TRANSPORTATION

Price declines and a weakened market in 1996 caused a drop in U.S. wood, pulp, and paper exports to the world, while imports also decreased

BY KELLY H. FERGUSON, Editor

Wild Paper Market Swings Reflected in Forest Products Exports, Imports

Just as the paper market rose and fell rapidly in the period from 1995 to 1996, so, too, did U.S. exports of wood, pulp, paper, paperboard, and converted products. The tonnage of forest products exports dropped 5% in 1996 to 33.8 million tons from 35.6 million tons in 1995. This followed an increase in exports that had occurred from 1994 to 1995.

Meanwhile, the amount of forest products coming into the U.S. continues to decline. Imports of pulp, paper, paperboard, and converted products dropped 12%, from 6.5 million tons in 1995 to 5.7 million tons in 1996.

The U.S. maintains its leadership as a raw material supplier to the world, with massive tonnages of wood, woodchips, pulp, and wastepaper going offshore. However, a trend that has continued for several years is that those tonnages are generally falling, while exports of higher value products such as newsprint, linerboard, printing and writing papers, and converted products are climbing.

Weak forest products prices worldwide caused a decline in the overall dollar value of both exports and imports, following two years of increased value. In 1996, the value of all forest products exports was $14.8 billion compared with $16.3 billion in 1995. On the import side, the value of imports was $6.1 billion in 1995 but dropped to $4.9 billion in 1996.

Pacific Northwest ports continue to move a major amount of forest products tonnage out of the U.S., primarily because of the wood that is shipped through them (Table 1). Several of those ports, including Washington State ports such as Longview, Tacoma, and Seattle, actually increased their tonnage over the previous year due to a 1996 overall increase in solid wood (logs, lumber, etc.) exports.

However, the general decline in exports caused many of the more dominant ports, such as New York, Savannah, Ga., Norfolk, Va., and Los Angeles, to slip slightly compared with previous years. On the import side, most of the major seaports used for bringing forest products into the U.S. saw a decline that matched the drop in overall imports (Table 2).

Import and export information for this study is based on U.S. Census Bureau data and was compiled by TradeMaster Inc. of San Mateo, Calif., a company specializing in trade data compilation. The data were analyzed by Pulp & Paper. The survey incorporates all forest products shipments through seaports in the U.S. and its territories for 1996. This information is then compared with similar information for 1991 through 1995.

The major forest product categories for analysis include the following:

Wood products, including logs, lumber, and woodchips

Wastepaper

Market pulp

Paper and paperboard, including commodity and specialty grades in unconverted form

Converted products.

EXPORTS DIP. Figure 1 shows that wood products remain the largest slice (39.32%) of the export pie based on tonnage, but that slice continues to shrink. For example, in 1996, wood products made up 40% of all tons exported; in 1993, that number was even higher at 49%. The decline has generally been offset by more exports of paper and paperboard. Paper and paperboard exports were 25.23% of all U.S. exports in 1996, but were only 19% in 1993.

The wood products share of the total export dollar value has slipped in the same way. In 1993, wood products made up 41% of the dollar value pie, but was only 28.5% in 1996. Paper and paperboard, which was 29% of the total pie in 1993, climbed to 32.5% in 1995 and 38.7% in 1996.

Figures 2 and 3 show total export tonnage and dollar value since 1990. These graphs tend to mirror what has occurred in the North American paper market in the past several years. While Figure 2 shows a slight increase followed by a decrease in export and import tonnages for the past few years, Figure 3 shows how prices climbed steeply during that time and then fell off as the rapid upturn came to an end.

Figure 4 shows how some key forest product exports have performed in the past six years. After a continued and steep decline since 1992, the tonnage of solid wood (excluding woodchips) picked up in 1996, rising 4.6% to 11.3 million tons. Almost the entire tonnage of solid wood-primarily in the category of what the Census Bureau terms untreated coniferous wood "in the rough"-comes out of the Pacific Northwest ports going to Asian countries.

