High Cost of Growing Trees in China to Drive Imports of Wood Chips

China will continue to see rising wood pulp production along with rising imports of wood chips to make that pulp.

Sept. 27, 2012 - According to a new study, China will continue to see rising wood pulp production along with rising imports of wood chips to make that pulp.

The study, 2012 The China Pulp Market: A Comprehensive Analysis and Outlook released today by RISI, concludes that large-scale papergrade market pulp production in China is not a sustainable business over time.

A steady upward trend in wood growing costs in southern China will keep China's pulp producers purchasing ever-increasing volumes of wood chips from greater distances, including North and South America, at very high costs, RISI explained.

"Wood costs in China are already almost the highest in the world, and account for as much as 70% of cash costs for bleached hardwood kraft (BHK) market pulp producers in China. Market BHK producers in China have some of the newest and largest pulp lines in the world, and yet are still the high cost producers, even in their own market," said Kurt Schafer, VP of Pulp & Recovered Paper at RISI.

"Our research indicates that wood growing costs in southern China will probably outpace growing costs in Brazil by a wide margin over the next decade, and this suggests that large-scale papergrade market pulp production in China is not a sustainable business over time," Schaefer noted.

SOURCE: RISI