Corrugating medium imports down 31%

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Australia’s imports of corrugating medium – including semi-chemical fluting – fell a sizeable 31% year-ended May 2021, declining to 32,644 tonnes. Despite the sharp fall in volumes, the average import price was just 0.5% lower than a year earlier, declining to AUDFob649/t.

Corrugating medium imports are a little like coals to Newcastle when they are delivered to Australia. The country is a net exporter of corrugating medium, but as we can see below, shipments come from across the world.

The shipments from Africa, are from South Africa and are specialty grades.

Supplies from Europe are mainly semi-chemical grades, providing high wet strength and other specific capabilities, as are the small shipments from North America.

However, in the main, Asian shipments are from the United Arab Emirates – hardly ‘Asia’ we know, but IndustryEdge does not define the global regions. Shipments from Asia appear to be general corrugating medium, as do most of the shipments from ‘Oceania’, which in this case means New Zealand. The shipments across the ditch are understood to be primarily delivered to the box plants of Oji Fibre Solutions, shipped from its own operations.

 

 

Beyond the global snapshot, the information below provides country level import data. It demonstrates that even as imports have fallen, the impact has been felt disproportionally by Thailand and the Ukraine. The latter’s supplies fell from significant to zero over the last year.

Australian Corrugating Medium Imports by Country: Jan ’17 – May ’21 (tpm & AUDFob/t)

Source: ABS, derived and IndustryEdge

 

 

YE May ’20

YE May ’21

% Change

New Zealand

7,125.6

7,864.7

10.4%

South Africa

497.7

3,861.5

675.9%

Sweden

4,269.3

1,953.9

-54.2%

Thailand

12,658.8

3,151.9

-75.1%

Ukraine

9,800.4

0.0

-100.0%

United Arab Emirates

11,636.5

14,883.4

27.9%

Other

1,270.2

928.3

-26.9%

Total

47,258.5

32,643.7

-30.9%

Wtd Average (AUDFob/t)

652.72

649.18

-0.5%

 

 

Why does a country with significant corrugating medium production and exports need to import supplies at all?

The first reason is the impact of specialties – especially those that deliver ‘wet strength’ or similar capabilities. Most of those volumes are manufactured with at least some semi-chemical pulp, to achieve the specific utility required of them. That is evident in the following analysis of the detailed trade data.

Australian Corrugating Medium Imports by Main Type: Jan ’17 – May ’21 (tpm)

Source: ABS, derived and IndustryEdge

 

 

YE May ’20

YE May ’21

% Change

Semi-Chemical Fluting

34,606.9

16,538.6

-52.2%

Corrugating Medium

11,688.1

15,174.1

29.8%

 

Despite the declines in Semi-Chemical Fluting imports over the last year, the longer period demonstrates the importance of these grades to the domestic economy. One reason for the declines of the last year, we are advised, have been the challenges of the pandemic, but that does not explain all the changes.

The second reason Australia has imports is that local production of corrugating medium is fully integrated. Converters without their own production capacity – Abbe/Auscor is the obvious example – have the option of seeking local supply, or importing the volumes they need.

Returning to the imports by main country, the chart below shows average import prices typically hovering around and just below the AUDFob700/t mark. As the Swedish price points indicate, the Semi-Chemical grade operates on a different basis to the general pricing.

However, most recently, the average import price lifted to AUDFob817/t. Notably, none of the major importing nations had prices at anything like that level in May. The high prices were recorded for China and despite the small volumes from China, the low total import volumes ‘shifted the price dial’ quite sharply.

Australian Corrugating Medium Imports by Main Country: Jan ’17 – May ’21 (AUDFob/t)

Source: ABS, derived and IndustryEdge

 

  • Subscribers can download and analyse Australian and New Zealand trade data here

 

Underscoring the nature of the imports and who drives the majority of imports, the data presented below, shows at least the states into which imports of corrugating medium have been delivered over the last year.

Australian Corrugating Medium Imports by State: YE May ’21 (tonnes)

Source: ABS, derived and IndustryEdge

 

If there is one point of importance to note, it is that declining corrugating medium imports do not mean there is less consumption of corrugating medium, or of boxes, of course.

Indeed, the fact is that more boxes are being consumed now than ever before. The corrugating medium balances provide some clues to corporate decisions and supply chains, but they do not indicate some change in the fortunes of the all-powerful corrugated box!

 

This item is an edited extract from the May 2021 edition of Pulp & Paper Edge (Edition 193).

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