Hannah Zhao, Economist, Pulp and Recovered Paper
Feb. 11, 2013
According to the latest trade data, Chinese imports posted another big increase and peaked at 30 million tonnes in 2012. Apparently, China has developed a voracious appetite for recovered paper over the past two decades, during which Chinese imports expanded dramatically by about 4,000% from less than 1 million tonnes in 1992 to 30 million tonnes in 2012. Imported recovered paper has become a key fiber material to feed China's huge demand for different types of paper and paperboard.
One of the fundamental drivers for this 30 million tonnes of recovered paper imports is believed to be the aggressive expansion in recycled-based paper and board capacity. Even with overcapacity being a big issue in the Chinese containerboard and boxboard market, more than 6 million tonnes of new recycled boxboard and containerboard capacity was started up in China in 2012. Relatively low import prices were another factor that helped boost Chinese imports of recovered paper in 2012. The gloomy world economy, especially in Western Europe and North America, kept the paper and board markets, and thus the recovered paper market, pessimistic. Recovered paper prices, including both domestic and exported, in these regions, were at relatively low levels, which gave Chinese papermakers more opportunity to buy recovered paper collected in North America and Western Europe. Consequently, Chinese imports expanded by about 1.5 million tonnes in 2012 despite the stricter inspections on imported recovered paper in most Chinese ports.
With China continuing to break its import records and creating pressure on world recovered paper markets, people may want to know whether China's appetite for imported recovered paper is insatiable and whether Chinese imports will keep rising significantly in the future. Our answer to this question is "probably not."
As the largest recovered paper supplier to China, North America, mainly the United States, sent more than 14 million tonnes of recovered paper to China in 2012, accounting for about 47% of total Chinese imports. Exports have become more and more important in the North American market, where the share of net exports in the total recovered paper collection has climbed from 20% in 1992 to more than 40% in 2012. The fast-growing Chinese appetite for recovered paper has helped boost paper recycling in this region by raising recovered paper prices. Over the past decade, the average US price for OCC went up from less than $70/ton in 2002 to $115/ton in 2012. Meanwhile, the paper recovery rate in the United States increased from 49% to more than 65%.
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Hannah Zhao, Economist, Recovered Paper, is the coauthor of RISI's new study, Outlook for Global Recovered Paper Markets, as well as the World Recovered Paper Monitor, the World Pulp & Recovered Paper 5-Year Forecast and the World Pulp & Recovered Paper 15-Year Forecast. She works out of RISI's Charlottesville, VA, office and can be reached at firstname.lastname@example.org.