outlook for the asian graphic paper market · • co-author of the monthly asian pulp & paper...

Outlook for the Asian Graphic Paper Market

Dr. Li MengEconomist, Asian Graphic Paper

RISI Asian Conference

May 2017

© Copyright 2017 RISI, Inc. | Proprietary Information

2

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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3

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

4 4© Copyright 2017 RISI, Inc. | Proprietary Information 4

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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


7

-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


8

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


$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


11

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


12

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


13

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


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.


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


18

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


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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


20

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


CWF Net Exports Will Increase Gradually and Absorb Some of Regional Excess Supply


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



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


$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


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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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