China Woodchip Market and Outlook

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1 China Woodchip Market and Outlook Gavin Hao RISI Forester RISI s 9th International Woodfiber Resource and Trade Conference 1

2 Chinese Woodchip Import Market International Woodfiber Resource and Trade Conference February 2017 Gavin Hao Forestry Consultant

3 Asian Woodchip Imports, Thousand BDMT /2015 Hardwood Japan 9,991 10,220 10, % China 8,578 9,695 11, % S. Korea % Taiwan* % India** % Total Hardwood 20,069 21,388 22, % Softwood China % Japan 1,648 1,681 1, % S. Korea % Total Softwood 1,883 1,802 2, % Total All 21,952 23,190 24, %

4 Since 2009 China s Hardwood Chip Imports Have Increased by 7.5 Million BDMT 12,000 China: Woodchip Imports by Source, Thousand BDMT 10,000 8,000 6,000 4,000 2,000 Other Chile Australia Indonesia Thailand Vietnam

5 And the Chinese Market Has Diverse Sourcing from Southeast Asia 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Brazil China: Woodchip Imports Share by Source, 2010, 2013, 2016 S. Africa Chile Australia Southeast Asia

6 China s Hardwood Chip Imports Have Been Mainly from Southeast Asia, but Recently Australia Has Become an Important Source 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Hardwood Chip Suppliers to China Thousand BDMT Vietnam Thailand Indonesia Malaysia Australia Chile Brazil South Africa 6

7 The Share of Hardwood Chip Imports to the Two Dominant Companies Has Reduced Bohui 4% Chenming 10% SUN 9% China Hardwood Chips Importers, 2012 Tiger 1% Others 0% Huatai 1% Oji 8% Chenmi ng 13% China Hardwood Chips Imperters, 2016 Huatai Bohui 2% 5% Dingfen g 1% Others 1% APRIL 33% APP 25% APRIL 50% SUN 13% APP 24% 7

8 Different Companies Have Different Sourcing Strategies 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Reliance on Southeast Asia for Imported Hardwood Chips, 2016 Other Southeast Asia APP APRIL SUN Chenming Oji Bohui Huatai 8

9 Kraft Pulp and Dissolving Pulp Have a Greater Reliance on Imported Chips China: Imported Hardwood Chips by Pulp Grade, 2016 DP 13% MEC 8% Share of Pulp Capacity Based on Imported Hardwood Chips BHK 61% DP 63% MEC 16% BHK 79% 9

10 The Softwood Chip Market Is NOT as Stable as the Hardwood Chip Market Brazil New Zealand Russia United States Fiji Australia China Softwood Chips Import, Thousand BDMT

11 Qinshan Paper Is the Only Stable Softwood Chip Buyer on the Market China: Softwood Chip Import, Thousand BDMT Yanbian Bohui APRIL Phonex Tiger Qinshan

12 China Has 4 Million ha of Eucalyptus Plantations (60 Million m 3 Wood Supply Annually); Less Than 5 Million m 3 Goes to the Pulp Industry 2,500 2,000 1,500 1, Chinese Eucalyptus Plantation Area, 2016E Thousand Hectares 0 Guangxi Guangdong Fujian Hainan Yunnan Other 12

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14 Chinese Domestic Logs Are Expensive < 8 cm SED > 8 cm SED Guangxi: Eucalyptus Log Price Trends US Dollars per Cubic Meter

15 Mainly Hardwood Chips Mainly Softwood Chips (650)Bohui, Shandong (900)Sun Paper Chenming, Shandong (580) APRIL, Rizhao (1,900) Bohui, Dafeng (500) (120)Huatai, Anqing Oji, Nantong (500) (300)Tiger Qinshan (120) * Number refers to pulp line capacity APP, Qinzhou (900) APP, Hainan (1,800) Chenming, Zhanjiang (850) 15

16 The Volume of China s Hardwood Chip Imports Already Surpasses Japan s 3,500 3,000 2,500 2,000 1,500 1, Hardwood Chip Export Volume to China & Japan Thousand BDMT China Japan 16

17 China Has Been Very Successful in Reducing Hardwood Chip Import Prices 240 China Market Imported Hardwood Chip Price Trends US Dollars per BDMT Vietnam Australia Thailand Indonesia Chile

18 China s Woodchip Imports Are Strongly Related to the Domestic Pulp Industry Development, but Now Imports Grow Will Slowly 24 China: Wood Pulp Consumption, and, F 12 Million Tonnes Pulp Imports Pulp Production Chip Imports Million BDMT

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21 Thank you for your attention! For more information: International Timberland Ownership and Investment Database Southeast Asia: Regional Timber Supply and Market Outlook International Pulpwood Trade Review Contact: Gavin Hao Phone: Copyright 2015 RISI, Inc. Proprietary Information 21