Soon after the turn of the year, China market and the paper industry saw a few new developments, including the replacement of industry standards by national standards on laminated food packaging paper and board, wall paper, thermo-lottery paper, etc. and the launch of new tissue paper and containerboard machines inside and outside China. Most eye-catching, however, should be the price escalation of market pulp and finished paper and board. By the 2nd week of January, NBSK futures hit US$740/mt for February and US$800/mt for March deliveries in the Shanghai Commodity Exchange (SCE), while spot offers in the open market reaching as much as US$840/mt, CIF CMP! At the same time, the price of Chinese domestically produced brown kraft-top linerboard surged to near RMB5,000/mt, while prime medium exceeding RMB3,900/mt! Many other grades of paper and board, such as coated SBS board, tissue and fine paper, joined the race with price increases all over the place without signs of slowing down. While the wide-spread price increase is powered by market forces, no one can deny that shortage in fiber supply directs the market this time.

According to China Paper Association (CPA), Chinese wood pulp producers confronted greater challenges during 2020 and more ended the year in red. Therefore, China's production of paper-grade pulp – including virgin and recycled pulp - in 2020 could only manage to stay equal to that of 2019 at 72 million/mt, creating a greater shortage that had to be covered by imports in order to meet with the +2.1% growth from 2019 to estimated 99 million/mt in pulp consumption in 2020.

While remaining dominant in China's paper-grade pulp industry, recycled pulp production and contribution to the country's paper industry were declining in recent years and could be further weakened as a result of China's complete stop of recovered paper imports from 2021! With domestic collection of waste paper nearly at its peak in volume, the shortage of China's domestic pulp production vs. consumption would become greater and the hunger for fiber in the entire paper industry would not only spur the country's aggressive imports of virgin pulp, but also attract more imports of recycled pulp and re-pulping paper and board job-lots in 2021.