china boxboard market:title line 1title line 1 digging one ... · • an overview of china boxboard...

Title line 1China Boxboard Market:Title line 1Title line 2Digging One Layer Deeper

NameTitle, date

Han Yao, Economist, Asian Paper PackagingBeijing Office, RISI Asia

J 3 2015June 3, 2015

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Today’s Agenda

• An Overview of China Boxboard IndustryAn Overview of China Boxboard Industry

• Boxboard Grade Definitions

• Market Structure: Digging One Layer Deeper

M j E d U d S b G d A l i & F t• Major End Uses and Sub-Grades: Analysis & Forecast

• Competitive Landscapes and Regional Cost Comparisong

• China Boxboard Industry Outlook and Trade Implications

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Chinese Boxboard Demand and Supply Have Become More Unbalanced, Leading to Serious Trade Implications

3.0

Demand Capacity

p

2.0

2.5

onne

s

Demand Capacity

1.5

Mill

ion

To

1.0

Gro

wth

, M

0 0

0.5

0.02007 2008 2009 2010 2011 2012 2013 2014E 2015F 2016F

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China Total Boxboard Trade Dynamics, 2007-20142,000

Total Exports

Total Imports

1,500p

1,000

500

02007 2008 2009 2010 2011 2012 2013 2014E2007 2008 2009 2010 2011 2012 2013 2014E


Boxboard Grade Definitions Used in the China Boxboard Study

Cigarette

烟卡Liquid Packaging

Board

液体包装纸板

Virgin Cartonboard

FBB/SBS (Ivoryboard)

白卡纸

Food Grades

食品卡

液体包装纸板

Cupstock/Food Service

纸杯原纸/食品盒Commercial PackagingUnbleached

Total Boxboard

白纸板

g g

社会卡未漂白SUB/CUK

Greyback

灰底白白纸板

Coated Recycled Board

WLC(Coated Duplex)

涂布再生白板纸

灰底白

Whiteback

白底白

Recycled Boxboard Other

Uncoated Recycled Board


China Boxboard Demand Growth Trends, 2007-2014

10%

12%

8%

6%

2%

4%

0%

2%

200 2008 2009 2010 2011 2012 2013 2014E

Ivoryboard (Virgin Grades) Recycled Boxboard (Including WLC)


2007 2008 2009 2010 2011 2012 2013 2014E

The coated duplex grades were the initial focus of China's expansion wave, but the focus has shifted to the virgin gradesg g

4 0

4.5

Virgin Cartonboard

3 0

3.5

4.0 Virgin Cartonboard

Recycled Boxboard

2 0

2.5

3.0

1 0

1.5

2.0

0 0

0.5

1.0

0.02010-2012 2013-2015


Chinese Boxboard Export Trend by Grade

1 000

800

900

1,000

Virgin Cartonboard

Recycled Boxboard

600

700

800

d To

nnes

400

500

600

Thou

sand

200

300

400

Gro

wth

, T

0

100

200

02009 2013


China Boxboard End-Use Market Composition

(2014)

Food and Beverage Products

Dairy/Alcohol/Beverage/Food Packaging/Food Service

( )

30%22%

Other Non‐Durable Goods

Pharmaceutical/Cigarette/Cosmetics

27%

19%

2%

Total Boxboard Durable GoodsGarment/Footwear/ToysPaper Bags/Appliance

Food and Beverage Products

N D bl G dArticles for Culture &

PrintingPrint & PublishPlaying Cards

Non‐Durable Goods

Durable Goods

Articles for Culture & Printing

OthersOther Sectors

Others


Chinese Boxboard Consumption by Sub-Grade for 15 End-Use Sectors, 2013Share of Total Demand

Packaged Food

Food Service

Cosmetics/Toiletries

Printing & Publishing

Paper Bags

FBB/SBS (Ivoryboard)

Liquid Packaging Board

T

Cigarettes

Beverage

Selected Appliances Liquid Packaging Board

Cupstock

WLC (Coated Duplex)

Alcoholic Beverages

Pharmaceuticals

Footwear

Toys

Playing Cards

Garment

Dairy

Alcoholic Beverages

0% 5% 10% 15% 20%

y g


The Market Structure for the Ivoryboard and Coated Duplex Board Sectors Is Different in China

Total WLC Capacity by M j P d (2013)

Total Ivoryboard Capacity by M j P d (2014E) Major Producer (2013)Major Producer (2014E)

23%30%Others, 25%

7%Others, 49%

8%

5%

7%

6%5%

3%

18%14%

8%

3%


Chinese/Asian Ivoryboard Is Already Cost Competitive with European FBBMill Cash Costs, 4Q14, US Dollars/FMT, Indicated by World Region

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12

N. America Oceania Africa Asia Europe Latin America

Annual Changes in Chinese Boxboard Demand and Capacity, 2007-2018Thousand Tonnes

86%

88%

2 500

3,000

80%

82%

84%

2,000

2,500

76%

78%

80%

1,000

1,500

72%

74%500

70%02007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Change in Total Demand (L) Change in Total Capacity (L)g ( ) g p y ( )Overall Operating Rate (R)


Take Home Points

• China boxboard capacity has greatly outpaced demand, causing further imbalance in its internal marketcausing further imbalance in its internal market

• More than half of the 15 end-use sectors analyzed in this t d i di t l th th h th f t i dstudy indicate slower growth through the forecast period

• Virgin cartonboard will show relatively steady demand growth, but the supply surplus will exceed 2 million tonnes by 2015; thus, domestic producers will compete t i t h th i d t titito increase exports where their products are competitive


Take Home Points

• Recycled boxboard demand will continue to drag down overall growth and a larger demand and supply gap willoverall growth, and a larger demand and supply gap will lead to tougher market competition for both import and export grades, and more closuresp g ,

• The changes in domestic demand and supply fundamentals (by sub-grade and end-use sector) willfundamentals (by sub-grade and end-use sector) will lead to an increase in Chinese exports and supply side rebalancingg

• Increased exports will change global trade dynamics, which is demonstrated by our trade flow and costwhich is demonstrated by our trade flow and cost analysis (China’s export main destinations, export prices and firm strategy, regional import dependence, etc.)


Thank you for your attention!

China Boxboard Study For more information:

www.risi.com/chinaboxboard

Asian Paper Packaging ForecastsAsian Paper Packaging Forecastswww.risi.com/forecasts

Asian Paper and Paper Monitorwww.risi.com/appmHan Yao, RISI AsiaPhone: 86 13811064535 (Cell)

86 010 5730.6127Email: [email protected]

Office location (Beijing):RM1561 15/F Office Building A Parkview Green

16

RM1561, 15/F, Office Building A, Parkview Green, 9 Dongdaqiao Road, Chaoyang District, 100020, China

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