Li Meng, Economist, Graphic Paper, RISI
Nov. 5, 2012
China surpassed the USA to become both the world's leading consumer and producer of graphic paper in 2010. Graphic paper demand has expanded rapidly over the past decade, with an average annual growth rate of 7.8%, or 1.5 million tonnes per year, from 2001 to 2011. This is well beyond the world average annual growth rate of 0.3%, due to offsets mainly in North America, Western Europe and Japan (whose demand declined by 4.0%, 1.6% and 1.7% annually, respectively). Production rose by 17.5 million tonnes during this period, with an average annual growth rate of 9.3 %, or 1.7 million tonnes. This significant increase reflects China's solid growth in installed capacity with substantial capital investments made in the sector in the last decade. The huge hikes of production since 2001 have helped China convert from being a net importer to a net exporter since 2006. Net exports changed from a negative 860,000 tonnes in 2001 to a positive 2.0 million tonnes in 2011. In 2007-2011, net exports grew by approximately 10.8% or 81,000 tonnes per year, due to a fairly steady low level of import growth (about 0.1% per year) and a 7.1% growth in exports, which helped China's domestic graphic paper producers absorb some of their supply.
In 2011, Chinese consumption of graphic paper reached 27.6 million tonnes, including 15.2 million tonnes of uncoated woodfree, 5.6 million tonnes of coated woodfree, 3.9 million tonnes of newsprint, 2.2 million tonnes of uncoated mechanical and 0.8 million tonnes of coated mechanical paper. Despite being the largest consuming and producing country for graphic paper with relatively healthy growth rates, China is far from being a mature market with the exception of newsprint. Per capita graphic paper consumption still lags far behind the levels of developed countries with an estimated 20.6 kg/person compared to 103.3 kg/person for Japan, 79.1 kg/person for the USA and 65.4 kg/person for South Korea. In fact, China's per capita consumption numbers are overestimated to the extent that papers are exported as books, calendars and manuals for products produced in China. For its level of income, China consumes about the same amount of graphic papers as South Korea did when it was at the same level of per capita GDP.
Several factors have contributed to the healthy demand growth for graphic paper in China, including increasing levels of economic activity, rising incomes, a relatively low per capita consumption base, a relatively high rate of literacy and an increase in educational demand. We believe that these factors will continue to support graphic paper's demand growth as our near-term and long-term forecast for China's economy is still optimistic, although the growth might be slower than it has been over the past decade, a projected 7.7% growth rate in the next five years and 7.1% in the next decade compared to 10.6% in 2002-2011. High GDP growth means rising personal incomes, which in turn will boost graphic paper consumption as a result of higher education and affordability of graphic papers.
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Click here for more information on China's Influence on World Graphic Paper Markets in the Coming Decade - RISI's detailed analysis of China's end-use market structure.
Li Meng, Economist, Graphic Paper, co-author of the Asian Pulp & Paper Monitor and the Asian Graphic Paper Forecast, works out of RISI's Beijing office, and can be reached at email:mailto:%email@example.com.