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Asian Pulp and Paper Monito

Analysis and Forecasts of thAsian Pulp and Paper Market

January 1

Order Chinas Influence

on World Graphic

Paper Markets in the

Coming Decade

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In December, although pulp prices increased by US$20-30/tonne, Hong Kong's woodfr

paper market was relatively quiet as both coated and uncoated woodfree paper prices remain

flat at their November levels due to the destocking strategy by sellers. Prices are expected

rise moderately late in thefirst quarter of 2013 due to seasonal factors and cost pressure fro

pulp and freight rates.

In thefirst quarter of 2013, newsprint prices in Asia wereflat in India, but fell US$10-20/ton

in Hong Kong to an estimated average of US$685/tonne. We are forecasting that newspri

prices in Asia will beflat until the fourth quarter, when improving demand and a better glob

balance, supported by cost pressures, lead to a US$20/tonne increase. There is some chan

of small increases in some markets in the next two quarters, depending on capacity availabfrom Russia and elsewhere.

Prices for both kraft top liner and recycled corrugating medium were generally flat

December, although market activities remained sluggish and related waste paper prices we

dropping again. For virginfiber-based kraftliner, imported prices were also unchanged.

addition, prices for coated duplex board in Hong Kong were cut down by another US$1

tonne.

In January, prices for recycled linerboard and medium are likely to rebound temporari

rising by US$10/tonne and US$5/tonne, respectively. The upward movements will be main

driven by producers' efforts to implement price increases from the start of 2013. Prices f

imported kraftliner are also expected to bounce back by US$10/tonne in thefirst month

2013. Meanwhile, declines in coated duplex board prices are likely to pause this month, b

resume in February when the Chinese Lunar New Year holidays come to an end.

Economic OutlookWhile 2012 was not a particularly good one for China's economy, with growth on pace to

the slowest since 1999, there are clearly signs that the economy has stabilized and is improvi

as it begins 2013 (Table 1). Given the turnaround, it is unlikely that there will be addition

government stimulus for the economy, especially as inflation is starting to turn back up. T

incoming leadership has signaled that they will move toward further reforms and restructuri

of the economy, and we expect the first moves from them later in 2013.

Perhaps the most prominent signs of the stabilization and upturn are evident in the acceleratiin industry. Industrial production growth in November exceeded 10% on a year-over-year ba

(Figure 1a) for the first time since March 2012, led by heavy industry, which grew 10.5% yea

over-year. Electricity production also continued its rebound, growing 7.9% compared to 6.4%

the previous month. The better growth in the industrial sector is being led by the revival of t

property sector. Growth in real estate investment has started to pick up, as reflected by increas

steel demand. Property sales continued to grow well in November, with year-over-year growth

30%, and this has pushed year-to-date growth back into positive territory. We believe that real esta

will continue its momentum and this should continue to support growth in industrial production


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Asian Pulp and Paper Monitor - January 2013

2 RISI

One concern is that inflation has started to tick back up. While it is still very low compared to 2011, November's

consumer price index grew 2.0% (Figure 1b), and it should accelerate somewhat during 2013. This will certainly

make it much less likely that monetary policy will be loosened further. Meanwhile, new bank loans in November

increased from the previous month, although they were once again slightly below expectations. It seems that

companies are increasing their use of the bond market as well as alternative sources of financing.

On the trade front, the news is decidedly less positive than in other sectors. Exports grew at just a 2.9% year-

over-year pace in November 2012 (Figure 1c). The recession in Europe means continued lowered demand, and

the holiday shopping season in the USA showed the worst growth since 2008. In the near term, we do not expect

much improvement from either of these two demand centers, which will keep China's export growth subdued.Imports were flat on a year-over-year basis in November, although this seems to reflect lower commodity

prices rather than poor domestic demand. Indeed, although import growth was non-existent, retail sales growth

accelerated to 14.9% year-over-year and has now risen for four consecutive months. Additionally, the China

Beige Book survey showed that the retail sector had the strongest revenue growth and the most optimistic

expectations for the coming year.

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

Real GDP, Y/Y % Ch 9.8 9.7 9.5 9.1 8.9 8.1 7.6 7.4

Ind. Production, Y/Y % Ch 13.3 14.4 13.9 13.8 12.8 11.6 9.5 9.1

Exchange Rate, CNY/$ 6.66 6.58 6.50 6.42 6.36 6.31 6.33 6.35

Consumer Prices, Y/Y % Ch 4.7 5.1 5.7 6.3 4.6 3.8 2.9 1.9

Producer Prices, Y/Y % Ch 5.7 7.0 6.9 7.1 3.1 0.1 -1.4 -3.3

Real Fixed-Asset Investment, Y/Y % Ch 18.0 17.3 18.1 15.5 17.3 21.3 20.2 15.0

Annual Trade Balance, Bil. US$ 259.2 73.0 100.9 270.5 195.7 96.8 22.9 26.1

2010 2011 2012 2013 2014 2015 2016 2017

Real GDP, Y/Y % Ch 10.4 9.2 7.7 8.1 8.3 8.2 7 6.5

Ind. Production, Y/Y % Ch 15.7 13.3 9.6 11.5 12.2 9 6.9 7.5

Exchange Rate, RMB/US$ 6.77 6.46 6.32 6.26 6.20 6.10 6.04 6.0

Consumer Prices, Y/Y % Ch 3.3 5.4 2.8 3.5 4.2 3.7 3.3 3.6

Producer Prices, Y/Y % Ch 5.5 6 -1.5 3.1 5.2 5.9 3.6 4.2

Annual Data

Quarterly Data

Table 1Chinese Economic Indicators


3/30 RISI 3


Figure 1a

Industrial Production Growth Highest Since March

Year-over-Year Growth in Fixed-Asset Investment and Industrial Production

30%

35%

15%

20%

25%

-5%

0%

5%

05 06 07 08 09 10 11 12

FAI Growth

Industrial Production

Source: Dragonomics

Figure 1b

Year-over-Year Percent Change in Consumer Prices; New Bank Loans, Billion RMB

New Loans Slightly Below Expectations; Inflation Ticks Up

2,00010%

New Loans

.

1,000

1,500

4%

6%

CPI

-

0

500

-

-2%

0%

--

05 06 07 08 09 10 11 12


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4 RISI

Newsprint

Current Conditions

While some contracts are still under negotiation, those completed indicate that contract newsprint prices are flat

in India and down slightly in other markets for the first quarter of 2013. In Hong Kong, buyers managed to secure

prices in a range of US$580/tonne to US$595/tonne, which is about US$5-20/tonne lower than the estimated

average in the fourth quarter of 2012. Most respondents are talking of a US$10/tonne reduction. These dropslikely occurred because buyers pushed for discounts and producers looking for sales given weakness elsewhere

chose to drop prices. Hong Kong buyers may have been in a good position to win price reductions with solid

inventories. Also ONP prices had stabilized in December as demand levels cooled a little, while supplies were

also somewhat low due to the holidays. This kept cost pressures from worsening for many suppliers. We are

estimating that average transaction prices were at US$585/tonne, a US$15/tonne reduction.

In India, buyers accepted steady prices for the first quarter, generally in the US$590/tonne to US$610/tonne range.

Spot prices reportedly remained lower, ranging from US$560/tonne to US$610/tonne, although there was less

volume available at these spot levels -- some said such deals are on hold as sellers wait to determine the balance

given the Kondopoga situation. Generally it appears that Kondopoga's downtime has concerned India's buyers

-- reportedly there are already delays in shipments from Russia and as well as other suppliers. Other factors that

may have encouraged buyers to accept stable prices are the reported downtime at Jeonju Paper (taking advantageof a government program to encourage reduced energy use), the closure of a 150,000 tonne newsprint machine

at Norske Skog's Tasman mill and reduced inventory levels. For the year through September, Russia accounted

for 25% (or 220,000 tonnes) of India's estimated imports and about 15% of imports for all Asia.

In China, prices generally were flat, ranging from to RMB 5,100/tonne to 5,200/tonne.

