"By 2011, Chinese consumption of graphic paper reached 27.6 million tonnes, averaging a demand growth rate of 1.5 million tonnes/yr since 2001. However, the end-use structures in China are dramatically different than those of other world regions. For example, books consume more paper than any other end-use in China, 40% of all graphic paper demand, and standards for newsprint and magazines are far different than in the developed world. These differences all affect the likely trends in graphic paper demand by grade in China," says John Maine, vice president of graphic papers at RISI.
RISI expects the proportion of each end use will change according to its 10-year forecast. Newsprint and paper demand for converting and specialties should decrease by about 5% each. Demand for office paper, books and magazines will be stable or edge up slightly. The most significant change will the share gain by commercial printing, considering China's healthy economy and advertising market.
Figure 1 - Trade forecast for Chinese graphic paper net exports by grade, 2009-2022 (thousand tonnes)
"Based on our analysis of this intricate end-use structure, we believe that although future growth rates for graphic paper demand could be less than half of historical levels as some markets begin to mature- China's increasing levels of economic activity, rising incomes, and increased educational demand will continue to support the overall growth of graphic paper," says Li Meng, economist for graphic papers at RISI and the lead author of this study.
There are three main reasons that RISI believes will slow demand growth. "First," adds Meng, "China's macroeconomic situation will slow the demand growth although there is still a healthy economic development environment. The Chinese government has slowed down its economic growth, which will influence the country's graphic paper demand as graphic papers are not necessities."
Second, according to Meng, population growth is very important to paper consumption in China. China's large population base, high literacy rate, rapidly developing roles in international business and low per capita consumption will support the gradual demand increase, but the declining population growth and working-age population will slow the rate of further increase.
Finally, rapid substitution of electronic-based media and communication/data storage has undermined demand for graphic papers in China, especially newsprint. "But, we believe its impact over the next 10 years will be less than what happened in the US and Europe in recent as per capita income in China is still low and the high sales price make the devices available only to people with higher incomes," Meng states.
How will future demand be sourced? "We believe the majority of the demand will be supported by domestic suppliers," Meng says. "China will export less to try to fulfill its domestic market first, but for some grades, China will shift back to being a net importer."
For example, the country will revert back to being a net importer of newsprint after being a net exporter since 2006. China is still a net exporter of printing and writing grades although net export volumes are projects to decline from the 2011 level of two million tonnes to only 365,000 tonnes by 2022, an annual decline rate of 14.4%
As for pulp, Meng adds that the assumption is that there is enough pulp in the market considering the existing and upcoming planned paper machines. "However, if China is short of fiber and the cost of imports is too high, then there will be a risk of overestimation for our demand forecast."
China became the world's leading graphic paper consumer and supplier after 2010. From 2001-11, total demand growth of graphic paper in China accounted for more than 80% of the world's overall positive growth and the country consumed almost 20% of global graphic paper in 2011.
Figure 2 - Per capita graphic paper consumption, 2011 and 2017 (kg/person)
But per capita consumption is still quite low compared with developed regions such as North America. Therefore, there is still room to improve demand. "We forecast China will dominate the demand growth of the world's graphic paper as usual in the next decade, but the growth will be slowed," Meng says. "Most importantly, China will focus on its domestic market, which means more imports and fewer exports. This will change the world's trade to some extent and will provide more opportunities for other offshore markets."
China's Influence on World Graphic Paper Markets in the Coming Decadeprovides a comprehensive analysis of China's end-use market structure and its projected impact on future graphic paper markets with a 10-year forecast period, as well as a detailed outline of Chinese commercial printing markets. This 316-page report has been compiled by RISI's expert economists, analysts and editors who are stationed throughout China and have been active in the Chinese industry for over 30 years. The RISI China team has contacts throughout the product chain and has a fundamental understanding of the culture and regulations that shape the industry.
China's Influence on World Graphic Paper Markets in the Coming Decadeincludes:
- 10 year forecast
- 5 year historical data
- End-use detail in 16 Chinese Graphic Paper Markets
- Regional distribution of end-uses in China by grade and by product
- Distribution channels for the major graphic paper grades
- Mill capacity, supply, and cost estimates
- Trends in China's world trade
- Pricing and profitability of graphic paper production in China
For more information on the study, visitwww.risi.com/chinagraphic;