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Global old corrugated container (OCC) demand and supplies will tighten again in the medium-term as China’s hunger for recycled brown pulp (RBP) imports rises, Fastmarkets’ Director of Fiber Hannah Zhao said on Nov. 9 at Fastmarkets Forest Products’ International Containerboard Conference (ICC) in Chicago.
Despite China’s ban on global recovered paper imports that went into effect at the start of 2021, China will continue to dominate global recovered paper markets through imports of RBP, and paper and board. Rebounding containerboard output will drive Chinese recycled fiber demand up in 2023-24, Zhao said.
At the same time, recycled containerboard capacity will continue to boost US and European domestic recovered paper demand as well, Zhao said.
Zhao talked through the effects the Covid-19 pandemic played on global recovered paper markets, from e-commerce shifting the supply of corrugated boxes from the commercial sector to the residential sector, to the slowed demand from Asia and US that reduced exports of US recovered fiber. Restrictions, lockdowns, and downtime due to the pandemic have subsided across the globe, save for in China where these rules remain.
She wrapped up the recovered fiber-focused session by highlighting the continual additions of recycled-fiber-based containerboard capacity, and the potential addition of recycled pulp projects, especially for the US.
Recycled fiber will remain a very important fiber source for China.
Yet, China’s growing demand for wood imports, and its focus on virgin products also are ongoing. “China increased its virgin fiber use a lot,” Zhao said.
Watch/read our exclusive interview with Hannah Zhao on the three things to watch in the global recovered fiber trade for 2023 here.
About 35 million tonnes of wood pulp capacity are anticipated to come online in the coming years in China. For non-wood pulp capacity, about 6 million tonnes are expected to be added.
China will rely “heavily” on wood chips to make these projects happen. Zhao, though, questioned both where the wood chip supply would come from, and whether the 35 million tonnes would really ramp up as announced.
“How much of the 35 million tonnes of wood pulp capacity will really start up?” Zhao asked.
There is no question that demand for paper packaging and recycled fiber from China has been sluggish in the second half of this year, Zhao noted.
Further, slowing demand for goods from Europe and North America also helped calm paper packaging demand, and ultimately, OCC demand in Asia. A slower paper packaging sector saw softening domestic demand in North America as well.
“Production of paper and board grades relying heavily on recovered fiber fell in 2018 to 2020 and in 2022, particularly containerboard,” Zhao highlighted.
For the first time since recycled pulp started trading in 2019, China’s buying has fallen this year. China’s imports of global recycled pulp dropped by 7.8% year-over-year in the first eight months of this year, compared with growth of 171% in 2020, and of 30% in 2021.
From non-China Asia, recycled pulp imports fell by 8.3% during the same period.
From the US, though, imports increased 15.3% during the same period. Zhao explained that without packaging demand like the strong buying patterns in 2021, US mills that are capable of swinging between producing packaging grades and recycled pulp switched to the latter, upping exports of recycled pulp in the first eight months of this year vs one year ago.
“In the medium-term, China has to import much recycled pulp to get enough recycled fiber,” Zhao said.