Outlook for the Asian Graphic Paper Market
Dr. Li MengEconomist, Asian Graphic Paper
RISI Asian Conference
May 2017
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Dr. Li Meng, EconomistAsia Graphic Paper
• Covers Asian graphic paper market
• Works out of RISI’s Beijing office
• Co-author of the monthly Asian Pulp & Paper Monitor, the Asian Graphic Paper 5-Year Forecast and the Asian Graphic Paper 15-Year Forecast
• Principal author or co-author of several single- or multi-clients studies on Asian and global graphic paper market
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Asian Graphic Paper Demand by Grade, 2016
Graphic Paper Demand 55.5 Million Tonnes (% of Total)
Change 2015-2016: -3.1%
• Demand for woodfree papers and newsprint accounts for about 90% of total graphic paper apparent consumption
• Demand for both printing & writing paper and newsprint face heavy competition from e-media
• Third year of negative growth in P&W demand since the global economic recession of 2009, mainly due to negative growth in Japan and China
• Uncoated woodfree is the only grade to see a slight improvement in demand, due to stable support from school materials
11.8 mt(21%)
2.6 mt(5%)
27.9 mt(50%)
2.9 mt(5%)
10.3 mt(19%)
Coated Woodfree
-5.0%
P&W Coated Mechanical
-7.6%
PW Uncoated Mechanical
-3.5%
Newsprint-9.4%
Uncoated Woodfree
+1.0%
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Regional per Capita Graphic Paper Consumption in Asia, 2016Kilograms per Capita
16.35
66.62 23.11
0 20 40 60 80 100
Pakistan
Other Countries
India
Philippines
Indonesia
Thailand
China
Malaysia
Taiwan
South Korea
Singapore
Hong Kong
Japan
P&W NW
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Asian Newsprint Demand Has Entered a State of Permanent DeclineIn decline since 2008
-12%
-9%
-6%
-3%
0%
3%
6%
9%
12%
8
9
10
11
12
13
14
15
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
Mill
ion
To
nn
es
Volume (L)
Percent Change (R)
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More Asian Newsprint Markets Shift into Long-Term DeclineTotal market fell 2.1% in 2016, but better than the 7% per year declines in 2014-2015; 2017 down 5%
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2002 2004 2006 2008 2010 2012 2014 2016 2018
Tho
usa
nd
To
nn
es
China
Japan, South Korea,Taiwan, Hong Kong,SingaporeIndonesia, Malaysia,Philipines, Pakistan,ThailandOther
India
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-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
0
500
1,000
1,500
2,000
2,500
3,000
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
Tho
usa
nd
To
nn
es
Demand
Percent Change (R)
Indian Newsprint Demand Growth Was Healthy in 2016, Supported by a Good Economy and Less Shifting of Basis Weights
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Indian Newsprint Imports by SourceThe North American share dropped 2% in 2015, while the Western European share climbed 5%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Tho
usa
nd
To
nn
es
Rest of World Asia Western Europe North America
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$400
$500
$600
$700
$800
$900
$1,000
2011 2012 2013 2014 2015 2016 2017
India
South Korea
China
Hong Kong
Newsprint Prices in Major Asian MarketsUS Dollars per Tonne in Domestic Markets
9
Note: a 17% of VAT is included in the Chinese prices
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Asian P&W Paper Demand: Stagnant in 2017 and 2018CWF papers will face more challenges, especially in mature markets
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
UWF 0.9%* UMe -0.7%* CWF -1.5%* CMe -2.5%* Total Growth% 0.0%*
* Annual growth rate, 2017-2018
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Many Asian P&W Markets Will Continue to Grow, But the More Mature Markets Will See Ongoing Decline
-15%
-5%
5%
15%
2005 2007 2009 2011 2013 2015 2017
IndiaOtherIndonesia, Malaysia, Philipines, Pakistan, ThailandJapan, South Korea, Hong Kong, SingaporeChina
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UWF Demand: Maintains Slow Steady Growth in 2017-2018
8,000
13,000
18,000
23,000
28,000
33,000
38,000
10 11 12 13 14 15 16 17 18
Tho
usa
nd
To
nn
es
Capacity Demand Production
1%
4%
-2%
1%1%
-6%
-4%
-2%
0%
2%
4%
6%
8%
2015 2016 2017 2018
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Asian UWF Market Imbalance Arose Because of New PMs and Conversions, with Little Relief in Sight
-400
0
400
800
