The discussion on China's future wood chip demand in recent weeks was not a new topic to the market and the analysts. Such renewed attention points to the fact that the country's pulp and paper industry is in the course of changes in fiber consumption, partly as a result of the need for better performance paper and board products and partly due to the lack of recycled pulp from imported recovered paper.
A recent report from Wood Resources International (WRI) – a highly recognized consulting firm founded in 1987 and has been focused on global forest resources and wood raw-material markets since then - said "global trade of wood chips increased by almost 50% from 2009 to 2020, driven by substantial demand for hardwood fiber by Chinese pulp mills". Such trade, as shown in the report entitled "WRI Market Insights 2021", grew from 21 million tons in 2009 to 35 million tons in 2018 by volume. Thereafter, it slowed down to about 30 million tons in 2020, apparently under economic unsteadiness of supplier countries. However, the dip in 2019-2020 period seemed to have no impact on China where significant investment in new pulp capacity allowed its pulping industry to consume more hardwood chips from abroad.
According to the report, China bought 13.2 million tons of hardwood chips in 2020, rising +7% from the previous year and a +1,220% jump from 2008 when the country's hardwood chip imports reached 1 million tons for the first time! And in fact by 2016, China already overtook Japan as the largest hardwood importer and by 2020, China swallowed more than half of the global trade volume! Along with the annual consecutive growth in general, China's wood chip sourcing became diversified, with substantial increases in shipment from Vietnam, Indonesia, Thailand and Malaysia of acacia chips vs. significant declines in supply of eucalyptus chips from Australia – the prime source of high yield fiber (HYF) in the Pacific Rim.
Market analysts believe the upgrade of China's paper industry, so as to meet with rising demand for better performance paper and board products in the country's economy, needs strong and cost-effective fiber made of wood, such as eucalyptus. And this was confirmed by Lee & Man’s recent order of two semi-chemical pulp lines from Andritz – to be installed in its Guangdong and Jiangxi mills respectively. Scheduled to start up in late-2022, both lines will consume eucalyptus chips to make semi-chemical pulp ideal for the production of high-performance corrugating medium and other grades of board. At the designed capacity of 1,000 air-dried metric tons per day each in processing eucalyptus chips into pulp, the two lines will enable Lee & Man to build strong but light boxes for the China market, which is now flooded by low-performing multi-wall boxes hardened by recycled fiber and additives! In addition, Dongguan Jianhui Paper got EIA approval from the government to build its two hardwood pulp lines (at the combined capacity of 400,000/mtpy) in mid-May. Scheduled to start-up in the 2nd Quarter 2022, the lines will process either eucalyptus or acacia chips into thermo-mechanical pulp to furnish the company’s upgrade to prime carton and other packaging board production.
Either the light and strong carton, single-wall boxes or heavy duty multi-wall boxes made of high-performing industrial packaging paperboard will surely be welcomed by the market, which is now e-commerce driven, and may also be followed by other market players in their search for fiber solution to the industry future.
