Trends to Track in the Paper Market
The U.S. mills and merchants are down-playing its significance, but if it is true, these printers may have a potent weapon by offering their customers a low-cost option.
As far as its quality and run-ability, I have heard mixed results from printers. One had problems, one didn’t, and most haven’t tested it. The paper should run well, as the Chinese have been making paper for thousands of years. Most Chinese paper is 60# and higher because the vast majority of it is for the sheetfed market as opposed to web.
In the 2005 American sheetfed market, Asian papers consisted of approximately 1.2 million tons of coated freesheet, of which only 24 percent came from China. Total uncoated freesheet was approximately 60,000 tons, again only 22 percent to 25 percent being from China.
John Howell, Horizon Paper, believes that the Asian product is one of several factors that has kept the coated freesheet market depressed (lower prices), but doesn’t think it will be a huge factor. “Their costs of production (slowly increasing) and delivery (greatly increasing) will prevent them from going too low,” he says.
It is no secret that China plays by different rules, as its mills receive non-tariff protection, which is expected to continue for a while. China openly encourages its largest companies to go global, and there has been considerable progress in needed modernization of many facilities. Also, Chinese mills are not restricted to the same environmental regulations to which their North American counterparts adhere.
But there still is concern about whether China’s strategy can sustain a strong and modern paper industry. Can China meet the energy and water demands needed to produce large volumes of paper given its current restrictions in the supply of both?
Another inherent problem with making pulp and paper in China, unlike in North America, is a shortage of renewable and harvestable tree plantations. Much of China’s pulp is obtained in neighboring countries, where the forests are already suffering adverse effects, and from recycled fibers. China has a huge appetite for recycled fibers as it currently consumes about 60 percent of all internationally traded waste paper. The fear is that it may lead to lower supply and higher prices for reclaimed pulp.