Paper360 - January/February 2018 - 37

the bottom line | GLOBAL MARKETS

Global Trade in Pulp and Paper
TEDD POWERS, FISHER INTERNATIONAL

Global trade is one of the most important issues in the pulp and
paper industry. While trade is a great opportunity for some, it is a great
threat to others. In some regions, domestic producers worry about the
impact imports will have on the profitability of their markets. For others,
finding new customers beyond their borders is a primary driver of growth
and increases the utilization of existing assets.
Many in the industry feel that global trade is more of a factor today than
at any time in history. But is that really the case? Figure 1 reveals that trade
in paper and paperboard grades as a percentage of production actually
peaked in 2004 and has been in decline ever since. Pulp exports, on the
other hand, have continued to grow and now represent about 30 percent
of all production.
The picture is not the same for all grades of pulp and paper. Figure 2
illustrates that truly global trade-that is to say, trade between regions (interregion trade)-varies widely among grades. For some grades, nearly all of
the production is shipped domestically within the borders of the country
of origin. Other grades are heavily exported to countries within the same
region (intra-region), while still others are readily shipped between regions.

Figure 1

Figure 2

$45

Figure 3

RESOURCES AND TRANSPORTATION
Why are some grades traded between regions so much more than others?
One of the most obvious reasons is the availability of natural resources. For
example, North America and Europe have an abundance of softwood trees
and over time have developed the capabilities to produce vast amounts of
bleached softwood kraft pulp. Conversely, Asia has very limited resources to
produce softwood pulp, so it relies heavily on imports from North America
and Europe. In some cases, necessity requires that products be moved from
where they can be made to where they are needed.
Transportation costs also limit the free flow of some grades between
regions. For example, tissue and towel products are very lightweight, so
shipping costs as a percentage of the value of the product is much higher
than for other grades. What modest trade that does occur in tissue and
towel grades is largely parent rolls, which may be shipped between countries
for converting.
Testliner, or recycled linerboard, is another grade that is rarely traded
between regions. Figure 3 shows that the average cost to produce testliner
in the lowest-cost region (North America) is only US$45 per ton less than
in the highest (Asia). Manufacturing cost differences among regions are not
enough to offset the transregional shipping costs. Indeed, very few mills can
be cost competitive outside their own region, so testliner producers have a
strong home court advantage.
While there is almost no inter-regional trade of testliner, its fresh fiber
counterpart, kraft liner, presents a completely different picture. More than 70
percent of global production is in the United States and most of that production stays in the US. However, the US exports nearly 4 million tons, most of
it traded inter-regionally, with European countries taking the largest part.
Figure 4 reveals that few North American suppliers can be considered
low-cost producers for kraft liner delivered to Rome, yet Italy gets more that
half of its 600,000 tons of kraft liner imports from the US for the simple
reason that Europe does not have enough tons available to meet all of the
Paper360º JANUARY/FEBRUARY 2018

37



Table of Contents for the Digital Edition of Paper360 - January/February 2018

Setpoint
Over the Wire
On the Journey to Injury-Free
2018 Outlook
Welcome to Scappoose
A Novel Synthetic Adsorbent for Pitch Control
TAPPI Journal Summaries
A New Resource for R&M Professionals
Reliability Interview: Steven Mjoen, Catalyst Paper
Leadership in Reliability & Maintenance
Global Trade and the Pulp and Paper Industry
TAPPI News
ASPI News
Advertisers’ Index
Paper360 - January/February 2018 - Intro
Paper360 - January/February 2018 - cover1
Paper360 - January/February 2018 - cover2
Paper360 - January/February 2018 - 3
Paper360 - January/February 2018 - 4
Paper360 - January/February 2018 - 5
Paper360 - January/February 2018 - Setpoint
Paper360 - January/February 2018 - 7
Paper360 - January/February 2018 - Over the Wire
Paper360 - January/February 2018 - 9
Paper360 - January/February 2018 - On the Journey to Injury-Free
Paper360 - January/February 2018 - 11
Paper360 - January/February 2018 - 12
Paper360 - January/February 2018 - 13
Paper360 - January/February 2018 - 2018 Outlook
Paper360 - January/February 2018 - 15
Paper360 - January/February 2018 - 16
Paper360 - January/February 2018 - 17
Paper360 - January/February 2018 - Welcome to Scappoose
Paper360 - January/February 2018 - 19
Paper360 - January/February 2018 - insert1
Paper360 - January/February 2018 - insert2
Paper360 - January/February 2018 - 20
Paper360 - January/February 2018 - 21
Paper360 - January/February 2018 - 22
Paper360 - January/February 2018 - 23
Paper360 - January/February 2018 - 24
Paper360 - January/February 2018 - 25
Paper360 - January/February 2018 - A Novel Synthetic Adsorbent for Pitch Control
Paper360 - January/February 2018 - 27
Paper360 - January/February 2018 - 28
Paper360 - January/February 2018 - 29
Paper360 - January/February 2018 - TAPPI Journal Summaries
Paper360 - January/February 2018 - 31
Paper360 - January/February 2018 - 32
Paper360 - January/February 2018 - Reliability Interview: Steven Mjoen, Catalyst Paper
Paper360 - January/February 2018 - Leadership in Reliability & Maintenance
Paper360 - January/February 2018 - insert3
Paper360 - January/February 2018 - insert4
Paper360 - January/February 2018 - 35
Paper360 - January/February 2018 - 36
Paper360 - January/February 2018 - Global Trade and the Pulp and Paper Industry
Paper360 - January/February 2018 - 38
Paper360 - January/February 2018 - 39
Paper360 - January/February 2018 - 40
Paper360 - January/February 2018 - 41
Paper360 - January/February 2018 - 42
Paper360 - January/February 2018 - TAPPI News
Paper360 - January/February 2018 - 44
Paper360 - January/February 2018 - ASPI News
Paper360 - January/February 2018 - Advertisers’ Index
Paper360 - January/February 2018 - cover3
Paper360 - January/February 2018 - cover4
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http://www.nxtbook.com/naylor/PPIS/PPIS0213
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http://www.nxtbook.com/nxtbooks/naylor/PPIS0312
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http://www.nxtbook.com/nxtbooks/naylor/PPIS0711
http://www.nxtbook.com/nxtbooks/naylor/PPIS0611
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http://www.nxtbook.com/nxtbooks/naylor/PPIS0311
http://www.nxtbook.com/nxtbooks/naylor/PPIS0211
http://www.nxtbook.com/nxtbooks/naylor/PPIS0710
http://www.nxtbook.com/nxtbooks/naylor/PPIS0610
http://www.nxtbook.com/nxtbooks/naylor/PPIS0510
http://www.nxtbook.com/nxtbooks/naylor/PPIS0410
http://www.nxtbook.com/nxtbooks/naylor/PPIS0310
http://www.nxtbook.com/nxtbooks/naylor/PPIS0210
http://www.nxtbook.com/nxtbooks/naylor/PPIS0110
http://www.nxtbook.com/nxtbooks/naylor/PPIS0609
http://www.nxtbookMEDIA.com