By Annie Zhu, Associate Editor, Pulp & Paper International magazine
SHANGHAI,
June 11, 2009
(RISI) -
Despite swine flu, the economic crisis, and tight travel budgets in many companies, this year, the 10th RISI Asian Pulp and Paper Outlook Conference attracted close to 200 attendees - paper machine suppliers, chemical suppliers, pulp and paper producers, associations, financial analysts, printing companies and academics - from 26 countries all attended the conference to clearly use it as a platform to explore the future of the industry in this uncertain period.
photo: 10th RISI Asian Pulp and Paper Outlook Conference
Emerging markets
Speakers on the first day covered different parts of Asia, especially in the emerging markets, including Vietnam, India, Thailand and China, basically the ones that investors are really interested in.
"Opportunities of investment in Vietnam include geography, a stable political system and society, resources of forest, water and labor, and state companies transferring into joint ventures," says Dr. Vu Ngoc Bao, secretary general, of Vietnam Pulp and Paper Association. However, he admits that there are risks, including "slow administrative reform, serious corruption, poor infrastructure, and tough environmental regulations".
In addition, the Indian market is also a hot topic these days, though it is still fragmented at the current stage. "Overall paper consumption in India has reached 9 million tonnes, making India an interesting market. Increasing demand for paper brings with it new challenges - economics of scale, efficient usage of resources, the need to develop and expand sustainable use of fiber, and value chain management," comments RR Vederah, managing director, Ballarpur Industries.
China, the world's second largest producer and consumer of paper and board, which has seen fast capacity expansion in the past 30 years, is expected to become a the strongest and most powerful player in the world.
"The paper industry in China is under restructuring. Capacity already exceeded production in 2008, and the operation rate was low at the end of 2008. Some sectors have already finished their restructuring, like newsprint and coated paper; some sectors are under restructuring, for instance packaging grades; and coming soon some other grades like tissue, and uncoated printing and writing will see over supply," comments Dr, Cao Zhen Lei, China National Pulp and Paper Research Institute.
photo: Dr. Cao Zhen Lei, president of China National Pulp and Paper Research Institute, and vice president, China Light Industry Corporation gave a key note speech
Also, pulp producers from South America and Russia gave their view on the pulp supplies to China, which heavily relies their forest resources. "From 2000 to 2008, pulp imports from South America increased by 207% and the trend will continue," says Evandro Muzilli, chief representative officer, VCP Asia.
Ilim Group, the largest in Russia in terms of production of market pulp, also has ambitions to further expand in pulp destined for China.
Panel discussion
The panel discussion is always an eye catching slot in each year's conference, and this year was no exception. The panelists businesses cover different paper grades including newsprint, pulp, tissue paper, box board, containerboard, and fine paper.
Almost all the paper producers admit that their businesses have been affected by the financial crisis since late last year, and the domestic market has become more competitive. Though the prices of raw materials slumped, that was offset by lower prices for paper products. However, things have improved this year, though the market may still be turbulent until the end of this year, or even the first quarter of next year.
"The Asian market has bottomed out and should see more growth in the future," says Thomas Gestrich, president, International Paper Asia.
"China's exports have started to see a pick up with the government incentive policies on consumer exports, which have a knock on effect on board exports," says Liu Han Wen, vice general manager, Zhuhai Hongta Renheng Paper.
photo: Panel discussion
photo: questions from the audience
The panelists all expect to see more merger and acquisition in the pulp and paper industry in Asia. However, Duan Xiao Min, Chairman of the Board, Nanning Phoenix expects "the pace of merger and acquisition might not be very fast in the coming years, as the market is not mature enough in terms of capital financing."
As for future plans, "Guangzhou Paper is currently moving its machines to new locations in Nansha," says Jiang Peng, deputy general manager, chief engineer, Guangzhou Paper. Looking to trends in the future, some panelists expect LPB will be a lucrative product to tap into.
Other topics touched upon during the discussion included environmental issues, energy costs and forecasts of paper prices over the next five years.
The future
What are RISI economists' views of the future market trends?
"China is in better shape than other economies, and Q4 represented the bottom of China's slowdown. Policy stimulus is large and effective," says Scott Howard, RISI macroeconomics service.
"Wood chip volume will decline in 2009, but by 2013, total imports in Asia should be 2.0 million BDMT higher than in 2008", forecasts Bob Flynn, director, International Timber, RISI.
As for the pulp market, Kurt Schaefer, vice president, Fiber, RISI, expects that "Graphic paper is a key driver of market pulp demand and consumption is likely to fall sharply in 2009 and flatten out in 2010."
The Asian tissue market has grown rapidly. "The market size already exceeds that of Europe - mainly thanks to China, but also other emerging markets. Despite being rather resistant to economic cycles, the Asian tissue business will see some signs of recession - the effects are to be as slower growth rather than decreases" comments John Maine, vice president, Graphic Paper, RISI.
For the printing and writing market, Sandy Lu, economist of Asian Graphic Paper, expects that "Indonesia and Thailand will remain major UWF exporters in Asia. China will continue to invest in state of the art mills to produce CWF."
As for the boxboard market, "imports will continue to slide down as China becomes more self-reliant during 2009-2011", comments Alex He, economist, Asian Paper Packaging Services. "Asian containerboard net imports will decline from 2010 to 2011, and the region is expected to become a net exporter of recycled by 2011."
photo: discussion during coffee break
Great fun
It was a great fun to meet friends old and new in this year's conference, and we saw active participation in discussions during and after the conference. We didn't have traditional Asian style round table dinners in the evening. Instead, it was cocktail night so that we could talk easily and had more fun.
The joy was clear on Chen Hong Guo's face, Shandong Chenming's Chairman of the Board. He won the RISI Asian CEO of the year in 2008, for second year in a row, and felt it was his honor to receive the award given by RISI's CEO Mike Coffey.
"I shall say thanks for RISI for giving me this award and it has given me encouragement to do a better job for the industry," says Chen. (The exclusive interview was published on PPI June.)
