In the first half of 2020, China’s market pulp imports grew +11.97% from the corresponding period of 2019 to nearly 12.02 million metric tons, regardless of the fierce assault of COVID-19 pandemic to the country and its paper industry. Data released by China Customs showed this included a +6.54% increase to 4.40 million metric tons in bleached softwood kraft pulp (BSK) and a +14.09% surge to 6.24 million metric tons in bleached hardwood kraft pulp (BHK) from that of the previous year.

Not only a deep dependent on recovered paper, China’s paper industry is also a strong consumer of market pulp! And demand for market pulp has grown more actively as a result of less supply of recovered paper since 2017. The fact that more than 90% of BSK supply and 70% of BHK supply to China’s paper industry originate from overseas firms up the general belief that China’s market pulp imports will continue to grow in the rest of 2020 and into 2021. However, growth magnitude may subject to a few variables such as:

• - Steadiness in supply on both BSK and BHK, given the unplanned downtimes in existing mills under unforeseeable reasons and no new green field capacity launches in 2021 worldwide.


• - The consistency in supply of new and low-cost pulp from Northern Europe, which not only made up for the decrease in supply from Chile, but also caused the price of Canadian supplies to drop in the first half of 2020.


• - The impact of declines of market pulp stocks at European ports vs. the rise of stocks, especially BHK, at Chinese ports and at mills. Data from Europulp showed a -4.6% decline from June to July of market pulp stocks at European ports, while Chinese analysts estimating a near 2 million metric tons combined stocks – more BHK than BSK -at ports and mills in China.


• - Firmness in price hike attempts by mainstream suppliers in the rest of 2020, following the announced US$10-20 per metric tons increase by Arauco, Canfor and Ilim in July.


• - China’s market pulp demand in the 2nd half of 2020, under low season in printing and writing paper production and conversion vs. high season in packaging paperboard production and conversion.


• - Market pulp demand from newly started-up tissue projects in China. Initial report shows over 700,000/mtpy of new capacity has been added to the country’s tissue industry since January, with about 200,000/mtpy more to come before the end of the year.


• - Earnings of paper and board producers. This is especially true in the printing and writing paper sector where more negative performance has been reported. And the recent upbeat in coated SBS board sales price may probably be short lived and a marginal win for the producers.


• - Last but not the least, the extent of impacts of COVID-19 in the 2nd half of 2020 and into 2021 to China’s economy and the paper industry.