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Packaging Bonanza as One Child Policy Ends

The end of China's one-child policy herald's the beginning of a baby boom in the world's most populous nation. Estimates lead to expectatsions of 6 million additional births per year, from 2017, for at least a decade.

With an average 34% of Chinese family expenditure in the first five years of a child's life being on milk products, including milk powder and baby formula (and hasn't that been in the news lately), New Zealand and Australian milk exports will rise.

 

The biggest winner - globally - is expected to be New Zealand. Milk powder is already New Zealand’s largest export, China its largest market and Fonterra, New Zealand’s largest export income earner.

Practically all milk powder and milk products are exported in fibre packaging, including bags and sacks, as well as corrugated boxes, most of which are made from virgin fibre, for strength reasons.

As milk product exports grow, so too will the packaging materials in which they are exported. 

Production expansion in the region, to meet the new demand, is possible. Industrial grade bag and sack expansion is already underway, with both Oji Fibre Solutions (formerly Carter Holt Harvey Pulp, Paper & Packaging) and Orora currently building their production capacity for supply to New Zealand’s dairy industry.

Supplier opportunities, throughout the value chain of both the dairy and packaging industries will be significant.

This is an edited extract from the November edition of the monthly  Pulp & Paper Edge. More detailed analysis, including latest market data and intelligence is available exclusively to subscribers.

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Australian Paper Consumption to Rise 4.9% by 2020

Latest research and analysis by IndustryEdge demonstrates that Australia's consumption of paper and paperboard will increase by a total 4.9% over the five years to 2020. The 157,000 tonne increase in consumption is reported in the 24th annual edition of the Pulp & Paper Strategic Review, which we have just published.

However, that aggregate consumption increase is not uniform across the major grades of paper and paperboard. Indeed, almost all forecast growth will be provided by increased consumption of packaging and industrial papers and printing and communication papers. The growth in packaging and industrial papers is unsurpirising, but the forecasts continue to throw up surpirses when it comes to printing and communication papers. After all, they are under pressure from digital media and communications technologies. Yet still, they demonstrate, in total at least, some resilience.

For the first time, the Strategic Review includes forecasts for consumption and demand in New Zealand, as well as Australia and also includes new 'snapshot' graphics for each major sector for both Australia and New Zealand.

Over the  five year period to 2020, New Zealand's aggregate consumption of paper and paperboard will grow 4.3%. As with Australia, consumption growth will not be uniform across the paper grades, with packaging and industrial papers again set to dominate.

The Strategic Review details forecasts for both Australia and New Zealand, covering newsprint, printing and communication papers (Broken down to major grade level for Australia), tissue and tissue products and packaging and industrial papers.

Because the forecasts are strict econometric regressions, IndustryEdge has also included commentary that provides current industry context.

To examine a sample of the Strategic Review, as well as the full Table of Contents and Lists of Charts and Tables, click here.

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ABC Tissue Announces Manufacturing Expansion – EXCLUSIVE

Melbourne, 16th October 2015: Published today in the subscriber only Pulp & Paper Edge, from Australia’s only dedicated paper, products and fibre supplies market analysis and intelligence service, IndustryEdge.

ABC Tissue, the manufacturer of Australia’s market-leading Quilton toilet paper brand has announced it will expand, renovate and further integrate its manufacturing base in Australia. Once completed, its development program will make it the largest tissue manufacturer in the region.

Based on the information supplied by the company, IndustryEdge’s estimate is that by the end of 2017, ABC Tissue’s manufacturing capacity will almost triple and will be close to 140,000 tonnes per annum, equivalent to approximately 50% of Australia’s demand and 40% of combined demand for Australia and New Zealand.

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Carter Holt Harvey, Oji and the Australasian Fibre Advantage

In this month’s edition of our flagship Pulp & Paper Edge (Edition 122, August 2015), we published an interview with Dr Jon Ryder, the CEO of Carter Holt Harvey Pulp, Paper & Packaging (CHH PPL). Now under the ownership of the Japanese based but global Oji Paper Holdings and its partner INCJ, the reinvigorated CHH PPL seems to be experiencing a renaissance that is worth understanding.

It was an interview, so IndustryEdge will allow Dr Ryder’s comments to speak for themselves.

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Mid-Rise Apartments Right for Wood & Timber Building Systems

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In a busy week for the IndustryEdge team, we delivered three significant presentations, on completely different topics.

First, on Monday, we delivered some detailed preliminary research findings on polymer-coated fibre packaging. We will have more to say about this in future months.

Second, on Tuesday, we presented material on mid-rise apartment developments and wood and timber building systems at a fantastic symposium organised by the Australian Forest Products Association (AFPA), Forest & Wood Products Australia (FWPA), ForestWorks and the Australia Timber Importer’s Federation (ATIF). We will say a little more about this shortly, as it was the stand out event of a highlight filled week,

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China Deal Offers Nothing for Wood Products Sector

The recently signed China Australia Free Trade Agreement (ChAFTA), still to be progressed through the Australian Parliament, offers little for the wood products sector, reducing few of the important tariffs for Australian exports to China.

Imports to Australia, from China, are now tariff free, almost without exception. In exchange for free access to Australia’s market, China has granted Australian firms limited access to its markets, with few products enjoying entry into China on a tariff free basis.

In the case of wood product exports to Australia, there are essentially three groupings of tariff amendments (although the details are more extensive):

  • Zero tariffs remaining in place
  • Existing tariffs reducing to zero
  • Existing tariffs remaining in place
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Australian Forest Harvest – 22.9 Million m3 in 2014

Australia’s total harvest was 22.9 Mm3 in 2014, up marginally from the prior year. But as the 2015 edition of the Forest & Wood Strategic Review demonstrates, not all species and sectors are experiencing growth.

As expected, the softwood harvest, dedicated to solid wood production, grew, as did the plantation hardwood harvest, which is focussed on the international pulpwood market.  This can be seen in the following chart from the Strategic Review.

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March Woodchip Exports Expected to be Highest Ever

It now appears certain that when the formal trade data is released in early May, Australia’s woodchip exports for MQ’15 will approximate 1,530 kbdmt, just above the record set in DQ’14.

At an estimated 640.8 kbdmt, March 2015 will see the highest ever level of monthly woodchip exports from Australia. This is just 11 kbdmt less than our early projection for the month, made last month.

Aided by the depreciation of the Australian Dollar, Australia’s exports of woodchips are almost at full speed. Any faster and the risk of delivery failures would be relatively high.

Coated sheet imports tumble

Recent months have seen imports of a number of advertising and publishing grades fall for short periods, before recovering soon after. In particular, this has impacted the coated woodfree grades and sheeted products in particular.

While the impact has been significant in the large volume C2S 150 gsm sheeted grade is not subject to restrictions and provides a very useful example. The last twelve month’s imports are displayed in the following chart.

2013-14 - Australian Woodchip Exports Climb to 4.8 Mbdmt

Geelong: 14.54, Tuesday 5th August 2014
Australian woodchip exports for 2013-14 year climbed to 4.796 Mbdmt in 2013-14, up 26.0% on the prior year.
Data released today by the Australian Bureau of Statistics (ABS) confirms predictions and estimates by <em>IndustryEdge</em> that total wood chip exports would rise to around 4.8 Mbdmt for the year.
Hardwood chip exports totalled 4.223 Mbdmt for the year, while softwood chips reached 0.573 Mbdmt.