China Has Become World’s Largest Importer of Hardwood Chips

Major expansion of pulp manufacturing capacity in China the past five years has resulted in a dramatic increase in the importation of wood chips to supply the new pulp mills.

Aug. 13, 2013 - Growing demand for paper in China has not only forced the country to import large volumes of pulp to supply the country’s paper machines, but also resulted in investments in new pulp production within China, according to Wood Resource Quarterly (WRQ).

Because of a lack of competitively priced wood fiber in China, the two pulp companies with the largest pulp mills in the country, Asia Pacific Resources International Ltd (APRIL) and Asia Pulp and Paper (APP), are procuring much of their wood fiber needs from out-of-country sources. As a consequence, importation of wood chips to China has surged the past few years. In just five years, the import value for wood chips has increased from 180 million dollars in 2008 to 1.3 billion dollars in 2012, and this year the estimated import value could be close to 1.5 billion dollars, WRQ said.

It has only been a matter of time before China became the largest importer of hardwood chips in the world. In the second quarter of 2013, China surpassed Japan with the record importation of almost 2.4 million m3 of chips, WRQ noted.

Although there have been sporadic shipments of chips from Latin America, Malaysia and South Africa during 2012 and 2013, there are really only four countries that have been supplying China with wood fiber the past few years. Those countries are Australia, Indonesia, Thailand and Vietnam, with Vietnam accounting for over half of the total import volume, WRQ said.

Another interesting development is that the average cost of imported wood chips has declined by almost six percent from the second quarter of 2012 to the same period in 2013. The biggest price decline has been in Australian chips, which have fallen over 11% in one year. Because of this price drop, in the 2Q/13, Australia exported its highest quarterly volume to China since 2010, WRQ said.

With the continued plans to expand domestic pulp manufacturing in China, it can be expected that shipments of wood chips, both softwood and hardwood, are going to increase in the coming years, WRQ concluded.

Global pulpwood and timber market reporting is included in the 52-­page quarterly publication Wood Resource Quarterly (WRQ). The report, established in 1988, tracks sawlog, pulpwood, lumber and pellet prices, trade and market developments in most key regions around the world. For additional information, visit www.woodprices.com.

SOURCE: Wood Resources International LLC