Sourcing of China’s Paper Fiber Supply& Recent Trade Trends

Kerstin Canby

Where will the supply come from?

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100

200

300

400

0 5000 10000 15000 20000 25000 30000 35000 40000

GDP per capita, USD 2000 prices

Consumption 2000, kg per capita

Japan 1980-2000

USA

Denmark

Sweden

Ireland

UK

Finland

CanadaNetherlands

Austria

Belgium

Singapore

Germany

France

Australia

Italy

Spain

New Zealand

Rep. of Korea

Malaysia GreecePortugal

ArgentinaMexico

VenezuelaBrazil

Turkey

South Africa

Russia

China

India

China

USA

GDP per capita & paper consumption

UK

China’s Total Papermaking Fiber Resources

0

10

20

30

40

50

60

2002 2003 2004 2005 2006

Mega

tons

0%10%20%30%40%50%60%70%80%90%100%

Local Pul p I mpor t ed Pul pLocal Wast epaper I mpor t ed Wast epaperI mpor t ed Pul pwood* % Vi r gi n Fi ber

Agricultural residues

Wastepaper

Office paper

Used cardboard & cartons

Mixed (cardboard, news, magazines)

Used magazines, newspapers, etc

Low risk forest / plantations

Potentially threatened forests

Low risk forest / plantations

Unknown forest / plantations

Vegetable pulps (short fiber, low strength, poor quality

Bleached chemical wastepaper

Unbleached draft wastepaper

Other wastepaper (mixed)

Mechanical grade wastepaper

Chemi-mechanical pulp

Bleached kraft pulp(sulfate)

Hardwood pulpwood

Traditional small-scale pulp & paper mills

white paper liner

cardboard

corrugating core

Large scale modern paper industry

Packaging & other paper products for domestic use 53%

Export-grade corrugated shipping boxes 22%

Coated mechanical grades (newsprint) xxxxxxx11%

Export-grade printing and communication paper 14%

Resource Origin Fiber Input Type Processing Final Product

Local pulp & wastepaper

53%

Imported secondary

fiber 33%

Imported pulp

13%

Imported pulpwood

1%

Agricultural residues

Wastepaper

Office paper

Used cardboard & cartons

Mixed (cardboard, news, magazines)

Used magazines, newspapers, etc

Low risk forest / plantations

Potentially threatened forests

Low risk forest / plantations

Unknown forest / plantations

Vegetable pulps (short fiber, low strength, poor quality

Bleached chemical wastepaper

Unbleached draft wastepaper

Other wastepaper (mixed)

Mechanical grade wastepaper

Chemi-mechanical pulp

Bleached kraft pulp(sulfate)

Hardwood pulpwood

Traditional small-scale pulp & paper mills

white paper liner

cardboard

corrugating core

Large scale modern paper industry

Packaging & other paper products for domestic use 53%

Export-grade corrugated shipping boxes 22%

Coated mechanical grades (newsprint) xxxxxxx11%

Export-grade printing and communication paper 14%

Resource Origin Fiber Input Type Processing Final Product

Local pulp & wastepaper

53%

Imported secondary

fiber 33%

Imported pulp

13%

Imported pulpwood

1%

Why is imported chemi- mechanical pulp considered low risk?

0100200300400500600700800900

1000

2002 2003 2004 2005 2006

Kilo

tons

Canada New Zealand Sweden IndonesiaEstonia Norway Finland Other

Why is imported bleached kraft pulp considered higher-risk?

0

1

2

3

4

5

6

7

2002 2003 2004 2005 2006

Mega

tons

Canada Indonesia Brazil RussiaUnited States Chile Finland Other

Agricultural residues

Wastepaper

Office paper

Used cardboard & cartons

Mixed (cardboard, news, magazines)

Used magazines, newspapers, etc

Low risk forest / plantations

Potentially threatened forests

Low risk forest / plantations

Unknown forest / plantations

Vegetable pulps (short fiber, low strength, poor quality

Bleached chemical wastepaper

Unbleached draft wastepaper

Other wastepaper (mixed)

Mechanical grade wastepaper

Chemi-mechanical pulp

Bleached kraft pulp(sulfate)

Hardwood pulpwood

Traditional small-scale pulp & paper mills

white paper liner

cardboard

corrugating core

Large scale modern paper industry

Packaging & other paper products for domestic use 53%

Export-grade corrugated shipping boxes 22%

Coated mechanical grades (newsprint) xxxxxxx11%

Export-grade printing and communication paper 14%

Resource Origin Fiber Input Type Processing Final Product

Local pulp & wastepaper

53%

Imported secondary

fiber 33%

Imported pulp

13%

Imported pulpwood

1%

Why is imported pulpwood considered higher risk?

0

100

200

300

400500

600

700

800

900

2002 2003 2004 2005 2006

Bone-d

ry m

etr

ic k

iloto

ns

Australia Vietnam Indonesia ChileMalaysia USA Cambodia Other

Agricultural residues

Wastepaper

Office paper

Used cardboard & cartons

Mixed (cardboard, news, magazines)

Used magazines, newspapers, etc

Low risk forest / plantations

Potentially threatened forests

Low risk forest / plantations

Unknown forest / plantations

Vegetable pulps (short fiber, low strength, poor quality

Bleached chemical wastepaper

Unbleached draft wastepaper

Other wastepaper (mixed)

Mechanical grade wastepaper

Chemi-mechanical pulp

Bleached kraft pulp(sulfate)

Hardwood pulpwood

Traditional small-scale pulp & paper mills

white paper liner

cardboard

corrugating core

Large scale modern paper industry

Packaging & other paper products for domestic use 53%

Export-grade corrugated shipping boxes 22%

Coated mechanical grades (newsprint) xxxxxxx11%

Export-grade printing and communication paper 14%

Resource Origin Fiber Input Type Processing Final Product

Local pulp & wastepaper

53%

Imported secondary

fiber 33%

Imported pulp

13%

Imported pulpwood

1%

63.5%

80%

2007 trends continue….

2007 pulp sourcing

Wood chips small but important to some countries...

Recommendations

• Be aware of where pulp, pulpwood and woodchips are coming from & develop tracking systems to verify origin

• Address the “weakest links” in China’s fiber supply system: the uncertified pulp and pulpwood coming from Russia and Indonesia– ensure certified harvested from sustainably

managed forest operations & can be tracked through to the mill

2007 import rise

Taking out p & p, logs dominate

Russian logs dominate….

Russian Exports to China, w/o logs

Small increase in other Russian wood products…

Rise of PNG, Solomons, NZ, Gabon

Indonesian imports down

African imports up (but only 4-5% of total imports)

Where is it going?

Adapted Fuller and Bernard. 2006. China's Rapidly Expanding Wood Products Market: Are they Sustainable? RISI

Where is it going?

Where is it going?

Exports to US by ProductExports by Destination 2007Exports to the United States

Jan-Apr 2008 Plywood and FurniturExports by Destination 2007Furniture & plywood Exports to US 1st Q 2008

Exports by Destination 2007

USA22%

EU18%

Middle East12%

Hong Kong9%

Japan8%

South Korea5%

Taiwan3%

Canada2%

Australia2%

India2%

Malaysia1%

Russia1%

Others15%

Importance of Middle East