China is getting stuck with paper?

The shortage of waste paper raw materials has indirectly affected enterprises in the entire paper industry chain, reducing their bargaining power to upstream enterprises, and it is a huge challenge for enterprises specializing in the production capacity of waste paper raw materials. They either compete with the same type of paper enterprises at high prices for domestic waste paper raw materials, or adjust the production line to adapt to the changing demand of raw material supply, or directly withdraw from the market.

And non-wood pulp.

In addition to wood pulp and waste pulp, non-wood pulp is made from other non-wood plant fibers, and there are mainly three types of non-wood pulp: grass fiber raw pulp (such as straw, bamboo, bagasse, etc.), bast fiber raw pulp (such as hemp, kenaf, flax, etc.) and seed wool fiber raw pulp (such as cotton fiber, etc.).

China is the world's largest non-wood pulp production country, has a lot of non-wood pulp raw material resources, but due to the poor quality of non-wood pulp fiber, need to be mixed with wood pulp to obtain better quality paper products, and non-wood pulp from the raw material to extract fiber process, requires a higher level of technology and chemical agent costs, so the cost performance is low. In recent years, under the impact of foreign wood pulp and waste pulp, the proportion of non-wood pulp raw materials has not been high.

The contradiction between the supply and demand of raw materials in China's paper industry comes not only from the basic reality of resource shortage, but also from the impact of industrial supply changes caused by the improvement of environmental protection requirements.

In addition, with the easing of the epidemic, the economic recovery is expected to rise, and the cost of world shipping has gradually risen. The blockage of the Suez Canal by the "Long Gift" cargo ship on March 23 this year also had a certain disturbance to the price of pulp, a raw material that has long relied on imports.

03 Crisis is everywhere

The price of paper products, seemingly ordinary industrial changes, there are many geopolitical factors behind the impact.

China imports wood pulp from more than 30 countries and regions in the world, more than 90% of the wood pulp from these 8 countries: Canada, Brazil, Indonesia, the United States, Chile, Finland, Uruguay, Russia.

China's rapid development in these years has attracted the envy of some countries, led by the United States, Western countries continue to use economic policies to suppress China, as we all know, such as making restrictions on China's imports of chips, lithography machines and other high-tech products, but many people do not know is that in the non-high-tech but also dependent on imports in the field, will still be the "neck" threat.

Coniferous pulp is a wood pulp raw material with high fiber quality, and its main supply countries are Canada, the United States and Finland, and it is also a country with more trade friction with China, and the supply is a security threat.

StoraEnso, Finland's largest pulp and paper manufacturer, decided to stop supplying raw materials to Xinjiang after the South China Morning Post mentioned that most of the chemical wood pulp used in Xinjiang comes from Finland, according to Finland's Yle radio.

Although Stora Enso did not directly respond to whether the decision was related to the previous BCI boycott of Xinjiang cotton, in the South China Morning Post report, the Xinjiang factory with Stora Enso is close to the foreign media rumors of "forced labor camps." 

In 2020, Canadian coniferous pulp exports to China decreased by 32% year-on-year in a single month. According to the data from January to February this year, the proportion of coniferous pulp in Canada continues to decline.

But there is another country that can provide a lot of coniferous pulp and maintains good and stable diplomatic relations with our country: Russia.

In 2020, Russia exported more than 1.14 million tons of conifed pulp to China, an increase of more than 250,000 tons year-on-year, and the annual import of Russian pulp from Manzhouli by China-Europe freight train has reached 448,000 tons. In addition, the Russian Ilim Group and Xiamen C&D Paper signed a four-year supply of base paper and pulp agreement, which can obtain 300,000 tons of base paper and 180,000 tons of pulp raw material supply every year.

For countries that supply broadleaf pulp, China generally has good diplomatic relations, but these countries generally have a low level of economic development, and the prevention and control level in this epidemic is not high, which affects some pulp production capacity. For example, Chilean pulp giant Arauco announced in March that it had temporarily suspended production due to employees infected with the novel coronavirus, and projects under construction had also been halted.

Under the epidemic, the construction investment of new capacity in many countries has been forced to put on hold, which may lead to a decline in capacity supply in the next year.

China Harbour Indonesia is the contractor of the supporting pier of the OKI pulp Mill, and is also one of the Chinese enterprises that helped the bottom people fight against the "epidemic" after the outbreak of the new coronavirus pneumonia in Indonesia. In the early stages of the epidemic, China Harbor distributed personal epidemic prevention materials to the surrounding people, which mitigated the impact of the epidemic to a certain extent, and enabled the project to be completed smoothly during the epidemic.