October and November data showed sluggish demand conditions continuing in Asian markets.

India:Our estimate for third quarter 2012 imports came in slightly higher than estimated last month at

297,000 tonnes. Still this is 17% lower than a year ago and 16,000 tonnes less than the second quarter.

Figure 1c

Export Growth Remains Weak

Exports and Imports, Year-over-Year Percent Change

100%

Exports

20%

40%

60%

Imports

-40%

-20%

0%

05 06 07 08 09 10 11 12

-60%


5/30 RISI 5


Markets reports have suggested a weak fourth quarter and the preliminary estimates for October hold true

to this, dropping below the 100,000 tonne mark to about 93,000 tonnes. Buyers still complain of weak ad

revenues and the need to cut pagination to control costs. The rupee exchange rate remained just under INR

55/USD in December, continuing to be a negative in terms of demand.

Japan:November demand numbers came in very weak due to a major reduction in producer inventories.

Demand fell 6% on a year-over-year basis, while consumption was down just 1%. For the year throughNovember, demand is off 0.6%, while consumption has done slightly better, yielding year-to-date growth

of 0.4%.

South Korea:South Korean demand growth remained positive in October with demand up 4% versus a

year ago, but then it tumbled 28% in November in part due to a major inventory correction by producers.

According to PPI Asia, Jeonju Paper took down time in November in line with the government's energy

conservation program, which is encouraging high energy consuming industries to cut production during

periods of peak electricity demand. Still consumption was off 21% as it compared unfavorably to a very

strong November 2011. The two solid months of September and October had put demand for the year

through October down 0.5%, but the horrible November leaves year-to-date demand down more than 3%.

November exports rose to 65,000 tonnes, the highest level of the year, with a jump in shipments to India and

to a lesser extent Singapore and Thailand. Although levels have dropped, India has remained the leading

destination for South Korea's exports, accounting for 24% of exports. China vaulted its way to second,

accounting for 14% of shipments, followed by Taiwan (13%) and Hong Kong (8%).

Taiwan:In October, import levels bounced back to 23,000 tonnes, a 10% increase over a year ago. It seems

there has been some inventory rebuilding going on over the past several months. For the year through

October, demand was up 2.3% compared to the same period last year.

Figure 2

Asian Newsprint Imports by Source Region

Thousand Tonnes

140

160

Asia

North America

80

100

120Other

0

20

40

60


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Figure 3

Hong Kong Newsprint PriceUS Dollars per Tonne

850

900

950

48.8 gsm

45 gsm

600

650

700

750

800

350

400

450

500

550

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Hong Kong:November imports drifted lower from their September and October levels to 23,000 tonnes. They

were 2% lower than the previous year, leaving demand for the year through November down about 0.5%.

China:In December, markets reportedly remained sluggish and prices were flat at RMB 5,000-5,200/tonne.

Contacts continue to indicate that the market is suffering from oversupply. Chinese imports did drop back to

8,400 tonnes in November, their lowest level since February.

Singapore:Available Customs data show imports in September at about 10,000 tonnes again. This ismarkedly lower than a year ago (off 20%), and for the year through September, Singapore's imports had

plummeted 23%. This weakness is reportedly due to a major inventory drawdown with the decline in true

consumption a much more mild 3%.

For the region as a whole, imports for September retreated back to 235,000 tonnes, equaling the average over

the previous five months. Receipts from Western Europe were relatively weak, and North America and Asia also

saw declines in their shipments into the region.

We are forecasting that prices will remain stable in the second quarter of 2013 with the market balance still being

tenuous. Rising ONP prices and low margins should prevent further declines. There is some chance of a small

increase, particularly in markets where prices declined this quarter, if supplies tighten a little (depending on how

long Kondopoga remains down). On the other hand, North America's lagging markets should continue to add to

available supplies unless some further closures occur (in North America or Europe).

In the third quarter, we are anticipating another quarter of steadiness before prices begin to move higher over

several quarters beginning in the fourth quarter. The higher prices will come as the market tightens modestly with

demand conditions expected to improve as the region's economies do better. At least ad revenues should stop

their decline and start to improve over the course of the year in some of the growth markets including India, as

economies begin to pick up modestly. ONP prices will also be contributing upward pressure, rising an estimated

US$20/tonne to US$25/tonne over the course of the year. Overall, we show 45 gsm newsprint prices in Hong

Kong averaging US$590/tonne in 2013 and US$636/tonne in 2014.


7/30 RISI 7


Printing & Writing Paper

Current Conditions

In December, the woodfree paper market in Hong Kong remained sluggish even with the potential of the

Christmas and New Year holidays stimulating demand. Even though pulp prices rose about US$20-30/tonne

in December, there was not enough market support for them to prompt a rise in paper prices. Instead, buyer

resistance and high inventories forced sellers to destock through offering competitive prices. There was a fairlywide range in the offer prices of US$760-830/tonne for uncoated woodfree and US$720-770/tonne for coated

woodfree. We suspect most transactions occurred in a more narrow range. We estimate that average transaction

prices for Hong Kong settled at US$815/tonne for uncoated woodfree and US$755/tonne for coated woodfree,

steady at their levels from November. There were some spot deals done by APRIL in China at very low levels

(a little less than US$760/tonne) on uncoated woodfree and by APP (some business at US$720/tonne) on coated

woodfree papers.

In China, some transaction prices for coated woodfree papers started to increase slightly after a few months of

stability due to insistence by sellers for prices to increase from their low levels. For example, APP mills such as

Gold Hai and Gold East again announced increases of RMB 100/tonne, and their attitude was extremely firm

due to the low prices over the last few months, which have hurt their profit margins. Although producers and

agents faced money collection pressure at the end of year, they did not lower prices in December 2012 as theydid in December 2011 because most of them had suffered heavy losses in the previous few months when prices

dropped substantially. Still, some other mills did not follow APPs lead and did not raise prices, opting to keep

them stable to enhance their competitiveness. Accordingly, even with the slight increase in demand as companies

plan to send out sales promotion advertising for the two upcoming big festivals, prices were stable. Overall, we

are showing the price for coated woodfree paper averaging RMB 5,100/tonne, same as last month, although

prices of supplies from APP increased slightly.

For uncoated woodfree paper, the prices for high-end papers declined slightly by about RMB 25/tonne due to

the steady demand which prevented prices from falling more. However, for mid- to low-end uncoated woodfree

paper made from mixed fiber prices declined about RMB 100/tonne again because producers and agents were

eager to reduce their inventories in order to get cash returns. In addition, December was nearly the end of the

period when printers build stocks for spring term's textbook printing, and many producers felt it was their lastchance for several months to achieve solid sales of their low-end paper.

Chinese net exports of coated and uncoated woodfree paper both rose in November after a big drop in October. For

coated woodfree paper, net exports increased 8% or 6,000 tonnes due to a 7,000 tonne gain in exports and 1,000

tonne gain in imports. For the year through November, coated woodfree paper exports increased 5% compared to

a year ago, reaching 1.3 million tonnes. Other Asian countries are still the leading destination of China's exports,

accounting for 63% of China's total coated woodfree exports, followed by Europe and Latin America (about 10%

each). For uncoated woodfree paper, net exports increased 27% or 19,000 tonnes in November, compared to an

18% decrease in October. Total exports of uncoated woodfree paper from January to November increased by

14%. Other Asian countries received about 46% of these shipments, and Japan alone accounted for nearly 24%

of total exports within Asia and about 11% of total global exports. The Middle East (15%) and Oceania (11%)

were the other two big export destinations for Chinese uncoated woodfree papers.

Japanese demand for printing & writing paper slightly decreased in November from October, back down to

September's level. Japanese net imports also decreased 10% or 9,000 tonnes due to a 10,000 tonne loss in imports

and nearly flat exports. The decrease in imports mainly came from woodfree and uncoated mechanical papers.

