Tariffs and slowing economy add to China's pulp market uncertainty

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Rising tissue output, slowing growth for paper and board seen by new study

BOSTON, March 4, 2019 -- Where China leads, global markets follow – and the path ahead for its pulp and paper industry is uncertain. China's GDP expansion slowed markedly in 2018, pulp prices have moderated following the third-longest price runup in recent history, and new trade restrictions threaten to stifle demand for wood fiber and finished goods. Still, China's fundamentals will sustain growth in key segments over the next decade, finds Developments in the China Pulp Market: A Comprehensive Analysis and Outlook, a new Special Study from Fastmarkets RISI.

"The entire industry is asking whether it faces a pause in Chinese growth, or if the market is at the precipice of the next global recession and a collapse in demand," said David Fortin, Fastmarkets RISI Vice President for Fiber Markets and co-author of the study. "Our base case forecast assumes growth will resume, but many risks remain."

"Tissue and the grades used in hygiene products will be bright spots for demand over the next decade," said Fortin. "Meanwhile, production of graphic paper and other paper and paperboard could slow or even reverse, in some cases. This shifting end-use demand profile for pulp will reverberate throughout global pulp markets."

After a decades-long boom, China leads the world in both its consumption of market pulp and output of paper and board products. On the supply side, imported recovered paper (RCP) has been an essential input for Chinese manufacturers. Starting in late 2016, government restrictions on these imports shook the entire global supply chain for wood fiber.

"China has become increasingly reliant on imported pulp, due to the limited availability of economically viable fiber for domestic production. As a result, much of the country's fiber needs are met from RCP imports which the new import policies have restricted. This has created increased volatility within China and altered global trade flows of pulp and paper."

Learn more at risi.com/chinapulp

About Fastmarkets RISI

Fastmarkets is the leading price reporting, analytics and events organization for global commodities markets, including the forest products sector, as Fastmarkets RISI. Businesses working in the pulp and paper, packaging, wood products, timber, biomass, tissue, and nonwovens markets use Fastmarkets RISI data and insights to benchmark prices, settle contracts and inform their strategies worldwide. Along with objective price reporting and industry data, Fastmarkets RISI provides forecasts, analysis, conferences and consulting services to stakeholders throughout the forest products supply chain.

About Fastmarkets

Fastmarkets is the leading price reporting, analytics and events organization for the global metals, mining and forest products markets. Fastmarkets' core activity in pricing drives transactions in commodities markets around the world and is complemented by news, industry data, analysis, conferences and insight services. Fastmarkets includes brands such as Fastmarkets MB, Fastmarkets AMM, Fastmarkets RISI and Fastmarkets FOEX (previously known as RISI and FOEX, respectively). Its main offices are in London, New York, Boston, Brussels, Helsinki, São Paulo, Shanghai, Beijing and Singapore. Fastmarkets is a part of Euromoney Institutional Investor PLC, a listed company on the London Stock Exchange. Euromoney is a leading international business-to-business information group focused primarily on the global commodities, banking, and asset management markets.

Source: Fastmarkets RISI