Exports of woodchips, both softwood and hardwood, have steadily declined over the reporting period and took a 4.4% drop in 1996 to about 3.4 million tons. About 61% (2.1 million tons) of those exported chips were softwood, primarily from the northwest U.S. The remaining tonnage (about 1.3 million tons) was hardwood chips generally from the southeast U.S.

After several years of increases, wastepaper exports declined in 1996. Wastepaper exports were at 4.9 million tons in 1994 and climbed 25.6% to 6.1 million tons in 1995. In 1996, however, wastepaper exports dropped 21.7% to 4.8 million tons. The U.S. industry has typically struggled with the amount of secondary fiber leaving the U.S., but some foreign buyers have been willing to pay a premium to draw the higher-quality fiber away. Since there have been numerous recycled mills that have come on-stream in the past few years-particularly deinked pulp mills and linerboard/corrugating medium mills-this decline may be an effort by the U.S. industry to stem that flow and recapture some of the wastepaper going offshore.

Of the total 4.8 million tons of wastepaper exported in 1996, 41% (1.99 million tons) was old corrugated containers (OCC). This is an almost 1 million ton difference in the 2.9 million tons of OCC exported in 1995. About 2.5 million tons of OCC were exported in 1994.

Another 23% of the 1996 wastepaper exports was old newspapers (ONP) at 1.1 million tons. This compares with 1.2 million tons exported in 1995. Exports of mixed office waste, at 869,000 tons in 1996, dropped significantly from the peak of 1.1 million tons in 1995. Again, this could have much to do with the number of deinked pulp mills that came online during the period that needed the fiber. Exports of unsorted mixed waste, at 857,000 tons in 1996, grew slightly as had happened previously (835,000 tons in 1995 and 614,000 tons in 1994).

Market pulp was another U.S. exported fiber source that declined in 1996, going from 7.3 million tons in 1995 to 6.5 million tons in 1996 (an almost 11% drop). The majority (47%) of the 1996 tonnage was bleached softwood kraft (3.03 million tons), which dropped from 3.4 million tons in 1995. Exports of bleached hardwood kraft were also slightly lower at 1.8 million tons in 1996 vs 1.9 million tons in 1995. Export tonnages for other pulp grades include the following:

Dissolving pulp: decreased from 759,000 tons in 1995 to 601,000 tons in 1996.

Bleached and unbleached sulfite pulp: decreased from 600,000 tons in 1995 to 443,000 tons in 1996.

Unbleached softwood kraft: decreased from 312,000 tons in 1995 to 168,000 tons in 1996.

Semi-chemical: increased from 49,000 in 1995 to 176,000 in 1996.

Mechanical: decreased from 79,000 in 1995 to 69,000 in 1996.

For paper and paperboard grades, newsprint exports were the star, jumping 76.5% from 950,000 tons in 1995 to 1.7 million tons in 1996. Newsprint exports had previously been flat for a number of years. Exports of printing and writing papers continued a slow climb from 664,000 tons in 1995 to 715,000 tons in 1996 (a 7.6% increase). Exports of kraft sack and linerboard have also consistently increased since 1993, with a 12% increase in 1996 (from 3.7 million tons in 1995 to 4.2 million tons in 1996).

Exports of finished paper and paperboard products get stronger every year. The tonnage of converted products exports grew 21% in 1996, from 518,000 tons in 1995 to 628,000 tons in 1996. This follows a 30% jump reported in exports from last year's survey.

CONTINUED IMPORT DECLINE. Imports of forest products into the U.S. had increased slowly beginning in 1991, but had dropped slightly (2%) based on 1995 figures. Now, imports have slipped more dramatically, declining 12% from 6.5 million tons in 1995 to 5.7 million tons in 1996 (Figure 2).

Analyzing trends in imports is somewhat more difficult than analyzing exports, because single large shipments can cause significant swings in tonnages. For example, several of the ports shown in Table 2 have large positive or negative percentage swings because of one or two shipments. But, generally, the U.S. receives a few key imports that come from the same countries of export.

