Esko Uutela, Consultant, RISI
July 17, 2013
In late May, the China National Household Paper Industry Association (CNHPIA) published its latest annual report on developments in the tissue and absorbent hygiene product business in China in 2012. This took place in connection with the annual CIPEX exhibition and conference event, this time held in Shenzhen, Guangdong, close to Hong Kong.
The expectations were for the continuation of the strong growth that the industry showed in 2011 in both tissue consumption and production (12.5% and 10.9%, respectively). The messages that we heard from the marketplace and the main players during 2012 and early 2013 indicated that the tissue market expansion did not show any signs of slowing down, supported by new demand emerging in "hinterland China", namely provinces in central and northeastern regions of the country where industrialization and urbanization has recently accelerated. But the figures shown by CNHPIA in its annual report were disappointingly low, 7.8% for tissue production and only 7.1% for domestic consumption. The immediate reaction was why so low, as the industry had shown very dynamic investment behavior during the year.
Taking a closer look at the numbers, CNHPIA states in its report that "in 2012, the output of tissue paper was about 6.273 million (metric) tons (calculated on an 80% machinery utilization rate)." For comparison, the 2010 production number was based on 85% capacity utilization while there was no utilization rate mentioned in CNHPIA's 2011 Annual Report, only the production number 5.821 million metric tons "according to the statistics by CNHPIA." The main question that remains is that how accurate was the very round assumption of 80% capacity utilization for 2012? Could it have been 81% or 82%? This would make a major difference, and our own calculations based on known capacity changes in China would suggest slightly higher capacity utilization than 80% for 2012. An interesting comment was made by Liu Yuwu, General Manager and Director, C&S Paper, in his speech "China's Tissue Market Outlook" at RISI's Asian Pulp & Paper Outlook Conference, which took place in Shanghai, China, last week. He based his presentation on the figures published by CNHPIA, but made an interesting and diplomatic comment in the next sentence that "these numbers are a little bit theoretical," or so it was expressed in the English translation that I listened to.
Esko Uutela, Principal, Tissue, is the author of RISI's Outlook for World Tissue Business Study, the World Tissue Business Monitor, the US Tissue Monthly Data, and the new China Tissue Study . He works out of RISI's EU consulting office close to Munich, Germany, and can be reached at: Tel: +49-8151-29193 or Email: email@example.com.
This is anexcerpt from a full story that is available in RISI's Pulp & Paper News Service.
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