The majority (about 95%) of Japan's coated woodfree imports are from other Asian countries, mainly China

(82%), South Korea (11%) and Taiwan (2%). Uncoated woodfree paper imports from other Asian countries

account for nearly 99% of total Japanese imports, with the top three sources being Indonesia (74%), China (21%)

and Taiwan (3%). It should be noted that the Japanese Ministry of Finance (MOF) is investigating an allegation

that cut-size papers from Indonesia were dumped into the Japanese market with dumping margins ranging from


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8 RISI

7.55% to 15.78%. The inquiry is expected to be wrapped up by June 2013, and if dumping is found, it could

clearly have an impact on the cut-size market in Japan and elsewhere in Asia.

For South Korea, net exports of printing & writing paper declined 18% and 14% in October and November,

respectively. This decline in net exports mainly resulted from the loss of coated woodfree paper exports and

nearly flat imports. Exports of coated woodfree paper declined 14% or 13,000 tonnes from September to

November. The major shipping destination for South Korea's coated woodfree paper exports is the Middle East,

which accounted for nearly 51% of its total exports, followed by Asia (21%) and North America (8%).

Forecast

Our near-term price forecast for both coated and uncoated woodfree paper is unchanged compared to last month.

That is, we are expecting that woodfree prices in Hong Kong will move higher over the course of 2013. In the

first half of the year, producers will be pushing for increases as cost pressures rise and the seasonal upturn hits.

We expect that suppliers will not be fully successful with the increases they seek as buyers will continue to put upresistance in light of lingering excess capacity issues. We believe that demand is still a little soft and the market

will continue to favor buyers, although we do expect that cost pressures and an improving market balance will

support modest price increases in the first half of 2013. Further gains will occur in the second half of the year

with producers beginning to achieve better margins due to a narrowing in the demand/supply balance, improved

by healthier demand and capacity shutdowns caused by market forces or Chinese governmental intervention. In

addition, a potential rise in freight rates may be another factor supporting higher prices.

Overall, we project prices in the first half and second half of 2013 to average US$818/tonne and US$848/tonne,

respectively, for uncoated woodfree and US$769/tonne and US$794/tonne, respectively, for coated woodfree.

Figure 4

Chinese Woodfree Imports and Exports

Thousand Tonnes

120

140

Uncoated Woodfree Imports

Uncoated Woodfree ExportsCoated Woodfree Im orts

60

80

100Coated Woodf ree Exports

0

20

40

Jan

Jul

Jan

Jul

Jan

Jul

Jan

Jul

Jan

Jul

Jan

Jul

Jan

Jul

Jan

Jul

Jan

Jul

-04

04

-05

05

-06

06

-07

07

-08

08

-09

09

-10

10

-11

11

-12

12


9/30 RISI 9


Figure 5

Quarterly Woodfree Average Transaction Prices in Hong KongUS Dollars per Tonne

950

1000

1,000

1,050

Uncoated

Coated

800

850

900 Uncoated Coated

800

850

900

950

600

650

700

00 01 02 03 04 05 06 07 08 09600

650

700

750

Containerboard

Current Conditions

In December, prices for both kraft top liner and recycled corrugating medium were generally unchanged, despitesome orders slipping up to US$5/tonne from the average market price level. Meanwhile, market activities

remained sluggish toward year end, and related waste paper prices were dropping again.

Overall, we conclude that prices for 125 gsm kraft top liner remained at US$425/tonne in December and prices

for 110 gsm recycled corrugating medium remained at US$410/tonne. In addition, the price of imported virgin

fiber-based KLB was unchanged, averaging US$610/tonne. KLB prices from Russian suppliers remained below

US$600/tonne, but were up by US$5/tonne from November's level. Compared to a year ago, average imported

kraftliner prices were down US$5/tonne in December, corrugating medium prices were down by US$5/tonne, and

prices of recycled liner grades suffered a large drop of US$55/tonne. The poor result for the recycled linerboard

market reflected the weak demand rebound and heavy supply-side pressures from the significant capacity start-

ups that were launched in the last two years. All prices are CIF Hong Kong in US dollars per tonne.

For the two recycled containerboard grades in the Chinese market, demand over the year-end period showed nosigns of a pickup in growth. Moreover, production cuts in small and medium sized containerboard mills over

of the last few months, as well as some reduction tied to the outdated capacity closure campaign, may result in

a smaller projected annual production growth figure for 2012 than 2011, as detailed in the recently published

November 2012 issue of theAsian Paper Packaging 5-Year Forecast. On the cost side, according to the most

recent issue of RISI's PPI Asia, the late December price of AOCC (CIF China) eased to US$200-205/tonne,

compared with US$213-215/tonne in the beginning of the month. Meanwhile, prices for white top linerboard

from various Chinese mills were either flat or moved down slightly compared to the previous month. Specifically,

average prices ranged between US$565-570/tonne during December.


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Figure 6

Asian Kraftliner ImportsThousand Tonnes

260

285 China/Hong Kong

Rest of Asia

160

185

210

235

60

85

110

135

04 05 06 07 08 09 10 11 12 13 14

In other Asian markets, price movements were mostly stable, except that Korean mills lowered their prices.

For instance, medium prices in Korea moved down to US$350/tonne, down by US$15-20/tonne from the prior

month's level.

On the supply front, our latest estimates show that close to 5.0 million tonnes of new supply was added to the

Chinese containerboard capacity base in 2012. Moreover, it is reported that Shandong Chenming Paper finally

sold its subsidiary Qihe Chenming Paperboard (with 400,000 tonnes capacity in total) to Henan Jianghe Paper.

The Qihe Chenming Paperboard mill used to produce containerboard grades, but about half of its machines

currently make cupstock. In the newly releasedAsian Paper Packaging Capacity Report 2012, it is also noted

that Anhui Shanying Group is currently going through a reorganization process. If the deal is completed, Taison

Group, the owner of Zhejiang Jian Paper Packet, will become the controlling shareholder of the listed Anhui

Shanying Paper. According to the report, Zhejiang Jian Paper Packet currently has a total containerboard capacity

of 1.55 million tonnes, while Anhui Shanying Paper holds nearly 850,000 tonnes of containerboard capacity. By

integrating with Zhejiang Jian Paper Packet, the group will boost its total annual capacity level to 2.4 million

tonnes. Without counting the two units that are being installed at present (a total of 1.04 million tonnes to be

launched this year), the owner of both Zhejiang Jian Paper Packet and Anhui Shanying Paper will replace TaiwanLong Chen Paper for the fifth place in the Top 20 Asian Containerboard Producers list. This may also further

stimulate industry restructuring and merger and acquisition activities in mainland China.

Forecast

In January, prices for recycled linerboard and medium are likely to rebound temporarily, rising by US$10/tonne

and US$5/tonne, respectively. The upward movements will be mainly driven by producers' efforts to implement

price increases from the start of 2013, when some restocking activities may boost demand growth slightly. For

instance, a major containerboard producer is planning a US$10/tonne increase for both liner and medium grades.


11/30 RISI 11


Overall, we conclude that January's prices for kraft top liner in Hong Kong will rise to US$435/tonne, while

corrugating medium prices will reach US$410/tonne.

In our baseline scenario, prices for both recycled containerboard grades are expected to show some modest

rebounds in 2013 if input costs reaccelerate and producers take additional downtime to successfully prevent

excess supply from developing. Meanwhile, authorities will further implement policies that boost private

consumption as well as industrial production growth. However, the market is still subject to overcapacity ifdownstream demand sees only a fragile recovery and groups of new machines targeting this year for startup are

launched on schedule.

In the first quarter of 2013, we forecast that kraft top liner prices (which are largely weighted toward the

secondary grade of this kind; the premium grade is less popular in the market) will stay between US$425/tonne

and 435/tonne, while corrugating medium will average US$410/tonne. As usual, a certain number of mills are

also planning to implement downtime during the Chinese New Year, which will run from February 9-15 in 2013.

The production downtime is likely to be extended to cope with the subdued demand as well as strengthen pricing

power in the following quarters.

