Despite consistent growth of recovered paper (RCP) demand for over a decade, Chinese imports dropped by about 1 million tonnes in 2013. Imports are expected to decline gradually through 2018 due to slowing economic growth, sluggish paper and board demand, new government regulations and limited supply in the exporting regions. These and other key findings were released in a new study by RISI.
"Over time, fast-growing recovered paper demand and rising recovered paper prices have stimulated China's domestic recovered paper collection efforts. Now, as we see this trend continuing to grow, more paper and board is staying within the country for domestic collection," says Hannah Zhao, study author, and senior economist of recovered paper at RISI.
"The real Chinese paper collection rate was estimated to have reached 67% in 2013, with certain regions reaching close to 90%. Therefore, the domestic collection expansion will be limited and China will still continue to import a large amount of recovered paper over the next five years," continues Zhao.
IFPTA Journalconducted a follow-up interview with Zhao.
You talk about "new government regulations" Can you give an example and how it will affect the recovered paper market?
1) Regulation about domestic RCP collection: Some organizations in China are trying to get a tax rebate policy for domestically collected recovered paper. If domestic RCP suppliers get a tax rebate in the future, they will be able to sell their RCP at lower prices and still make a reasonable profit margin. Then this will impact China's demand for imported RCP.
2) Regulation on RCP imports: This is to control both quantity and quality. Last year, China instituted Operation Green Fence to control the quality of imported RCP. After Operation Green Fence ended, Chinese government has been planning to come up with some kind of new regulation to regulate RCP imports. If the new regulation is very strict with RCP imports, Chinese demand for imported RCP will certainly be affected.
Both the new regulations are in the discussion process and not finalized yet.
You also mention "limited supply" in the exporting regions. Will this supply continue to decline?
"Limited" means decline, flat or slow growth in supply. For Western Europe and Japan, the supply will be flat in the near term and decline in the medium and long term; For North America, the supply will grow but very slowly. Overall, the supply growth in the exporting regions will not catch up with the demand growth in the developing regions, so the developing regions will have to dig deeper into their own waste streams to collect more domestically.
Chinese domestic collections have reached relatively high levels. How much (actual tonnage) is collected? Are the programs run by the central government, the provinces or the individual municipalities? Although China will still continue to import a large amount of RCP, do you foresee the day when China will be self-sufficient?
Now, Chinese domestic collection is about 45 million tonnes. Most, if not all, Chinese collection is done by private collectors. As long as China continues to export a huge amount of consumer products, China will have to import a lot of RCP. I don't think China will become self-sufficient in 5-10 years.
Is there anything else you would like to emphasize about the report?
Although I forecast a decline in Chinese imports, China will remain the Number 1 RCP buyer and continue to play a key role in world RCP markets.
The China Recovered Paper Market: A Comprehensive Analysis and Outlookis the first independent and comprehensive study to focus on the recovered paper market in China. Covering demand, collection, trade and prices by region, it analyzes the top recovered paper suppliers and consumers in the country.
Companies analyzed in this study include:
APP China, Dalian Huanjia Group, Dongguan Jianhui, Guangdong Tianbao Renewable Resources Development Co., Ltd, JaAn Group, Jiangsu Paper Union Renewable Resources, Lee & Man Paper, Long Chen Paper, Nine Dragons Paper Industries, Shandong Chenming, Shandong Huatai Paper Grp, Sunshine Paper, Suzhou Baina Recycling Resources Company, Taison Group, Tianjin Xuyang International Trading Co., Ltd, Zhongnan (Tianjin) Renewable Resource Company.
The analyses inThe China Recovered Paper Market: A Comprehensive Analysis and Outlookincludes:
- 5-year demand, collection, trade and price forecast for China as a whole and by region
- Overview of Chinese recovered paper demand growth and its drivers
- Analysis of China's domestic recovered paper collection and whether it will catch up with demand growth
- Expectations on where Chinese recovered paper imports will come from
- Overview of regulations and government policies on recovered paper usage, collection and trade
- Up to 17 years of historical consumption, production and trade data.
For more information on this study, visitwww.risi.com/chinarcp.