Coated woodfree grades lift 47% – renaissance or dead cat bounce?

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An incredible resurgence in demand and consumption has seen coated woodfree (CWF) grades of paper experience a 47% lift, with imports totalling 119.6 kt* year-ended March 2022.

Around the end of 2020, in client consultations, the consensus was CWF paper consumption would never see six figures again, having plunged to around 80,000 tonnes per annum. We recall there were a couple of importers holding sufficient orders to argue the number would be close to 100,000 tonnes by the end of 2021, but none had a view of greater than that.

The chart here shows monthly imports and annualised total imports for the last four years. The annualised results are significant, but so too are monthly imports in March 2022. At 13,801 tonnes for the month, imports were at their highest level since May 2018. The caution must be that with appalling shipping delays, a big month could easily be preceded and followed by two tiny months. Time will tell on that front, but certainly, none expect to see imports operate at an annualised 160,000 tonnes plus ever again.

 

Australian CWF Imports: Jan ’18 – Mar ’22 (tpm & tpy)

Source: ABS and IndustryEdge

 

One reason for expectations of difficulties for CWF grades in maintaining their volume has simply been they are the highest value-added and the highest priced (generally) of the main printing and communication paper grades. That this prognosis has proved wrong may be a short-term matter, and we are reminded of the lift post-GFC that was then followed by a return to trend declines. Long-term trend decline in consumption of coated papers seems inevitable.

There are three short forms of analysis for CWF papers, and each is set out below. There could be a fourth, but for more than a decade, the wholly imported grade of paper has been masked under the cloak of ‘confidentiality restrictions’, so no country-of-origin details are available.

 

Sheets rule over Reels

For more than a decade, sheeted products have ruled the market for coated woodfree paper. Once, reels were imported and merchants provided sheeting as a service. That still occurs in some cases, but the majority of imports are now sheeted products.

As the data indicates, the reel stock remained reasonably stable through the pandemic downturn. It was the sheeted products that experienced steep declines. However, as the data shows, in March 2022, imports of CWF Reels lifted to a near five year high of 3,820 tonnes, Why might that occur? Our expectation is in a market struggling for supply, one or more importers took what they could get and potentially sheeted it locally. There will be curiosity over whether the Reel imports will continue in coming months.

 

Imports of CWF Paper: Reels v Sheets: Jan ’18 – Mar ’22 (tpm & AUDFob/t)

Source: ABS & IndustryEdge

 

 

2020

2021

2022

% Change 2021-2022

Reels

14,303

12,560

16,405

30.6%

Sheets

101,909

68,614

103,167

50.4%

 

This is an edited extract of an item that first appeared in Edition 203 of Pulp & Paper Edge (May 2022)

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