood chips are 17% higher than in Imports of softwood chips are 122% higher than in Jan-Apr 2012 Jan-Apr 2013

21 Thousand BDMT Nearly 90% of China s hardwood chips are from Southeast Asia 8,000 6,000 4,000 China: Imports of Hardwood Chips Other Indonesia Vietnam Australia Thailand Change in imports by source in January-April 2013 vs. 2012: Vietnam + 42% Thailand - 17% Indonesia + 8% Australia + 70% Other - 36% 2,

22 In some months, China s imports of hardwood chips have already exceeded the volume imported in Japan Thousand BDMT Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Hardwood Chip Imports in Japan and China, April China Japan

23 Australia has been the primary supplier of softwood chips to China, although the USA would also like to sell a lot more to China China's Softwood Chip Imports, Thousand BDMT Australia Russia Brazil Fiji N Zealand USA Market shares in January-April 2013: Australia 72% Fiji 10% USA 9% Russia 8%

24 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Thousand BDMT China s imports of softwood chips have been higher in 2013, but will likely level out in second half 250 Softwood Chip Imports in Asia, January 2009-April China Japan

25 75% of China s hardwood chip imports in 2012 went to just two mills: APRIL at Rizhao and APP on Hainan Island

26 But other hardwood chip importers have been increasing volumes also In January-March 2013, market share of Others = 30%, up from 25% in 2012

27 Softwood chip imports have gone to just a few mills, with little change over time

28 China s Hardwood Chip Import Price: Prices higher in eastern China (Shandong province) due mostly to higher freight USD /BDMT Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 Hardwood Chip Price Index, 2009-March 2013 (CIF) East China South China Source: RISI International Pulpwood Trade Review

29 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 US$ per BDMT, CIF Hardwood Chip Price in Rizhao Australian suppliers tried hard to keep their price down, but still higher than SE Asian suppliers Hardwood Chip Price in Rizhao, March Vietnam Thailand Indonesia Australia Source: RISI International Pulpwood Trade Review

30 Project List Paper Grade Pulp Project Allocation Type New Capacity Purposed Start Date APP Qinzhou, Guangxi MEC 350 Jan, 2013 Bohui Dafeng, Jiangsu MEC 400 Q2, 2013 MCC Yinhe Linqing, Shandong MEC 70 early 2013 Xinya Henan MEC Jindaxing Guangxi BHK Lee & Man Wuzhou, Guangxi DIS Oji Paper Nantong, Jiangsu BHK Longjiangfu Heilongjiang UKP 340 Q4, 2013 Dingfeng Zhaoqing, Guangdong BHK Stora Enso Beihai, Guangxi BEK AdvanceAgro Dafeng, Jiangsu BHK Nanping Paper Nanping, Fujian DIS Stora Enso Beihai, Guangxi MEC April Rizhao, Shandong MEC April Rizhao, Shandong MEC Tiger Yuanjiang Paper Yuanjiang, Hunan MEC Chenming Shouguang, Shandong BHK 400?

31 Million Tonnes China is expected to maintain a balance between domestic pulp production and imports China: Forecast of Domestic Pulp Production and Pulp Imports Imports Production Note: does not include dissolving pulp F 2014F 2015F 2016F 2017F

32 Even our relatively conservative forecast indicates that China s market for hardwood chip imports will exceed Japan s by Hardwood Chips Import Forcast, China & Japan Million BDMT China Japan F 2014F 2015F

33 RISI s 14 th Annual Asian Pulp and Paper Outlook Conference June 17-19, 2013, Four Seasons Hotel, Shanghai see June 19, 2013 RISI seminar on Global Timberland Investment Trends and Opportunities for Chinese Investors, see nts_program.html

34 7 th International Woodfibre Resources and Trade Conference Focus on international trade in woodchips and biomass. To be held first week in November, 2014, in Chile. Aimed at providing networking opportunities for both suppliers and buyers of woodchips and biomass. Conference web site

35 RISI s International Pulpwood Trade Review (also known as the woodchip bible ) has provided information on international trade in woodchips and biomass for the past 20 years. See Contact: Bob Flynn rflynn@risi.com