Source: Zhonghua Paper Media
[Policy opportunities in the pulp and paper industry]
Environmental protection forced industrial upgrading
From 2010 to 2015, paper mills with a capacity of 37.31 million tons were ordered to be shut down by government authorities due to environmental requirements.
The Chinese government plans to shut down 8 million tons - 10 million tons of backward paper production capacity during the "13th Five-Year Plan" period, mainly to eliminate enterprises that are currently discontinued or enterprises that do not meet the requirements of environmental protection. The Central Environmental Protection Inspection Team inspected the environmental protection situation in various places. It is expected that under strict law enforcement inspection, more than 100 enterprises will close.
Continued government intervention means that production lines that are less productive and use waste paper and non-wood pulp will be forced to close. As more and more modern machines replace this part of the backward production capacity equipment, the demand for wood pulp will continue to increase in the long run.
Supply side reform
Supply-side reform encourages quality improvement and efficiency improvement. It is estimated that some of the 2 million tons of imported paper will be gradually replaced by domestic production; the production capacity will remove zombie enterprises and free up market space for advantageous manufacturers; overseas consumption is expected to return, and China packaging paper will be driven The market is growing further.
“Belt and Road†policy
China's layout of the “Belt and Road†encourages superior production capacity to go out, which will drive a new market for global pulp consumption. In 2014, China exported 3.987 million tons of paper and paper products to the “Belt and Roadâ€; in 2015, China exported 1.222 billion US dollars of pulp and paper equipment, up 15.51% year-on-year.
[Determination of the development trend of China's pulp and paper industry]
Position in the global market: China remains the main driver
The demand for paper and paperboard in developed countries will continue to shrink in the future. It is estimated that by 2020, the annual growth rate of demand in the United States, Western Europe and Japan will be around -1%; while the demand for paper and paperboard in developing countries will continue to grow, China and Eastern Europe. The compound annual growth rate of countries such as Latin America and Latin America will be around 3% by 2020. Global paper and board demand is expected to grow by 27.24 million tons from 2015 to 2020, with 65% growth coming from China, which remains the main driver of global paper and board demand growth. It is estimated that from 2015 to 2020, the global demand for bleached commercial pulp will increase by 6.7 million tons, and 70% of the growth will come from China. At the same time, China's waste paper pulp demand will maintain a 3% growth from 2015 to 2020. As shown below.
China's paper production and consumption will continue to grow
Driven by economic development demand, China's paper production and consumption will continue to grow, but it will deviate from GDP growth. Thanks to online shopping and emerging logistics, packaging paper is the main driver of China's paper production and consumption growth. China's paper production is expected to continue to increase by 13 million tons by 2020, with 70% growth coming from packaging paper. As shown below.
The internal structure of China's paper industry will continue to be optimized
Paper quality continues to improve, high-quality products will continue to squeeze into the low-quality product market, and high-end paper types are beginning to squeeze into the low-end paper market. Differentiated, customized, and personalized products.
The growth rate of production is higher than the growth rate of consumption, which will encourage papermaking enterprises to promote the continuous optimization of the internal environment of the paper industry by eliminating backward production capacity, mergers and acquisitions, transformation and upgrading, and going global.
Corporate profits are polarized and concentration will continue to increase. The profitability of advantageous enterprises has been continuously enhanced, and mergers and acquisitions and cross-border development have increased. The environmental friendliness of the company has increased.
Chinese companies will be more involved in global competition
Since 2007, China has developed from a net importer of paper into a net exporter. From January to September 2016, China's paper exports increased by about 20% year-on-year. Excess production will continue to drive external sales, and overseas investment by Chinese pulp and paper companies will also increase.
In the future, the Chinese pulp industry will be in a serious form, and domestic non-wood pulp manufacturers will experience large-scale shutdowns.
The main expansion of global pulp is as follows. If new capacity is put into production on schedule, there will be a phased surplus in the supply of global broadleaf pulp in the second half of 2017. Wood pulp enterprises will be shut down and will increase, and domestic non-wood pulp manufacturers may experience large-scale shutdowns.
In the fourth quarter of 2016, China's imported waste paper and wood pulp market showed a gap in supply. The price of waste paper and wood pulp soared, and the spot price of broadleaf pulp rose by 30%. As far as the current imbalance between supply and demand is concerned, the situation of commercial pulp will remain good in the short term. In the first quarter of 2017, the price of wood pulp will continue to rise. Although the price of wood pulp has soared, the production of wood pulp and non-wood pulp in China has not increased significantly due to factors such as environmental protection and capacity constraints. Large fluctuations in exchange rates are currently the most important uncertainties in the wood pulp market.
In the fourth quarter of 2016, China's finished paper market was hot, and paperboard, corrugated paper and other paper types were in short supply. It is expected that China's finished paper will continue to be driven by rising raw material prices, depreciating exchange rates, eliminating backward production capacity, rising freight rates and inflation in the short term. Large fluctuations in raw materials are the most important uncertainties in the current cost paper market.
In short, China's total papermaking industry has entered a period of balanced development, and the internal structure of China's paper industry will continue to be optimized. China's paper production and consumption will continue to grow, but the growth rate is not as fast as GDP growth; thanks to online shopping and emerging logistics, packaging paper is the main driving force for China's paper production and consumption growth; Chinese companies' overseas investment will continue to increase; high-quality products will continue Tightening the market for low-quality products, high-end papers will crowd out the low-end paper market. Differentiated, customized, and personalized products will increase; corporate profits will be polarized and concentration will continue to increase. Advantageous enterprises have increased their profitability, mergers and acquisitions, and cross-border development; the environmental friendliness of the manufacturing process has increased.
Responsible editor: Ge
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