On the capacity side, an estimated 0.9 million tonnes of capacity will be coming online in the first quarter of

2013, including Jiangxi Lee & Man's PM18 (a 550,000 tonne recycled liner machine in Jiangxi Province). The

unit from Lee & Man Paper will be the only linerboard machine to be launched in this season, but the firm willalso place PM19, a 350,000 tonne corrugating medium machine, at the same mill in Jiangxi Province during the

second quarter. Meanwhile, Nine Dragons Paper will finish construction on the two machines at its Quanzhou

base in Fujian Province, which will add 650,000 tonnes of linerboard capacity. The direct competitor in that

province is Fujian Liansheng Paper, which added 450,000 tonnes of linerboard capacity and 350,000 of medium

at its new Longhai base at the end of last year. Anhui Shanying Paper, as mentioned previously, also started up a

550,000 tonne containerboard machine during the same time frame.

Figure 7

Quarterly Hong Kong Containerboard PricesUS Dollars per Tonne

650

700

750

KLB 175

Medium

400

450

500

550

600ra op

100

150

200

250

300

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14


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12 RISI

In the first quarter of 2013, imported kraftliner prices are forecast to rise to US$620/tonne. This indicates some

potential restocking demand, and may reflect the price increases achieved in the US market during the fourth

quarter of last year. There is also an upside risk that the currently low inventories for the US containerboard sector

may lead to another price increase in the next few months if downstream demand rebounds faster than expected.

Boxboard

Current Conditions

In December, prices for 350 gsm coated duplex board in Hong Kong were cut by another US$10/tonne. As the

recycled boxboard market continued to endure the weakest season, average duplex board prices were still subject

to some discounting pressures even though most listed prices were unchanged. Meanwhile, ONP prices settled

toward the end of the year. On the whole, we show transaction prices for 350 gsm coated duplex in Hong Kong

falling to US$510/tonne in December.

Looking into the downstream manufacturing sector, the latest PMI data for December showed that industrial

activities among most Asian economies continued to improve, even though there were concerns that the "fiscal

cliff" -- a package of spending cuts and tax increases -- could drag the US economy back into recession. In

addition, Japan is hoping it will exit the recession in early 2013 by adopting more economic stimulus packages.

So far, Asian policymakers have provided supports to their economies, and will act again if necessary.

CFLP's China PMI remained at 50.6% in December, matching November's seven-month high. Meanwhile,

HSBC's China PMI rose to 51.5% in December (up from 50.5% a month ago), the strongest point since May

2011. A reading below 50% signals a decline in the sector while a reading above 50% indicates expansion. The

official (CFLP) index is based on responses from managers at more than 820 companies in 28 industries, while

HSBC's measure covers more than 420 companies and is weighted toward smaller businesses. The two surveys

have different sample sizes and methodologies, but both indicate that the Chinese economy revved up during the

final quarter of 2012 after GDP growth had slowed for seven consecutive quarters. In addition, authorities will

continue to step up more policy easing to stabilize growth and further boost domestic demand. The latest China

Customs data show that the full-year value of total exports grew by 7.9% last year, falling from the double-

digit growth pace reached in 2011. In addition, the United States replaced Europe as China's largest exporting

destination, which should not be surprising given the chaotic economic situation in Europe for most of 2012.

Japanese manufacturing activity contracted in December at the fastest pace in more than three years, as firms

targeted lowering inventories due to a mild economic downturn. The nation's GDP growth is expected to have

shrunk in the fourth quarter, owing to the sharp decline in exports, a territorial dispute with China and slowing

domestic consumption. Specifically, Japan's PMI dropped to 45.0% in December from 46.5% in November.

South Korea's PMI registered 50.1% in December, up from 48.2% in November and 47.4% in October. It also

showed an expansion in the nation's manufacturing conditions for the first time in six months.

Moreover, in September the South Korean government unveiled a package of tax breaks and provincial

government budget measures worth about $5.2 billion (GBP 3.2 billion). These followed a $7 billion package in

late June for a total value of about 1% of the nation's GDP. The declining inflationary pressures in December also

provided room for further monetary easing measures that will help sustain economic growth.In the region's other major boxboard producing nations besides China, South Korean cumulative boxboard

consumption rose by 4.9% year-over-year through October 2012, and Taiwanese total boxboard demand shrank

by nearly 3.0% over the same time period. For Japan, apparent boxboard consumption through October of this

year also moved down by 3.8% on a year-over-year basis.


13/30 RISI 13


gure

China/Hong Kong Boxboard ImportsThousand Tonnes

550

600

300

350

400

450

500

100

150

200

250

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Forecast

Declines in boxboard prices are likely to pause in January, but resume a month later when the Chinese market is

through the Chinese Lunar New Year (a weeklong holiday which will run from February 9-15 in 2013). Market

demand will slow further as the traditional holiday period approaches, and recovered paper costs seem to have

entered a stable period. On the supply side, some new units that were not put into the market late last year may

launch in the first quarter of 2013 and exacerbate the market imbalances.

In terms of fiber costs, according to the most recent issue of RISI's PPI Asia, the late December price of AONP

(CIF China) dropped to US$180-185/tonne, down US$6-7/tonne from its level in the first half of the month.

Meanwhile, the monthly average price of AONP a year ago was about US$14/tonne higher than its present price.

It should be noted that coated duplex board prices during some months in 2007 were below US$500/tonne when

related recovered fiber prices stood at US$170-190/tonne. After taking into account all of the factors, we forecast

that duplex board prices in January will remain at US$510/tonne.

Our baseline forecast is based on an assessment of the changing demand and supply fundamentals, in particular

the historical trend of input costs as well as new supply set to enter the market during the forecast time period.

As analyzed above, average coated duplex prices are expected to fall below US$510/tonne, as compared to the

prior quarter. The second quarter prices will rebound to US$518/tonne when the market becomes warmer and

capacity growth starts to slow.


14/30


14 RISI

On the capacity front, our estimates show that around 2.1 million tonnes of new supply will be added to the

Chinese boxboard capacity base in 2013. For the coated duplex grades, Jiangsu Longheng Paper and Jiangsu

Fuxing Paper are likely to launch their new units (each machine has a total capacity of 300,000 tonnes) during

spring 2013. In the fourth quarter of 2013, Fujian Liansheng Paper may start up a machine that produces either

ivoryboard or recycled based duplex board. Meanwhile, Jiangmen Xinghui Paper will install a 300,000 tonne

coated duplex machine at its greenfield mill in Jiangmen, Guangdong Province. The paper mill is controlled by

a joint venture with Hokuetsu Kishu Paper, a major Japanese producer, who holds a 60% stake.

Figure 9

Quarterly Hong Kong Coated Duplex Average Transaction PriceUS Dollars per Tonne

700

750

500

550

600

650

300

350

400

450

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14


15/30

The most comprehensivestatistical datacovering the global Pulp

and Paper industry.

Order RISIs2012 Annual Review of Global

Pulp & Paper Statistics- an independent

information source covering pulp & paper

demand, production, trade, and consumption.

For more information,or to order, visit www.risi.com/annualreview


16/30


16 RISI

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012

Transaction PricesHong Kong (US$ per Tonne)

48.8 gsm 635 635 635 625 625 625 615 615 615 590 590 590

45 gsm 640 640 640 630 630 630 620 620 620 600 600 600

India Imported (US$ per Tonne)

45 gsm 650 650 650 650 650 650 625 625 625 600 600 600

Exchange Rate

Rupee per US$ 51.20 49.21 50.40 51.78 54.39 56.02 55.41 55.53 54.42 53.06 54.82 54.65

Unit Import Values (CIF, US$ per Tonne)

Hong Kong 698 672 655 656 668 653 652 643 649 636 632

Taiwan 685 668 650 644 648 652 644 640 645 630

Singapore 689 668 654 634 639 639 642 634 644 625

Unit Export Values (FOB, US$ per Tonne)

South Korea 645 624 628 633 623 624 617 603 604 584 568 ONP Del'd to Asia * 198 200 206 206 200 199 187 147 154 180 186 186

Japan

Apparent Consumption 282 270 288 259 281 271 265 284 271 276 258

Net Imports 4 7 3 -1 3 4 4 4 4 4 4

Production 278 263 285 260 278 267 262 279 268 272 253

South Korea

Apparent Consumption 80 61 70 72 64 67 71 62 71 76 59

Net Imports -46 -62 -60 -53 -61 -61 -56 -62 -53 -59 -65

Production 126 123 130 126 125 128 127 124 124 134 124

* Price of ONP (old newspapers), CIF China and SE Asia from the USA.

