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

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

Kerstin Canby Where will the supply come from?

GDP per capita & paper consumption Consumption 2000, kg per capita USA 400 Finland USA

Austria Sweden 300 Belgium Canada Denmark UKGermany Netherlands New Zealand Australia UK 200 Italy France Japan 1980-2000 Rep. of Korea Spain Singapore

China Portugal Malaysia Greece Ireland 100 South Africa Mexico China Brazil Argentina Turkey Venezuela Russia 0 India

0 5000 10000 15000 20000 25000 30000 35000 40000 GDP per capita, USD 2000 prices China’s Total Papermaking Fiber Resources

60 100% 90% 50 80% 40 70% 60% 30 50%

egat ons 40%

M 20 30% 10 20% 10% 0 0% 2002 2003 2004 2005 2006 Local Pulp I mpor t ed Pul p Local Was t epaper Imported Wast epaper I mpor t ed Pul pwood* % Vi r gi n F i ber Resource Origin Fiber Input Type Processing Final Product Agricultural Vegetable pulps Traditional small- Packaging & other Local pulp residues (short fiber, low scale pulp & paper paper products for & strength, poor mills domestic use wastepape Wastepaper quality 53% r 53% Office paper Bleached white paper liner Export-grade chemical corrugated wastepaper shipping boxes Used cardboard & Unbleached draft cardboard 22% Imported cartons wastepaper secondary fiber Mixed (cardboard, Other wastepaper corrugating core 33% news, magazines) (mixed) Coated Used magazines, Mechanical grade mechanical newspapers, etc wastepaper grades Large scale (newsprint) Low risk forest / Chemi-mechanical Imported modern paper xxxxxxx11% pulp plantations pulp industry Export-grade 13% printing and Potentially Bleached kraft communication threatened forests pulp paper (sulfate) 14% Imported Low risk forest / Hardwood pulpwood plantations pulpwood 1% Unknown forest / plantations Resource Origin Fiber Input Type Processing Final Product Agricultural Vegetable pulps Traditional small- Packaging & other Local pulp residues (short fiber, low scale pulp & paper paper products for & strength, poor mills domestic use wastepape Wastepaper quality 53% r 53% Office paper Bleached white paper liner Export-grade chemical corrugated wastepaper shipping boxes Used cardboard & Unbleached draft cardboard 22% Imported cartons wastepaper secondary fiber Mixed (cardboard, Other wastepaper corrugating core 33% news, magazines) (mixed) Coated Used magazines, Mechanical grade mechanical newspapers, etc wastepaper grades Large scale (newsprint) Low risk forest / Chemi-mechanical Imported modern paper xxxxxxx11% pulp plantations pulp industry Export-grade 13% printing and Potentially Bleached kraft communication threatened forests pulp paper (sulfate) 14% Imported Low risk forest / Hardwood pulpwood plantations pulpwood 1% Unknown forest / plantations Why is imported chemi- mechanical pulp considered low risk?

1000 900 800 700 600 500 400 Kilotons 300 200 100 0 2002 2003 2004 2005 2006

Canada New Zealand Sweden Indonesia Estonia Norway Finland Other Why is imported bleached kraft pulp considered higher-risk?

7 6 5

3 Megatons 2 1

0 2002 2003 2004 2005 2006 Canada Indonesia Brazil Russia United States Chile Finland Other Resource Origin Fiber Input Type Processing Final Product Agricultural Vegetable pulps Traditional small- Packaging & other Local pulp residues (short fiber, low scale pulp & paper paper products for & strength, poor mills domestic use wastepape Wastepaper quality 53% r 53% Office paper Bleached white paper liner Export-grade chemical corrugated wastepaper shipping boxes Used cardboard & Unbleached draft cardboard 22% Imported cartons wastepaper secondary fiber Mixed (cardboard, Other wastepaper corrugating core 33% news, magazines) (mixed) Coated Used magazines, Mechanical grade mechanical newspapers, etc wastepaper grades Large scale (newsprint) Low risk forest / Chemi-mechanical Imported modern paper xxxxxxx11% pulp plantations pulp industry Export-grade 13% printing and Potentially Bleached kraft communication threatened forests pulp paper (sulfate) 14% Imported Low risk forest / Hardwood pulpwood plantations pulpwood 1% Unknown forest / plantations Why is imported pulpwood considered higher risk?

900 800 700 600 500 400 300 200 100 Bone-dry metric kilotons 0 2002 2003 2004 2005 2006 Australia Vietnam Indonesia Chile Malaysia USA Cambodia Other Resource Origin Fiber Input Type Processing Final Product Agricultural Vegetable pulps Traditional small- Packaging & other Local pulp residues (short fiber, low scale pulp & paper paper products for & strength, poor mills domestic use wastepape Wastepaper quality 53% r 53% Office paper Bleached white paper liner Export-grade chemical corrugated wastepaper shipping boxes Used cardboard & Unbleached draft cardboard 22% Imported cartons wastepaper secondary fiber Mixed (cardboard, Other wastepaper corrugating core 33% news, magazines) (mixed) Coated Used magazines, Mechanical grade mechanical newspapers, etc wastepaper grades Large scale (newsprint) Low risk forest / Chemi-mechanical Imported modern paper xxxxxxx11% pulp plantations pulp industry Export-grade 13% printing and Potentially Bleached kraft communication threatened forests pulp 63.5% paper (sulfate) 14% Imported Low risk forest / Hardwood pulpwood plantations pulpwood 1% Unknown forest / 80% plantations 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…. Small increaseRussian in Exports other Russian to China, wood products… w/o logs 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 by Destination 2007 ExportsExports toto theUS byUnited Product States FurnitureJan-Apr Exports& plywood 2008 by Destination Exports Plywood to2007 US and 1st Q 2008 Furnitur ImportanceExports by Destination of Middle 2007 East

Malaysia Russia Ot hers USA 1% 1% India 15% 2% 22% Aust ralia 2% Canada 2% Taiw an 3% EU South Korea 5% Jap an 18% 8% Hong Kong 9% Middle East 12%