China's Pulp Demand Growth to Stabilize

The importance of China in the global pulp market has continued to increase in recent years, with strong demand growth taking China’s pulp consumption share from around 15% to around 30% (combined hardwood and softwood) over the past ten years. Price movements in other regions are now mainly driven by dynamics in China. Consequently, it is crucial for the rest of the global pulp market to understand what is happening in China.

Report summary

“Rabobank estimates that 35% of Chinese pulp demand is generated by the P&W paper sector,” says Andrés Padilla, analyst at Rabobank. “Tissue production represents 28%, virgin boxboard around 15%, and speciality papers 12%. These four components account for the bulk of pulp demand in China (90%). Each of these sectors has different dynamics, and understanding them is key to understanding how overall pulp demand might perform.”

Despite announcements by Chinese mills for new domestic investments, the country is set to remain dependent on pulp imports to supply 60% of its demand going forward. Rabobank expects pulp demand to gradually bounce back in late 2019 and throughout 2020 in China.