Table 2a

Newsprint Monthly Summary

US$ per Tonne, Thousand Tonnes


17/30 RISI 17


Annual

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 2010 2011

2011 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012Asian Newsprint Imports

China 2 7 6 12 10 16 12 15 10 10 14 8 37 14

Hong Kong 22 21 19 34 29 15 28 27 28 25 25 22 285 296

India* 82 83 91 111 109 100 104 79 116 101 93.03 1,385 1,391

Indonesia 1 1 1 1 2 2 1 2 0 1 7 8

Japan 5 5 8 4 1 4 4 4 5 4 4 5 138 120

Malaysia 8 9 6 13 19 13 11 17 10 20 225 95

Pakistan 4 2 2 4 4 9 4 6 6 3 2 50 47

Philippines 3 4 7 5 4 5 9 6 9 7 32 35

Singapore 15 5 10 6 6 12 8 12 9 10 10 140 141

South Korea 0 0 0 0 0 0 0 0 0 0 0 0 2 1

Thailand 5 10 8 10 8 10 6 8 6 6 12 8 111 97

Taiwan 23 23 23 21 24 19 21 26 23 19 23 279 262Other Asia** 19 24 24 24 22 21 21 24 26 27 22 257 273

TOTAL 189 194 206 244 237 226 228 226 249 233 2,947 2,780

Asian Newsprint Exports

China 1 0 0 0 0 1 1 1 0 0 0 0 113 15

India 1 1 1 1 1 1 1 1 1 1 1 11 10

Indonesia 21 14 19 19 14 12 13 13 11 15 177 154

Japan 1 1 1 1 2 1 0 0 1 0 0 1 58 19

Malaysia 7 6 7 7 3 5 6 5 6 4 59 75

Philippines 2 2 2 2 2 1 2 4 1 3 117 95

South Korea 55 46 62 60 53 61 61 56 62 53 59 65 688 685

Thailand 2 1 1 2 2 2 3 1 2 2 2 1 17 22

Other Asia** 0 0 0 0 0 0 0 0 0 0 0 0 0

TOTAL 89 73 93 92 79 82 87 82 84 79 1,241 1,076

** In this table, Other Asia includes Afghanistan, Bangladesh, Bhutan, Brunei, Cambodia, Kazakhstan, Kyrgyzstan, Laos, Macau,

Mongolia, Myanmar, Nepal, North Korea, Sri Lanka, Tajikistan, Turkmenistan, Uzbekistan and Vietnam.

a e

Newsprint Imports and Exports

Thousand Tonnes

Monthly

* Based on source country trade data; subject to revision at year end.


18/30


18 RISI

12 Q2 12 Q3 12 Q4 13 Q1 13 Q2 13 Q3 13 Q4 14 Q1 2011 2012 2013 2014

Transaction PricesHong Kong (US$ per Tonne)

48.8 gsm 625 615 590 575 575 575 590 600 669 616 579 618

45 gsm 630 620 600 585 585 585 605 615 674 623 590 636

Cost Indicators

ONP Del'd to Asia * 201 163 184 188 192 201 207 213 241 187 197 22

Macroeconomic Indicators (% change, year ago)

Real GDP Growth

Japan 4.0% 0.5% 0.1% -0.9% -0.5% 0.6% 1.4% 1.4% -0.5% 1.9% 0.2% 1.5%

East/Southeast Asia ** 3.7% 3.6% 4.6% 5.2% 5.5% -0.5% 2.5% 3.1% 4.4% 3.8% 3.1% 6.3%

Regional Capacity

Japan 907 907 907 869 869 869 869 832 3,707 3,627 3,477 3,327

China 1,015 1,015 1,015 1,038 1,040 1,041 1,041 1,059 4,239 4,060 4,160 4,235

Other Asia 1,122 1 ,122 1 ,122 1 ,144 1 ,144 1 ,163 1 ,173 1 ,178 4,466 4 ,487 4 ,624 4 ,719Total 3,043 3,044 3,044 3,052 3,053 3,073 3,083 3,068 12,412 12,174 12,261 12,280

Asian Newsprint Trade

Imports 691 708 682 661 725 709 685 663 2,780 2,727 2,779 2,849

Exports 247 245 254 239 257 251 265 248 1,076 1,003 1,011 1,034

Net Imports 444 464 428 422 468 458 420 415 1,704 1,724 1,768 1,815

2009 2010 2011 2012 2013 2014

China

Apparent Consumption 4,614 4,224 3,899 4,200 4,270 4,347

Net Imports -186 -76 -1 126 106 86

Production 4,800 4,300 3,900 4,073 4,163 4,261

Capacity 4,878 4,574 4,239 4,060 4,160 4,235

Operating Rate 98% 94% 92% 100% 100% 101%

Japan


Net Imports 23 81 100 45 54 59

Production 3,455 3,349 3,210 3,240 3,145 3,056

Capacity 3,832 3,749 3,707 3,627 3,477 3,327

Operating Rate 90% 89% 87% 89% 90% 92%

Other Asia

Apparent Consumption 4,689 5,187 5,199 5,244 5,397 5,599Net Imports 1,137 1,702 1,605 1,552 1,608 1,670

Production 3,553 3,485 3,594 3,692 3,789 3,929

Capacity 4,770 4,579 4,466 4,487 4,624 4,719

Operating Rate 74% 76% 80% 82% 82% 83%

Annual

Table 3

Newsprint Forecast


AnnualQuarterly


** Includes Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand. Weighted by GDP at purchasing

power parity exchange rates in 2000.


19/30 RISI 19


Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

2011 2011 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2

Woodfree Transaction Prices in Hong Kong (Sheets)Hong Kong (US$ per Tonne)

Uncoated (70-80 gsm) 835 820 810 820 840 855 855 840 825 815 805 805 810

Coated (128-157 gsm) 790 760 755 755 800 815 800 780 760 745 745 745 755

China (RMB per Tonne)*

Uncoated (80-120 gsm)

10-30% (Virgin Fiber) 5,625 5,575 5,500 5,550 5,600 5,675 5,675 5,550 5,400 5,350 5,250 5,250 5,200 5

100% (Virgin Fiber) 6,450 6,400 6,300 6,350 6,425 6,525 6,475 6,450 6,375 6,375 6,375 6,375 6,375 6

Coated (128-157 gsm) 5,505 5,400 5,350 5,425 5,485 5,585 5,515 5,365 5,200 5,150 5,100 5,100 5,100 5

