Packaging paper imports fell in 2023… but were stable… here’s how that can be true

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Depending on the measures used and the grades included, 2023 saw Australia’s imports of packaging either stable (-0.2% or <1,000 tonnes) compared with 2022, or down by a more significant 8.6% or 23,000 tonnes.

Why the two figures?

It all depends what you measure.

The convenient (and to be frank, the traditional) domestic proposition would be that the only materials to be measured are the raw substrates like Kraftliner, Corrugating Medium and Coated Paperboard. If that’s your preference, then in softer markets, Australia’s imports were down 8.6% in 2023, falling to 242.6 kt.

The chart below show the declines over the last four years.

Australian Imports of Packaging Paper & Paperboard: 2019 – 2023 (tonnes)

Source: ABS and IndustryEdge

The table demonstrates that imports of container materials (used mainly in corrugated packaging) grew in 2023, by about 17,000 tonnes. As we examine later in this analysis, much of this has come from Oji in New Zealand.

A hefty fall of around 38,000 tonnes for imports of Coated paperboard is a little more perplexing. Again, most comes from New Zealand, but why the steep decline for material used for everything from cereal to alco-pops? We can anticipate that a sector rife with product substitution could be using a different grade or grades of Coated paperboard. A 25% decline is not a particularly likely scenario.

Unless… the volumes of pre-converted Cartonboard imports has been rising, more or less at the same pace as the raw paperboard imports have been declining.

This is where the data becomes interesting.

Over 2023, imports of pre-converted packaging lifted 13.9% or around 21,800 tonnes, to total 178.7 kt. That is a clear record, and it results in the falling volume of raw packaging and industrial grade paperboard imports being replaced by the growing volume of pre-converted imports.

Australian Imports of Pre-converted Fibre Packaging: 2019 – 2023 (tonnes)

Source: ABS and IndustryEdge

There are market drivers for some of the pre-converted imports – home deliveries anyone? There are also production dynamic drivers and the ever-narrowing information gap across the globe facilitates easier trade with a supplier, than ever before.

Regardless, as the index chart below shows us clearly, the import trajectories are opposed to one another, while the total volume of imports is pretty-much stable.

Index of Imported Packaging Paper and Converted Packaging Imports: 2019 – 2023 (INDEX)

Source: ABS & IndustryEdge

It is also important for us to recognise that imports of converted packaging have been cut, folded and printed from a larger volume of raw paperboard. That is, the 178.7 kt of ‘finished’ imports could be as much as 250 kt of raw paperboard equivalents.

The suspicion must be that converted packaging imports are beginning to eat into imports of raw paperboard and perhaps doing so at an accelerating rate. That could have implications for domestic manufacturers, but especially for domestic converters.

 

Prices

Since 2019, import prices for the main grades of Packaging and Industrial paper and paperboard have trended up. Even in the ‘sloppy’ year of 2023, when trade and markets were neither strong nor weak, the weighted average price lifted 1.7% to AUDFob1,444/t. That result was achieved mainly however by ‘non-major’ grades.

Among the Containerboard (corrugating materials) grades, Kraftliner was the lone grade to experience an average price increase over the year, lifting a modest 1.2%. On the other side of the box business, Coated paper & paperboard or Cartonboard, saw import prices fall 3.7%.

Australian Imports of Packaging Paper & Paperboard (Main Grades): 2019 – 2023 (AUDFob/t)

Source: ABS & IndustryEdge

On an annualised basis – despite its routine and occasionally large ups and downs – the Australian dollar was relatively stable with the US dollar. That has fed into the stability recorded for the free-on-board (Fob) price, but it is not the sole factor.

The Fob price is what the goods are sold for, at the point where they are about to be lifted onto a vessel at the Port of Origin. Shipping costs therefore also play a significant role in the total or ‘landed’ price, measured in terms of costs, insurance and freight (Cif).

As the chart and table below demonstrate, on an annualised basis, the weighted average CIF price for landed imports of paper and paperboard used in packaging fell 5.1% or about AUD85/t over 2023. Notably, the differential or the cost of freight specifically fell 40.7% on average across the year, declining from the record AUD268/t in 2022, to a more manageable AUD159/t in 2023.

 

Australian Packaging Paper & Paperboard Import Prices: 2019 – 2023 (AUDFob/t, AUDCif/t & AUD/t)

Source: ABS & IndustryEdge

 

It is important that the patterns of imports change on a country-of-origin basis each year, especially for the cost of freight. If Australia imported solely from Indonesia (for example), freight costs would fall dramatically compared with North America.

 

Countries

Perhaps unsurprisingly, over 2023, mainland Chinese manufacturers increased their imports to Australia, seeing a 54% lift in their contribution. However, as the chart and table indicate, New Zealand remains the major contributor, despite its volumes falling 19.0%, but still delivering more than one third of total imports.

Australian Packaging Paper and Paperboard Imports by Main Country: 2019 – 2023 (Tonnes)

Source: ABS & IndustryEdge

Tonnes

2022

2023

% Change

% Share 2023

Chile

        21,732.8

        20,093.8

-7.5%

8.3%

China (Mainland)

        24,656.3

        37,977.9

54.0%

15.7%

Korea

        19,613.1

        15,874.4

-19.1%

6.5%

New Zealand

     108,723.3

        88,016.7

-19.0%

36.3%

Sweden

        11,900.6

          9,816.8

-17.5%

4.0%

USA

        19,842.0

        13,253.6

-33.2%

5.5%

Other

        58,907.4

        57,607.7

-2.2%

23.7%

Total

     265,375.5

     242,641.0

-8.6%

 

 

Subscribers to the Pulp & Paper Edge Data & Information Service can sign into the IndustryEdge website and interrogate the data fully, at any time, so we will not provide country-of-origin pricing for each grade, just for each of the countries listed above.

The pricing data points to the reality that price matters, even here, where the freight costs have been removed to show the ‘goods alone’ or Fob prices. As an example, a 43% increase in the average price of imports from the USA over the year has resulted in a 33% fall in imports, while a 16.8% fall in price for imports from China delivers a 15.7% increase in import volumes.

Australian Packaging Paper & Paperboard Import Prices by Country: 2019 – 2023 (AUDFob/t & %)

AUDFob/t

2019

2020

2021

2022

2023

% Change 2022 – 2023

Chile

         1,319

         1,332

         1,215

         1,495

         1,603

7.2%

China (Mainland)

         1,381

         1,344

         1,517

         1,930

         1,606

-16.8%

Korea

             873

             841

             745

             992

             958

-3.5%

New Zealand

             834

             854

             918

         1,080

         1,049

-2.8%

Sweden

         1,381

         1,429

         1,398

         1,737

         1,923

10.7%

USA

         1,251

         1,366

         1,363

         1,291

         1,847

43.1%

Wtd Average

         1,153

         1,198

         1,213

         1,420

         1,444

1.7%

Source: ABS & IndustryEdge

 

The ever-growing body of imports of pre-converted packaging appears to be playing alongside declining volumes of raw paperboard imports. That may be a matter of limited interest, but we ask ourselves, what would the supply chain look like domestically, if the converters who rely on imported paperboard were no longer available to the industry?

What happens if conversion reduces further – not just consolidates – to the point where the next businesses under pressure become the integrated domestic manufacturers?

 

This item was first published in Edition 225 of Pulp & Paper Edge in March 2024

 

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