Australian ‘Kraft’ paper and board prices continue to climb

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Having hit an all-time high in January (AUDFob1,116/t), Australian Kraftliner export prices have barely receded since and remain at historic highs, while export volumes have hardly missed a beat. The situation is similar for Sack Kraft, exports of which are smaller but higher priced. Sack Kraft prices are yet to reach their historic peaks, but are ramping up very quickly, with little prospect of any moderation in an inflationary environment.

A great deal of attention is paid to the price of imports and the price Australia receives for its base commodity exports – think of iron ore and coal. There is a lot less attention paid to the price of some of the nation’s highest value exports, including the nation’s packaging papers.

That should probably change, as the chart below demonstrates. Kraftliner exports year-ended April 2022 earned Australia a little more than AUD414 million in value-added export income, while the Sack Kraft exports delivered AUD55.5 million. Closing in on a half-billion dollar export trade is nothing to be ignored!

 

Kraftliner & Sack Kraft Exports: Jan ’18 – Apr ’22 (tpm & AUDFob/t)

Source: ABS derived and IndustryEdge

 

Tonnes

YE Apr ’21

YE Apr ’22

% Change

Kraftliner

410,394

416,721

1.5%

Sack Kraft

45,817

44,671

-2.5%

AUDFob/t

Apr ‘21

Apr ‘22

% Change

Kraftliner (AUDFob/t)

$856

$1,068

24.7%

Sack Kraft (AUDFob/t)

$910

$1,506

65.5%

 

It remains astounding, but Australia’s Kraftliner exports are delivered to around one-third of the world each year. Most years, a little more than sixty countries receive Australian Kraftliner, with the most recent year being no exception.

There is no feasible way to display all the countries, so the chart here shows the top six and ‘Other’.

 

Australian Kraftliner Exports by Country: Jan ’18 – Apr ’22 (tonnes)

Source: ABS derived and IndustryEdge

 

Tonnes

YE Apr ’21

YE Apr ’22

% Change

Bangladesh

44,931

41,093

-8.5%

China (Mainland)

97,004

82,191

-15.3%

New Zealand

90,838

87,286

-3.9%

Philippines

22,512

40,251

78.8%

South Africa

23,869

42,874

79.6%

USA

42,459

45,221

6.5%

Other

88,781

77,804

-12.4%

Total

410,394

416,721

1.5%

 

The contrast in main recipient countries is relatively stark: New Zealand on the one hand and Mainland China on the other. The first is largely integrated trade, the latter is part of the pure market play that high quality Kraftliner allows.

Turning to price, at an average AUDFob1,068/t in April 2022, Kraftliner exports are 24.7% higher priced than a year ago, as the table here shows for the main countries.

 

Australian Kraftliner Export Prices: Selected Countries: Apr ’21 v Apr ’22 (AUDFob/t & %)

AUDFob/t

Apr ’21

Apr ’22

% Change

Bangladesh

$778

$1,243

59.7%

China (excluding SARs and Taiwan)

$853

$945

10.7%

New Zealand

$914

$969

6.0%

Philippines

$802

$1,169

45.7%

South Africa

$707

$955

35.1%

United States of America

$847

$1,033

22.0%

Weighted Average

$856

$1,068

24.7%

Source: ABS derived and IndustryEdge

 

 

High value sack kraft keeps kicking export goals

Unlike Kraftliner, exports of Sack Kraft were stable over the year-ended April, down just 2.5% to 44.7 kt, but with an average price that is roaring up toward record territory. Manufactured at only one facility in Australia, exports of Sack Kraft are essentially limited by production less any local sales. As with Kraftliner, exports make their way around the world, so here presented are the top seven countries and a large ‘Other’ which year-ended April accounted for thirty-eight countries.

 

Australian Sack Kraft Exports by Country: Jan ’18 – Apr ’22 (tonnes)

Source: ABS derived and IndustryEdge

 

 

YE Apr ’21

YE Apr ’22

% Change

China (Mainland)

    11,752

      2,447

-79.2%

Malaysia

      3,923

      4,921

25.4%

Mexico

      1,295

      3,031

134.1%

New Zealand

      3,466

      3,208

-7.4%

Pakistan

      6,621

      6,094

-8.0%

Saudi Arabia

      1,554

      2,754

77.3%

United Arab Emirates

      7,037

    10,426

48.2%

Other

    10,171

    11,791

15.9%

Total

    45,817

    44,671

-2.5%

 

Patterns are a little harder to discern with the Sack Kraft exports than for the Kraftliner trade. However, the Middle-East is a clear stand-out region and one that has proved resilient and lucrative, albeit challenging from time-to-time.

Again, price tells a story. With the exception of New Zealand, where contract pricing is likely dominating, Sack Kraft export prices have exploded over the last year, with the average price from April 2021 to April 2022 lifting a remarkable 65.5%.

 

Australian Sack Kraft Export Prices by Country: Apr ’21 v Apr ’22 (AUDFob/t & %)

AUDFob/t

Apr ’21

Apr ’22

% Change

China (Mainland)

$903

$1,515

67.8%

Malaysia

$945

$1,465

55.1%

Mexico

$833

$1,392

67.2%

New Zealand

$1,194

$1,204

0.9%

Pakistan

$856

Saudi Arabia

$1,658

United Arab Emirates

$869

$1,589

82.9%

Weighted Average

$910

$1,506

65.5%

Source: ABS derived and IndustryEdge

 

Packaging is big business and by price and value especially, for Australia, it is also a growing business.

This item was first published in Edition 204 of Pulp & Paper Edge in June 2022

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