China continues facing near-term overcapacity of paper; main industry challenge is environmental sustainability, including water concerns, Chinese industry executive tells Hawkins Wright/BWPA audience in London

Diane Keaton

LONDON , November 13, 2012 (Industry Intelligence Inc.) – The following report is from a speech presented at the thirteenth annual British Wood Pulp Assn./Hawkins Wright Symposium on Nov. 8 during London Pulp Week. The five speakers specifically addressed the global economy, trends in fine paper and tissue, the outlook for market pulp, Chinese pulp and paper trends, and the future of the print medium. Industry Intelligence has posted reports today on each of the five presentations.

Haidong Weng, head of strategic planning at Xiamen C&D Pulp & Paper Co. Ltd. in China, said China is challenged by near-term overcapacity of paper, an increasing fiber deficit, and environmental sustainability pressures.

C&D is a marketer and supply chain operator of forest, paper and pulp; it also operates a bamboo-based pulp mil, and more projects are proceeding.

Weng said China’s paper production and consumption growth rate is targeted at 4.6% year-over-year or an increase of about 23 million tonnes/year from 2011-2015 but that this will be strictly controlled by the total emission and area distribution.

There will be 10 million tonnes of old pulp and paper capacity closed during China’s 12th Five-Year Plan, which began in 2011, he said.

The plan’s goal is to increase forest coverage by 1.3% and forest stock by 6%, decrease water consumption, implement more pollution control systems and pollution recycling systems, and encourage domestic forest and paper integrated projects and overseas investments, he said.

The environmental sustainability pressure is critical, with wastewater a primary concern, Weng said. The pulp and paper industry’s discharging of chemicals contributes less than 1.5% of China’s product value but it is No. 1 in wastewater and COD pollutants discharge, he said. Looking at the country’s water “risk profile,” 62.9% of China’s pulp and paper industry is in the high-risk area, he said.

Weng said paper consumption in China from 2007-2011 rose by 2.48% year-over-year but that Chinese are reading less on paper and more online. This is resulting in a decline in newspaper and magazine demand but an increase in demand for digital books and other media, he said. However, the domestic consumption of packaging is increasing.

China’s paper capacity has grown by almost 10 million tonnes in three years, Weng said. Total tonnes, in millions, for different sectors in 2010 (2011-203 expansion in parentheses) are as follows: tissue—6.2 (2.55); uncoated woodfree—16.2 (1.9); coated woodfree—6.4 (2.15); and ivory board—3.8 (3.1). Given the oversupply and price and profit margin pressure, it will take years to rebalance, he said.

At the same time, China has a growing fiber deficit of 14.5 million tonnes of pulp, 27.3 million tonnes of recycled paper, 6.6 million bone dry metric tons (BDMP) of woodchips, 22 million m3 of lumber, and 42 million m3 of logs.

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