Exchange Rate

RMB per US$ 6.35 6.35 6.31 6.30 6.31 6.30 6.32 6.36 6.37 6.36 6.32 6.27 6.24

Japan

Apparent Consumption 895 869 903 858 906 801 832 736 765 817 756 782 756

Net Imports 145 118 148 130 127 77 96 94 98 119 75 100 91

Production 750 751 754 728 779 723 736 642 667 699 681 681 666

South Korea

Apparent Consumption 198 194 213 184 201 188 199 178 179 177 183 171 177

Net Imports -84 -98 -75 -85 -89 -87 -93 -91 -100 -92 -80 -66 -57

Production 282 292 288 269 290 275 292 269 279 269 263 237 234

Taiwan

Apparent Consumption 71 70 60 69 73 69 82 77 81 74 75 88

Net Imports 12 12 9 12 13 14 25 22 23 20 22 29

Production 59 57 51 57 60 55 58 54 58 54 53 60 58

* Includes VAT


Printing & Writing Paper Monthly Summary

Table 4a


20/30


20 RISI

Annual


2011 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012China

Coated Woodfree 19 13 22 23 21 27 23 21 21 17 17 18 330 259

Uncoated Woodfree 22 17 30 27 29 27 29 28 24 18 17 18 312 310

Coated Mechanical* 12 10 15 14 11 11 10 14 12 9 224 167

Uncoated Mechanical* 4 2 2 2 1 1 2 1 1 1 24 25

Hong Kong

Coated Woodfree 9 7 10 8 12 11 12 8 8 12 10 11 114 113


Coated Mechanical* 4 3 2 2 2 2 1 1 1 1 58 47

Uncoated Mechanical* 2 2 3 1 1 4 2 1 1 1 11 13

JapanCoated Woodfree 51 54 51 63 37 37 33 36 43 31 31 28 277 416


Coated Mechanical 48 53 47 43 38 44 37 48 52 36 48 47 407 514

Uncoated Mechanical 10 16 15 11 5 14 20 12 13 13 13 9 79 114

South Korea

Coated Woodfree 4 5 3 4 4 5 4 4 4 3 4 4 41 45




Taiwan

Coated Woodfree 13 12 12 13 14 18 16 18 15 18 22 175 197

Uncoated Woodfree 11 9 12 13 11 15 11 12 11 10 13 158 154

Coated Mechanical 2 1 1 3 3 6 7 6 6 6 7 24 29

Uncoated Mechanical 2 1 1 1 1 2 2 1 1 1 1 14 19

* Derived from reporting countries exports to destination country.

Monthly

Table 4b

Printing & Writing Paper Imports



21/30 RISI 21



2011 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012China

Coated Woodfree 124 91 125 134 125 139 132 107 121 122 91 98 1,075 1,337




Japan

Coated Woodfree 24 19 23 27 29 33 33 28 27 25 24 25 469 335




South KoreaCoated Woodfree 118 97 104 110 106 107 107 112 102 92 86 79 937 1,177




Taiwan

Coated Woodfree 9 7 7 8 8 7 7 7 6 6 6 136 101

Uncoated Woodfree 7 6 7 10 7 8 7 8 6 5 6 80 92

Coated Mechanical 0 0 0 0 0 0 0 0 0 0 0 0 0

Uncoated Mechanical 1 0 1 1 0 0 1 1 1 1 1 7 6

Annual

Table 4c

Printing & Writing Paper Exports


Monthly


22/30


22 RISI

12 Q2 12 Q3 12 Q4 13 Q1 13 Q2 13 Q3 13 Q4 14 Q1 2011 2012 2013 20

Woodfree Transaction Prices (Sheets)Hong Kong (US$ per Tonne)

Uncoated (70-80 gsm) 850 815 808 813 823 838 858 868 902 824 833 8

Coated (128-157 gsm) 798 750 752 762 777 787 802 817 862 768 782 8

China (RMB per Tonne)

Uncoated (80-120 gsm)

(10-30% Virgin Fiber) 5,633 5,333 5,325 5,355 5,425 5,475 5,600 5,650 5,933 5,460 5,464 5,6

(100% Virgin Fiber) 6,483 6,375 6,425 6,475 6,550 6,600 6,675 6,775 6,800 6,410 6,575 6,7

Coated (128-157 gsm) 5,488 5,150 5,225 5,250 5,325 5,370 5,400 5,475 6,313 5,321 5,336 5,5

Exchange Rate

RMB per USD 6.33 6.35 6.29 6.29 6.27 6.25 6.23 6.22 6.46 6.32 6.26 6

Cost Indicators: Pulp Prices Delivered to Asia *

BSKP from Canada 688 633 634 659 646 682 716 734 838 655 676 7

BHKP from Indonesia 635 622 612 619 649 667 662 667 666 627 649 6

Macroeconomic Indicators (% CHYA)

Real GDP Growth

Japan 4.0% 0.5% 0.1% -0.9% -0.5% 0.6% 1.4% 1.4% -0.5% 1.9% 0.2% 1.

East/Southeast Asia ** 3.7% 3.6% 4.6% 5.2% 5.5% -0.5% 2.5% 3.1% 4.4% 3.8% 3.1% 6.

2009 2010 2011 2012 2013 2014

China


Net Imports -1,626 -1,479 -2,022 -2,438 -2,446 -2,441

Production 22,003 23,703 25,730 27,612 29,244 31,010

Capacity 22,976 25,057 27,943 30,148 31,451 32,755

Operating Rate 96% 95% 92% 92% 93% 95%

Japan


Net Imports 507 110 960 1,296 1,142 1,014

Production 9,125 9,548 8,770 8,469 8,628 8,804

Capacity 12,037 11,326 10,852 10,213 9,863 9,654

Operating Rate 76% 84% 81% 83% 87% 91%

Other Asia


Net Imports -1,326 -1,244 -1,253 -1,163 -1,548 -1,891

Production 12,836 13,779 14,295 14,678 15,586 16,615

Capacity 14,944 16,141 17,047 17,464 18,256 18,798

Operating Rate 86% 85% 84% 84% 85% 88%

Annual

Table 5

Printing & Writing Paper Forecast


AnnualQuarterly

* Weighted average of unit import values for China and South Korea for bleached softwood kraft pulp from Canada and bleached hardwood kraft pulp

from Indonesia.

** Includes Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand.


23/30 RISI 23


Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012

Transaction Prices in Hong Kong Kraftliner 175 gsm 590 600 600 620 620 620 620 620 605 610 610 610

Kraft-Top Liner 480 485 485 485 485 460 450 435 420 425 425 425

Corrugating Medium 405 405 415 430 435 420 420 410 405 410 410 410

Unit Import Values (CIF)

Kraftliner

Singapore 653 543 530 551 514 593 660 588 596 545

South Korea 668 653 641 657 648 651 678 681 671 694 689

Unit Export Values (FOB)

South Korean Testliner 459 440 433 427 435 447 454 416 443 437 421

South Korean Medium 433 400 390 390 386 377 389 383 384 365 359

OCC Delivered to Asia * 229 241 235 230 229 224 209 180 191 220 225 209

Japan

App. Consumption 646 657 761 775 715 735 736 686 727 784 761 Kraftliner Imports 5 5 4 5 5 6 5 7 4 6 5

Other Net Imports 1 0 -2 0 1 1 3 2 0 2 1

Production 639 652 759 770 709 728 728 678 722 776 755

South Korea

App. Consumption 315 311 324 327 333 331 318 317 329 331

Kraftliner Imports 11 7 7 8 8 9 9 7 9 6

Other Net Imports -12 -13 -20 -19 -21 -24 -20 -17 -18 -14

Production 316 317 337 339 346 347 329 326 337 339

Taiwan

App. Consumption 124 146 143 134 156 145 153 135 144 146

Kraftliner Imports 3 5 3 5 4 5 3 4 3 2

Other Net Imports -31 -40 -52 -47 -49 -48 -43 -52 -43 -51

Production 152 181 192 177 200 188 192 183 184 195 187

* Price of OCC (old corrugated containers), CIF China and SE Asia from the USA.

