Pulp, paper and panel products set for solid future

18 December 2002

Exports of pulp and paper products look set for steady but unspectacular growth over the next four years according to the Ministry of Agriculture and Forestry’s latest forecasting report. Exports of wood panels, however, are expected to continue the good growth seen over the last couple of years.

The Situation and Outlook for Agriculture and Forestry (SONZAF) December 2002 report says export volumes of all three products are projected to remain steady over the medium term, with prices expected to be softened by a strengthening New Zealand dollar.

The report looks at the current 2001/02 season and reports:

  • Wood pulp production for the year ended March 2002 was 3.51 million cubic metres – down six percent on the previous year.
  • Export volumes, however, rose 13 percent to 783,000 tonnes. Exports were able to rise, despite the production drop, because imports rose (thus displacing product), and stocks were reduced by 12 percent.
  • Total paper and paperboard production rose slightly to 847,000 tonnes, while exports were 510,000 tonnes – an increase of ten percent.
  • Exports of wood panels (mainly medium density fibreboard – MDF) rose by three percent to 868,000 cubic metres and were valued at $515 million – up one percent.
  • Japan remained the number one market for wood pulp (32 percent by volume) followed by China (22 percent) and Australia (15 percent).
  • The main market for paper was Australia (47 percent), China (18 percent) and the Philippines (seven percent).
  • The United States MDF market jumped 118 percent in value to $42.8 million, but Japan was still the largest market at $112 million.
  • Export prices for pulp dropped sharply by 23 percent to $655/tonne, but are expected to recover over the medium term. The unit price for paper and paperboard (excluding newsprint) fell by 11 percent and prices for MDF (the main panel export product) dropped three percent on the previous year.

Looking out to 2005/06, the report projects:

  • Production of pulp is expected to remain at around 1.6 million tonnes and pulp exports are expected to maintain a steady but unspectacular rise in volume of around one percent a year across the forecast period.
  • Export volume growth of paper and paper products is expected to reflect only small year-on-year increases.
  • Wood panels, mainly MDF, plywood and laminated veneer lumber will show strong export volume growth during the period, with demand for the latter two products strong from Asia due to building activity. Japanese demand for MDF is projected to remain solid.

In the longer term, the report notes a number of new factors that could influence developments.

As the volume of harvestable wood increases, and production of lumber and logs rises, the increase in residuals (pulp logs and sawmill residues) could prompt further investment in reconstituted wood products. New Zealand radiata pine makes good MDF and there could be further development around these products in the future.

International developments in creating environmentally friendly mills could greatly assist new mills in meeting New Zealand’s stringent environmental requirements.

The feedstock that the pulp, paper and panel industries use could, however, also be sought for a burgeoning bio-fuels industry, encouraged by the implementation of the Kyoto protocol processes. This may negatively impact on expansions in the reconstituted wood products sectors of pulp, paper and panels (principally MDF and particleboard). On the other hand, development of a viable and sustainable bio-fuels industry could give wood producers an alternative market for their residual product in times of low prices for pulp, paper and panels.

For further information, please contact:

John Eyre, Senior Policy Analyst, MAF Policy

Contact MPI

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