Pulp Matters 2/2022

F IBRE PHENOMENA

THE OVERALL DEMAND FOR TISSUE WILL CONTINUE TO RISE.

A ccording to Wang the global Bleached Hardwood Kraft (BHK) pulp supply is expected to increase constantly in the future with new capacity coming online: most notably, UPM’s 2.1-million tonne eucalyptus pulp mill in Paso de los Toros, Uruguay, which is scheduled to start production by the end of the first quarter of 2023. “China’s pulp import will most likely recover in 2023. Also, the import structure may continue to readjust with a higher BHK proportion.” In contrast to BHK, Bleach Softwood Kraft (BSK) pulp producers usually lack cost advantages in terms of labour, energy and fibre. With constant BHK capacity expansion, a certain price spread between the two will continue, observes Wang. “Thus, paper mills in China may continue to adjust their feedstock structure by raising the BHK content. Aside from higher BHK consumption, more non-wood fibre has been consumed as an alternative to the expensive wood pulp in 2022.” Dealing with continuous industry concentration in China, the competition between industry giants may well escalate – and the role of importers and futures spot traders may diversify. M anaging Director Tom Wright from consultancy Hawkins Wright notes that during the past 20 years China has seen extraordinary and unnaturally fast growth. The next 20 years, however, can be something very different – also from a pulp perspective. “Still, looking at the global market, we can see that we need China to perform well, since it’s so central to the entire market.”

The rising middle class of China has been a big driver in keeping the growth going, by increasing the use of hygiene products. Similarly, urbanisation is remodelling Chinese consumer behaviour in the same way. “Now, about 65% of the Chinese live in cities, compared to only 26% 30 years ago,” Wright notes, adding that there are currently 14 “megacities” in the country. Still, with a range of problems in the national construction and property market, this fierce urbanisation is expected to witness a hiccup or two. “The rate of urbanisation will slow down as a period of slower growth sets in,” believes Wright.

46 million metric tons of wood pulp consumed in China in 2021

57% import dependency of pulp in China in 2021

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PUL P MAT TERS 02/2022