Containerboard Monthly Summary


Table 6


24/30


24 RISI

12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 2011 2012 2013 2014

Transaction Prices in Hong Kong Kraftliner 175 gsm 620 615 610 620 620 615 610 615 659 610 616 628

Kraft Top Liner 475 435 425 425 435 445 440 445 511 455 436 459

Corrugating Medium 430 410 410 410 430 440 430 425 442 415 428 436

Cost Indicators: Fiber Prices Delivered to Asia

OCC * 228 193 218 218 224 236 245 250 259 219 231 259

Unbleached Kraft Pulp ** 565 515 545 530 540 575 590 600 682 551 559 613

Macroeconomic Indicators (% Change, Year Ago)

Industrial Production Growth

Japan 5.4% -3.1% -5.1% -7.5% -5.2% 0.0% 3.4% 3.1% -3.5% 0.0% -2.5% 2.7%

East/Southeast Asia *** 1.4% 0.0% 4.3% 7.1% 5.4% 5.8% 6.9% 7.3% 1.4% 1.6% 6.3% 6.8%

Regional Capacity

Japan 2,550 2 ,560 2,345 2 ,530 2 ,545 2,560 2 ,319 2 ,530 10,254 9 ,985 9 ,954 9 ,789

China 11,567 11,786 12,551 11,984 12,733 13,634 14,191 13,957 44,536 47,321 52,541 56,815

Other Asia 5,194 5,248 5,165 5,300 5,361 5,413 5,954 4,093 19,803 20,638 22,029 23,089

Total 19,311 19,594 20,061 19,814 20,639 21,606 22,464 20,580 74,593 77,944 84,523 89,693

Market Balance: Major Net Exporters ****

App. Consumption 2,629 2,662 2,576 2,570 2,641 2,747 2,879 2,606 10,334 10,447 10,837 11,314

Kraftliner Imports 54 53 60 49 49 57 59 52 211 215 215 224

Other Net Imports -357 -258 -37 -258 -343 -317 -188 -258 -1,123 -962 -1,106 -1,103

Production 2,932 2,867 2,553 2,779 2,934 3,007 3,008 2,812 11,245 11,196 11,729 12,193

Capacity 3,420 3,465 3,335 3,514 3,479 3,551 3,741 3,578 13,181 13,551 14,284 14,924

Operating Rate 86% 83% 77% 79% 84% 85% 80% 79% 85% 83% 82% 82%

Asian Kraftliner Imports

China/Hong Kong 165 175 146 140 180 185 158 172 656 636 663 753

Other Asia 205 183 209 201 215 196 175 189 763 774 788 807

Total 370 358 355 341 395 381 333 361 1,419 1,410 1,450 1,559

**** Includes Indonesia, South Korea, Taiwan and Thailand.

Quarterly Annual

Table 7

Containerboard Forecast


* Price of OCC (old corrugated containers), CIF China and SE Asia from the USA.

** Weighted average of unit import values for China and South Korea.

*** Includes Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand. Weighted by GDP at purchasing

power parity exchange rates in 2000.


25/30 RISI 25


Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012

Transaction Prices in Hong Kong Coated Duplex 350 gsm 570 570 570 610 590 590 560 540 530 530 520 510

Unit Import Values for Coated Duplex Delivered to Hong Kong (CIF)

From South Korea 584 554 558 563 567 585 604 601 545 552 521

From Taiwan 692 502 709 1,239 543 637 513 516 443

From Indonesia

Unit Export Values for Coated Duplex (FOB)

South Korea 695 691 698 703 698 719 733 709 709 685 681

Taiwan 559 546 556 572 579 595 600 575 552 521

ONP Delivered to Asia* 198 200 206 206 200 199 187 147 154 180 186 186

Japan

App. Consumption 148 151 158 157 155 154 156 143 156 168

Imports 18 19 19 22 23 21 26 22 20 24

Exports 1 1 1 2 1 1 1 1 1 2 Production 131 133 140 137 133 134 132 122 138 146 138

South Korea

App. Consumption 60 56 64 60 64 75 72 70 76 75

Exports 56 63 66 60 66 53 59 51 49 54

Production 111 112 123 114 124 122 123 114 117 123

Taiwan

App. Consumption 37 45 45 44 48 41 48 49 45 45

Imports 3 5 5 3 5 6 4 8 4 5

Exports 22 31 36 31 31 34 29 30 27 33 35

Production 56 71 76 72 74 69 73 70 68 73 72

China/HK Imports ** 63 74 66 64 74 72


Boxboard Monthly Summary

Table 8

Note: Data do not include liquid packaging.


** Data for China/Hong Kong imports are RISI estimates.


26/30


26 RISI

12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 2011 2012 2013 2014

Transaction Prices in Hong Kong

Coated Duplex 350 gsm 597 543 520 508 518 533 523 528 654 558 521 540

Cost Indicators: Fiber Prices Delivered to Asia

ONP Delivered to Asia * 201 163 184 188 192 201 207 213 241 187 197 221

BHKP from Indonesia ** 635 622 612 619 649 667 662 667 666 627 649 665

Macroeconomic Indicators (% Change, Year Ago)

Industrial Production Growth

Japan 5.4% -3.1% -5.1% -7.5% -5.2% 0.0% 3.4% 3.1% -3.5% 0.0% -2.5% 2.7%

East/Southeast Asia *** 1.4% 0.0% 4.3% 7.1% 5.4% 5.8% 6.9% 7.3% 1.4% 1.6% 6.3% 6.8%

Regional Capacity Japan 497 495 531 495 498 480 523 485 1,997 2,004 1,997 1,997

China 4,084 4,621 4,783 4,897 5,131 5,231 5,260 5,308 15,670 17,461 20,519 21,738

Other 2,175 2,182 2,124 2,227 2,240 2,252 2,161 2,292 8,245 8,646 8,881 9,324

TOTAL 6,756 7,299 7,438 7,620 7,869 7,963 7,945 8,085 25,913 28,111 31,396 33,059

Market Balance: Major Net Exporters ****

App. Consumption 726 770 864 750 764 794 847 758 2,993 3,052 3,155 3,263

Net Imports -318 -289 -45 -270 -293 -292 -109 -273 -983 -963 -964 -1,079

Production 1,045 1,059 909 1,020 1,057 1,086 956 1,032 3,976 4,015 4,119 4,342

Capacity 1,115 1,122 1,063 1,133 1,146 1,158 1,067 1,147 4,248 4,404 4,504 4,745

Operating Rate 94% 94% 85% 90% 92% 94% 90% 90% 94% 91% 91% 92%

China/HK Imports 210 204 194 138 150 171 145 130 950 810 604 501

Table 9

Boxboard Forecast



**** Includes Indonesia, South Korea, Taiwan and Thailand.

Quarterly Annual

** Weighted average of unit import values for China and South Korea.

*** Includes Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand. Weighted by GDP at

purchasing power parity exchange rates in 2000.

Note: Data do not include liquid packaging.


27/30 RISI 27


Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct N

2011 2011 2011 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 20

Bleached Softwood KraftUnit Import Values (CIF)

Japan Average 868 840 800 749 731 720 752 759 751 751 732 719 706 6

China Average 806 797 749 679 660 656 666 675 710 677 664 633 624 6

South Korea Average 842 810 777 721 731 704 719 730 729 729 708 693 689 6

Received from:

Canada 819 802 760 682 675 666 681 687 701 674 669 632 625 6

USA 855 833 812 766 696 703 701 722 743 748 761 721 701 6

Chile 816 783 697 665 652 654 661 676 779 660 635 625 611 6

Russia 761 762 701 663 651 652 670 687 668 649 633 604 587 5

Import Volumes

Japan 75 78 65 83 73 74 68 87 71 76 65 66 74

China 518 517 507 461 634 663 551 630 560 499 451 523 547 5

South Korea 35 41 41 40 33 47 37 38 42 42 38 43 36 Subtotal 628 637 614 584 740 783 657 755 673 617 553 632 657 6

Received from:

Canada 216 204 238 200 261 252 241 263 255 206 179 231 244

USA 129 162 123 105 159 145 138 137 116 140 109 129 137

Chile 94 69 91 104 93 134 74 104 115 115 124 100 97

Russia 65 59 51 73 70 58 56 68 48 45 52 67 61

Other 125 142 109 101 157 195 147 183 139 112 89 104 118

Bleached Hardwood Kraft


Japan Average 657 649 601 566 543 549 581 613 631 624 628 593 586 5

China Average 654 654 623 553 541 556 576 597 668 618 607 608 602 5

South Korea Average 644 613 570 551 542 559 581 609 622 628 618 607 596 6

Received from:

Indonesia 633 631 568 554 531 561 577 601 616 619 601 578 578 5

Canada 668 726 630 565 547 563 593 618 628 644 618 612 596 5

Brazil 661 646 642 546 548 554 573 589 703 610 616 612 599 6

USA 638 640 647 615 530 543 539 571 582 602 594 583 608 5

Import Volumes

Japan 55 34 47 74 59 53 42 66 27 62 31 44 55

China 444 527 547 482 611 629 539 460 454 392 388 481 530 5

South Korea 114 142 128 105 104 115 127 120 111 118 124 132 91

Subtotal 614 703 722 660 773 798 708 646 592 572 543 657 675 6

Received from:

