Where will China get the recovered paper to meet its fast growing demand?

BEDFORD, MA, Sept. 20, 2010 (RISI) - I spent the past few weeks traveling in China, trying to dig up more information about the Chinese recovered paper (RCP) market. During my trip, I visited quite a few local and international recovered paper suppliers, traders and users. The questions that I was most often asked is where will China get the RCP to meet its fast growing demand in the long run and is there enough global RCP supply to meet Chinese demand? To answer these questions, we have to look at the stories from both the demand and supply sides.

Chinese recovered paper demand increased 15% annually during 2001-2009, reaching about 62 million tonnes in 2009. Over the same period, the Chinese recovered paper utilization rate increased from 53% in 2001 to 71% in 2009, while the world average level was only 56% in 2009. In our view, China will continue to be the major force generating growth in demand for recovered paper in the world, due mainly to the further expansion of recycled-based paper and board capacity. Chinese RCP demand will keep growing with the increasing paper and paperboard output and higher recovered paper utilization rate, although the growth rate of RCP demand will slow down.

The story from the supply side is a little more complicated. As for the developed world, the supply of recovered paper will be limited as a result of soft paper and paperboard consumption. The already high paper recovery rate also indicates that there will be little space for recovered paper generation to grow in the developed regions. Consequently, it appears that China may have to learn to feed itself. In our view, this is not impossible.

Hannah Zhao, Economist, Recovered Paper, works out of RISI's Bedford, Massachusetts, USA, office. She can be reached at tel: (781) 734-8969 or by email:hzhao@risi.com

This is an excerpt from a full story that is available in RISI's Pulp & Paper News Service.