Figure 5 shows import tonnage vs value, and the data in that figure correspond to the makeup of Table 2. The leading ports for forest product imports are typically centered at major metropolitan areas-such as Philadelphia, New York, Baltimore, and Los Angeles-where much of the paper and paperboard is needed to meet consumer demand. Unlike last year's survey, when import tonnage dropped but the dollar value continued to rise because of higher paper and paperboard prices, the poor market of 1996 took a toll on both tonnage and value (Figures 2 and 3).

The percentage breakdown of import tonnage shown in Figure 5 remained essentially the same as last year, with the the share of incoming paper and paperboard dropping only slightly and the share of incoming market pulp increasing slightly. The dollar value breakdown shown in the same figure also remained basically unchanged.

Paper and paperboard, at 2.9 million tons, accounted for a little more than half of all forest products imports into the U.S. Of that tonnage, 38% (1.1 million tons) was imported newsprint. That is an increase from 1995, when newsprint made up only 19% of all paper and paperboard imports. More than 90% of the newsprint imports came from Canada. Sweden was the next largest supplier.

Following newsprint, about 653,000 tons of
coated printing papers and 601,000 tons of uncoated groundwood printing papers were imported in 1996. Both of those tonnages are down vs 1995 levels. Primary points of origin for those grades were Finland and Sweden.

More than 1.6 million tons of wood products were imported in 1996, down from 1.8 million tons in 1995. Of that 1996 tonnage, 77% (about 1.3 million tons) was woodchips. A little more than 1 million tons of those chips were softwood, and most (63%) came from Canada. Another 25% of the softwood chips came from South America, primarily Brazil (123,000 tons), and Chile (101,000 tons). New Zealand also contributed to the softwood chip import tonnage with about 93,000 tons in 1996.

Hardwood chip imports declined to 231,000 tons in 1996 vs 294,000 tons in 1995. Of the 1996 tonnage, 66% (151,000 tons) came from South America, primarily from Brazil (79,000 tons) and Bolivia (34,000).

Market pulp imports slipped slightly from 946,000 tons in 1995 to 931,000 tons in 1996. Bleached hardwood kraft pulp made up 64% (600,000 tons) of that 1996 imported tonnage, and Brazil, at 568,000 tons, was the main supplier. Also imported was 117,000 tons of bleached softwood kraft, 87,000 tons of dissolving pulp, and 79,000 tons of unbleached kraft pulp. Most of the bleached softwood kraft came from Canada and Chile.

WHERE THE EXPORTS GO. As in past surveys, Pacific Rim countries are the main recipients of U.S. forest products. Five Asian countries-Mainland China, the Republic of Korea, Hong Kong, Taiwan, and Japan-receive more than 50% of all forest products exports; and, in general, this is represented by raw material such as wood, woodchips, market pulp, and wastepaper.

At 12 million tons and roughly 36% of all U.S. export tons, Japan is the single largest receiver. Japan also accounts for 29% of total export dollar value from the U.S. Japan's imported tonnage has declined in the past several years (13 million tons imported in 1995), but the country continues to import about four times that of the next major forest products importer. Japan's list of imports includes solid wood (9.6 million tons), softwood chips (1.2 million tons), market pulp (1.1 million tons), paper and paperboard (1 million tons), and wastepaper (390,000 tons).

The Republic of Korea is the next largest importer from the U.S. at 3.3 million tons, down from 3.9 million tons in 1995. Korea's imports include 1.1 million tons of wastepaper, 1 million tons of wood products (including chips), and 816,000 tons of market pulp.

Other major Pacific Rim targets for U.S. exports include the following:

Taiwan: 1.8 million tons

Mainland China: 1.6 million tons

Hong Kong: 1 million tons.

Outside of the Pacific Rim countries, Italy was the largest importer of U.S. forest products at about 1.4 million tons in 1996, followed by the Federal Republic of Germany (888,000 tons) and the United Kingdom (880,000 tons). Market pulp was the main product shipped to all three of those countries.