Indonesia 154 157 172 180 192 202 210 171 137 177 168 155 274 2

Canada 41 54 49 61 56 49 55 58 38 56 44 50 33

Brazil 175 292 305 241 311 292 273 234 221 153 189 201 139 2 USA 60 53 47 27 43 55 18 37 46 49 54 71 53

Other 184 147 149 152 171 199 151 146 150 137 89 180 177

Table 10

Bleached Kraft Pulp Monthly Summary



28/30


28 RISI

2010 2011 2011 2011 2011 2012 2012 2012 2008 2009 2010 2011

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3Bleached Softwood Kraft


Japan Average 903 874 882 920 915 838 734 755 778 625 828 889

China Average 849 820 831 882 870 784 664 684 722 527 786 841

South Korea Average 851 826 838 880 888 808 717 726 747 577 788 854

Received from:

Canada 860 816 829 882 876 792 674 690 726 548 801 845

USA 921 910 903 918 914 833 717 721 782 597 837 889

Chile 847 807 816 867 873 764 657 713 719 524 768 834

Russia 765 757 821 897 826 745 656 677 695 508 741 822

Import Volumes

Japan 226 209 225 220 239 218 230 226 909 783 860 903

China 912 1,203 1,494 1,408 1,405 1,521 1,748 1,732 3,553 4,765 3,995 5,827 South Korea 120 122 120 128 118 118 120 117 562 540 503 484

Subtotal 1,258 1,534 1,839 1,756 1,762 1,857 2,097 2,075 5,023 6,088 5,357 7,214

Received from:

Canada 451 538 737 688 643 658 713 759 1,664 1,734 1,858 2,726

USA 313 341 348 332 351 414 409 389 1,170 1,350 1,252 1,446

Chile 168 285 189 257 315 255 331 293 861 1,287 839 1,015

Russia 150 169 209 169 173 173 200 172 648 680 650 724

Other 175 201 356 309 280 357 444 462 681 1,037 759 1,303

Bleached Hardwood Kraft


Japan Average 801 724 701 723 719 636 554 606 711 478 727 696

China Average 769 702 698 710 701 643 550 611 675 443 703 686


Received from:

Indonesia 761 677 673 701 673 609 549 596 668 454 709 664

Canada 815 726 704 733 754 677 558 611 707 480 731 718

Brazil 784 728 712 705 707 648 550 618 686 439 706 689

USA 805 737 705 719 720 641 554 571 709 495 721 692

Import Volumes

Japan 137 135 142 135 161 136 186 135 641 523 549 574

China 990 1,004 1,386 1,184 1,167 1,519 1,722 1,453 3,725 5,931 4,412 5,255

South Korea 404 345 373 380 349 384 324 358 1,429 1,415 1,550 1,486

Subtotal 1,530 1,484 1,901 1,699 1,677 2,039 2,232 1,946 5,795 7,869 6,511 7,316

Received from:

Indonesia 360 475 560 437 529 483 574 518 1,897 1,702 1,642 2,009

Canada 86 116 174 165 176 145 167 151 551 596 472 660 Brazil 607 396 621 582 450 772 844 728 1,564 2,893 2,375 2,425

USA 115 106 136 100 129 160 125 102 389 526 510 525

Other 362 391 410 415 394 479 522 447 1,394 2,153 1,513 1,697

Table 11

Bleached Kraft Pulp Quarterly Summary


Annual


29/30 RISI 29


Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

2011 2011 2011 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2

Unbleached Kraft Pulp Unit Import Values (CIF)

China 659 662 633 588 567 561 569 580 552 561 530 525 527

South Korea 711 678 664 619 591 596 595 598 612 615 594 565 548

Old Corrugated Containers


China Average 269 261 237 212 214 222 231 231 228 224 217 206 193

South Korea Average 326 311 280 271 270 270 282 286 277 277 280 245 231

Received from:

USA 282 274 247 223 227 237 244 242 238 234 229 217 199

Europe/Japan 261 253 231 202 200 210 220 224 220 214 208 197 186

Old Newspapers


China Average 263 262 239 215 207 209 211 214 214 212 208 197 179 South Korea Average 272 265 242 219 213 210 220 221 220 219 218 208 192

Received from:

USA 265 263 242 214 203 205 207 212 212 211 208 197 174

Europe/Japan 265 260 237 212 210 212 214 217 218 215 210 202 192

Asian Recovered Paper Imports *

Japan 4 4 3 3 3 2 2 3 2 2 2 2 3

China 1,911 2,487 2,792 1,774 2,531 2,928 2,628 2,816 2,346 2,355 2,646 2,714 2,076 2

South Korea 119 134 121 122 117 105 116 128 116 124 136 129 127

Taiwan 50 45 47 73 87 64 59 68 77 74 80 78 74

Indonesia 203 196 159 162 154 161 180 213 251 233 89 170

Thailand 52 58 52 102 115 93 48 57 56 94 119 97 88

Subtotal 2,338 2,923 3,174 2,234 3,007 3,353 3,032 3,284 2,848 2,881 3,072 3,189 2,367 2

Received from:

USA 911 1,194 1,268 936 1,242 1,217 1,224 1,242 1,162 1,160 1,218 1,318

Europe 657 930 1,053 719 929 1,145 920 1,055 743 759 903 934

Japan 307 303 327 205 318 430 373 428 424 429 422 428

Other 463 496 527 375 518 561 516 560 519 534 529 509

* These six countries accounted for 90% of Asian recovered paper imports in 2009.

Table 12

Other Wood Pulp and Recovered Paper Monthly Summary



30/30


Asian Pulp and Paper Monitorprovides economic analysis of the Asian pulp and paper market and is written and prepared by Han Yao, Beth Lis, Li Meng and David Katsnelson. Subscriptions

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2010 2011 2011 2011 2011 2012 2012 2012 2008 2009 2010 2011

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3Unbleached Kraft Pulp


China 665 656 705 684 648 571 569 536 508 444 619 669

South Korea 699 689 718 719 682 600 601 591 559 461 652 704

Old Corrugated Containers


China Average 244 258 266 268 256 216 231 215 227 140 229 262


Received from:

USA 263 276 276 280 267 229 241 226 237 152 247 275

Europe/Japan 227 241 257 258 246 205 222 205 219 130 212 250

Old Newspapers

Unit Import Values (CIF) China Average 221 240 256 262 253 210 213 205 250 140 214 253


Received from:

USA 222 242 260 265 255 206 210 205 259 144 218 255

Europe/Japan 227 242 257 265 252 212 216 209 247 138 216 255

Asian Recovered Paper Imports *

Japan 10 11 10 11 10 8 7 6 61 44 44 42

China 6,138 6,569 6,682 6,839 7,190 7,232 7,789 7,714 24,204 27,501 24,352 27,280

South Korea 335 384 362 411 373 344 360 389 1,307 1,122 1,356 1,531

Taiwan 127 150 135 169 141 224 204 232 834 563 569 596

Indonesia 552 539 591 635 559 476 643 492 2,080 2,285 2,412 2,324

Thailand 242 262 234 266 162 310 161 310 1,217 970 1,024 924

Subtotal 7,403 7,914 8,015 8,333 8,435 8,594 9,164 9,142 29,704 32,484 29,757 32,697

Received from: USA 3,001 3,213 3,289 3,373 3,373 3,395 3,627 3,696 11,914 12,318 11,707 13,248

Europe 2,134 2 ,348 2 ,344 2 ,249 2 ,640 2 ,793 2 ,717 2 ,596 10,092 11,342 9,010 9,580

Japan 995 1,053 1,007 1,259 936 953 1,225 1,279 3,459 4,683 4,193 4,257

Other 1,274 1,300 1,374 1,452 1,485 1,454 1,595 1,572 4,239 4,141 4,848 5,612

Table 13

Other Wood Pulp and Recovered Paper Quarterly Summary


Annual

* These six countries accounted for 90% of Asian recovered paper imports in 2009.

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