Australia’s pulp imports lifted 7.0% in 2020
Australia’s total pulp imports lifted a healthy 7.5% (21.4 kt) in 2020, rising to 307.4 kt, just marginally below the annualised peak recorded in mid-2018.
In December 2020, monthly imports softened to 21.9 kt, down 26% on the prior month, but more importantly, 14.4% softer than the average for the last year. The monthly weighted average import price was AUDFob738/t, down 6.1% on the prior month.
The chart below displays import volumes since January 2017.
Australian Pulp Imports by Grade: Jan ’17 – Dec ’20 (‘000 tpm)
Source: ABS, derived and IndustryEdge
It is evident in the chart, that imports are dominated by three grades: Unbleached Softwood Kraft (UBK), used as cement board stabiliser and in the production of Kraftliner for corrugated boxes, Bleached Softwood Kraft (BSK) and Bleached Hardwood Kraft (BHK), that despite their versatility are imported into Australia primarily for tissue production.
There are two points of specific interest in this data.
BSK & BHK Comparison
The near reversal of fortunes between the somewhat interchangeable BSK and BHK over the course of 2020. For tissue production, they are broadly interchangeable, so the drivers for their changed application can be ‘process’ oriented, but are just as likely to be price related.
IndustryEdge reported in mid-2020 that one of the tissue producers appeared to have acquired a very cheap supply of BHK, which they subsequently shipped into Australia to supply their multi-state tissue production operations. That may have had some impact, but as the next chart shows, the trend towards BHK has been running for some time.
This chart shows the index of annualised volume movements in imports of the main pulp grades. For that reason, it goes back a full decade, to show how imports have trended. Note that ‘Other’ includes all grades not specifically referenced.
Annualised Australian Pulp Imports by Main Grade: Jan ’10 – Dec ’20 (INDEX: Base = Jan ’10)
Source: ABS, derived and IndustryEdge
The chart demonstrates that over the last decade, imports of BHK have continued to grow more or less consistently, to the point where at the end of 2020, they were effectively double what they were a decade earlier. For the competitor, BSK, imports have declined by about 20%, notably softening in recent months as imports of other pulps have increased.
The driver for BHK imports appears to be the solid price differential with BSK. This is a global experience, that can be explored in the monthly Pulp Market Briefing, but is also clearly a local phenomenon. The ever-improving quality of BHK over the last decade has allowed even the most discerning buyer to be more comfortable with the main hardwood pulp.
Specialty pulp grades are on the rise
As the index chart above shows, what might be considered ‘specialty grades’ of pulp have been growing their influence in Australia, since mid-2020.
In the main this includes Semi-Chemical pulps – both hardwood and softwood – that are imported to Australia at around 0.3 kt per month, deployed into producing some higher wet strength packaging papers.
More recently, a small quantity of Dissolving pulp was imported into Australia (0.3 kt in December 2020). IndustryEdge is uncertain where and for what that pulp was used.
Small quantities of Bamboo pulp have also been imported to Australia in 2H20 (0.5 kt in three separate shipments). This appears to be linked to Kimberly-Clark Australia’s new bamboo-fibre toilet paper range.
Pulp price differential favours BHK
As the monthly Pulp Market Briefing demonstrates, global pulp prices turned sharply higher in January 2021. That is yet to be reflected in the Australian data, but one international trend is clear in the local data. The spread between BSK – shown below in blue – and BHK – shown in red – is large and growing.
In December 2020, at an average AUDFob580/t, the average BHK price was 22% cheaper than the BSK at AUDFob743/t. That AUD163/t difference provides a lot of the rationale for softer imports of BSK than for BHK.
The recent price experience is shown below.
Australian Imports of Pulp by Main Grade: Jan ’17 – Dec ’20 (AUDFob/t)
Full details, including downloadable price and import volume files, are available to subscribers to IndustryEdge’s Pulp & Paper Edge Data and Information Service.