1,200
1,600
2,000
2010 2011 2012 2013 2014 2015 2016 2017 2018
Capacity Growth
Demand Growth
Tho
usa
nd
To
nn
es
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0200400600800
1,0001,2001,4001,6001,8002,0002,200
Tho
usa
nd
To
nn
es
UWF Net Exports Fell in 2015, But Rebounded in 2016 and Will Manage Gains in Other Regions Worldwide
Fell 355,000 Tonnes
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The CVD and ADD Tariffs on Cut Size Exports to Australia
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Country Company ADD Tariff
CVD Tariff
Combined
China UPM 34.4% 0% 34.4%
China APRIL 3.1% 0% 3.1%
China All Others 34.4% 7% 41.1%
Thailand Double A 13.4% 0% 13.4%
Thailand Phoenix 18.1% 0% 18.1%
Thailand All Others 23.2% 0% 23.2%
Brazil All 2.9% 0% 2.9%
Indonesia PT Pindo Deli 38.6% 0% 38.6%
Indonesia PT Indah Kiat 35.4% 0% 35.4%
Indonesia Riau Andalan Kertas
12.6% 0% 12.6%
Indonesia All Others 45.1% 0% 45.1%
Tonnage exported to Australia accounted for 6.6% of Chinese total cut size exports in 2016, down from 13% in 2015. And the biggest impact will be felt by UPM Specialty Paper.
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352 279
299 216
75 65
116 77
50 21
109 43
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
China Indonesia Japan Thailand
Fiber Chemicals Energy Labor Materials
Average UWF Sheets Structure of Cash for Major Supplying CountriesUS Dollars per Tonne, Balance Data 2017Q1, Cost Data 2016Q4
17
554 589
319 388
620
959
587 643
545 631 621
581 632
0
200
400
600
800
1,000
1,200
China Japan Indonesia Thailand
IntegratedNon-integratedRecycledSemi-integrated Price: US$747/tonne
Average UWF Sheets Cash Cost for Major Supplying CountriesUS Dollars per Tonne, Balance Data 2017Q1, Cost Data 2016Q4
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UWF Offset Sheets Prices in Major Asian Markets
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
2009 2010 2011 2012 2013 2014 2015 2016 2017
Japan South Korea China Hong Kong Southeast Asia
16
Note: a 17% of VAT is included in the Chinese prices
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CWF Demand: Negative Growth Since 2014
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
10 11 12 13 14 15 16 17 18
Tho
usa
nd
To
nn
es
Capacity Demand Production
-2% -2%
-1%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2015
2016
2017
2018
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No New CWF Projects, But Limited Demand Growth Means Gap Will PersistThousand Tonnes
5,000
7,500
10,000
12,500
15,000
17,500
20,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Demand
Supply
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CWF Net Exports Will Increase Gradually and Absorb Some of Regional Excess Supply
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0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Tho
usa
nd
To
nn
es
22
Export Patterns for Major Asian CWF Producing CountriesChina and Japan aimed at Other Asian countries; South Korea benefitted more from North America and Europe
0
200
400
600
800
1,000
1,200
1,400
1,600
20
12
20
13
20
14
20
15
20
16
20
12
20
13
20
14
20
15
20
16
20
12
20
13
20
14
20
15
20
16
Tho
usa
nd
To
nn
es
All Others
EU
NA
Asia
China South Korea JapanNote: Chinese CWF exports excluded Bristol
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
China South Korea Japan
Fiber Chemicals Energy Labor Materials
Average CWF Commodity Structure of Cash Cost for Major Supplying CountriesUS Dollars per Tonne, Balance Data 2017Q1, Cost Data 2016Q4
0
200
400
600
800
1,000
1,200
China South Korea Japan
Integrated Non-integrated
Recycled Semi-integrated
Price: US$675/tonne
Average CWF Commodity Cash Costs for Major Supplying CountriesUS Dollars per Tonne, Balance Data 2017Q1, Cost Data 2016Q4
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$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
2009 2010 2011 2012 2013 2014 2015 2016 2017
Japan South Korea China Hong Kong Southeast Asia
CWF Prices in Major Asian Markets
23
Note: a 17% of VAT is included in the Chinese prices
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Global Outlook for Cut Size Uncoated Freesheet Studywww.risi.com/globalcutsize
Asian Graphic Paper 5-Year Forecastwww.risi.com/AGP5
The Chinese Graphic Paper Markets: Recent Trends and Future Prospects under Changing Circumstanceswww.risi.com/chinagraphic
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