Chinese boxboard trade: What happened in 2008 and what are the prospects for 2009-2010?

By Alex He, Economist, Packaging, RISI

SHANGHAI, CHINA, March 19, 2009 (RISI) - The year 2008 was once again a witness to a substantial increase in Chinese boxboard capacity. After increasing by almost 1.0 million tonnes during 2007, Chinese boxboard capacity expanded by 1.2 million tonnes in 2008. Six months ago, it was expected that this large increase in Chinese boxboard capacity would lead to a severe drop in Chinese boxboard imports. Based on available data, our estimates for 2008 did show a drop, but by substantially less than what was once expected. What happened to Chinese boxboard imports in 2008?

Based on RISI's estimation, China imported about 830,000 tonnes of boxboard last year. These included both virgin grades such as ivory board (in Europe called GD grade or Folding Boxboard, in US called SBS grade) and liquid packaging board (LPB), and recycled boxboard such as coated duplex board (in Europe called GC grade or white-lined chipboard). This was a 9.0% retreat from 2007's level. At the grade level, we estimate that 70% of imports were the virgin grades and the remaining 30% was recycled boxboard. This was compared with an estimated split of 60% virgin and 40% recycled in 2007. What factors were behind the 9% decline in Chinese boxboard imports? First, as China has added more boxboard capacity in the past few years it has become more and more self-sufficient (see Fig 1). Second, the melamine scandal that erupted last September in China had a huge negative effect on its dairy product exports as well as domestic consumption. More than 20 countries have since banned Chinese dairy product imports. Unfortunately, the dairy industry is one of the most important end-use markets for the virgin fiber boxboard grades. Third, the bleeding world economy since fourth quarter 2008 also slowed down China's overall demand growth.

What are our expectations for 2009-2010? We forecast that the ongoing growth in Chinese production will partially feed rising Chinese demand, and will also lead to further reductions in Chinese imports and increases in exports.

This is an excerpt from a full story that is available in RISI's Pulp & Paper News Service.

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