What is the future of virgin fiber in China?

We look at some of the consequences following China’s ban on recovered fiber imports

Over the last few years, the global pulp market has become more volatile. Some of its end-use sectors struggled during the pandemic and the shift to digital in 2020, along with supply-side disruptions related to global logistics and delays in new capacity expansions, tightened the market in 2021.

During this time, there have been many changes to the pulp industry for China. The most dramatic change in overall fiber furnish shares is the swing away from recovered paper to virgin pulp. The country’s ban on recovered fiber imports has created a significant fiber shortage. Several large and mid-sized containerboard companies are evaluating their alternatives, and concerns over finding enough fiber furnish is increasing as companies continue to start up additional new paper capacity.

A new wave of investment in Chinese virgin pulp

This has triggered a wave of large-scale investments in the virgin pulp sector. The market pulp price rally that began in 2021 also aroused growing interest in integrated pulp projects. Many Chinese paper companies have unveiled aggressive expansion plans for new virgin pulp capacity in China, spurred on by a more favorable investment environment and supporting policies from provincial governments.

Our tracking of expansion plans shows more than 90 pulp lines with about 40 million tonnes of potential new capacity announced in the past four years.

The dynamics of the Chinese virgin fiber markets

These developments have sparked a number of questions. What has happened to Chinese pulp consumption and what might happen in the future? What challenges and implications do these developments and the changes in China’s policy pose to the pulp industry? How will the ambitious pulp expansion plans impact the supply/demand balance in the market?

To better understand the dynamics of the Chinese pulp industry, and to explore the influences and opportunities for Chinese paper producers and pulp suppliers, Fastmarkets RISI has recently released a new study, Dynamics in Chinese Virgin Fiber Markets.

The report, which is available now, provides an overview of changes in Chinese virgin pulp end uses and a five-year outlook for the industry. It places particular focus on the influence of the recycled paper imports ban on virgin fiber. It links the forecast for paper and board production to fiber demand and pulp production by starting with recent developments and the outlook for virgin fiber furnish in China.

The report presents details of new projects within China, including analysis of wood and nonwood fiber availability in the country. In addition, because government policy clearly has a central role in determining the course of development of the industry, it explores recent policy developments.

If you are interested in learning more about this upcoming study, please feel free to request more information.

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