Emerging in stages

China’s status as the kingpin of bulk scrap paper shipments is spelled out each month and year as the United States Department of Commerce assembles its statistics on international trade flows.

Data gathered by the Department of Commerce and aggregated by the Institute of Scrap Recycling Industries (ISRI), Washington, show that in 2015 China imported 29.3 million tons of recovered fiber, more than half of that year’s globally traded total of 57.6 million tons.

That year, China’s next closest competitor in Asia was India, which imported 3 million metric tons of scrap paper.

Nonetheless, presenters at the 2017 Paper & Plastics Recycling Conference Europe, held in Warsaw, Poland, in early November, helped portray the emergence of India and the ASEAN (Association of Southeast Asian Nations) region as important destinations for the developed world’s excess scrap materials.

Alternative manifests

Hrishikesh Vora of Paperworks, which is based in Mumbai, said capital is being invested in new and upgraded paper mills in India and the nation is about to experience “unprecedented demand for scrap paper.”

He said the “Amazon effect” of increased boxes being shipped to individual homes has expanded to India, where Amazon “has become a household name.” Growth in that sector is spurred in part by India’s demographics, with 50 percent of the population being 25 or younger.

Vora said India is growing as a consumer of finished paper at a 7 percent annual clip and the nation’s mill sector will need recovered fiber at a companion rate. “Today, there is tremendous interest in India; it is a land of opportunity.”

He said its paper production is forecast to rise from 15 million metric tons in 2017 to 27 million in 2030. “With that growth, scrap paper will always be in demand.”

Vora said several Indian mills began “setting up supply chains” to bring in scrap paper tonnage from the United States in 2017 and that 2018 would be “very interesting in terms of how India will buy its scrap paper.”

Shailesh Gothal of Gemini Corp., Belgium, described how that company has worked for the past several years to diversify its customer base for plastic and paper scrap to avoid being caught short by sudden regulatory changes in China.

He said Gemini’s exposure to China for the 1,400 containers it ships per month “is only 10 percent.” Regarding the topsy-turvy conditions of 2017, Gothal said, “It was pretty easy for us to manage our business while China was closing.”

He said emerging Asian markets, such as Vietnam, Thailand and Malaysia, are likely to follow China’s lead on restrictions, however. “There will be pollution controls that will [curtail] these markets that are coming up,” he predicted.

His comments reflect the unease among packers and shippers of mixed paper, which is the grade that has come under the most scrutiny in China, even though that is where existing mills are best equipped with the technology to handle the grade.

Young tigers

Vu Ngoc Bao, vice chairman and secretary general of the Vietnam Pulp and Paper Association (VPPA), says new paper and board capacity coming online in Vietnam will cause an expected 34 percent increase in production between 2015 and 2018. That is despite the nation’s only newsprint mill having halted production at the end of 2015, with its owner declaring bankruptcy.

Speaking to delegates at a RISI event in Zhuhai, China, in December 2016, Bao said the VPPA forecasts Vietnamese mills will import more than 1.9 million metric tons of recovered fiber in 2018. That would be approximately triple the figure of 648,000 metric tons the Commerce Department records for Vietnam’s imports in 2015.

Recovered paper is expected to supply 85 percent of Vietnam’s furnish, including 60 percent in its tissue sector, Boa said.

He said just 48 percent of the recovered paper the nation needs can be supplied from within Vietnam, with the remaining 52 percent needing to be imported. In recent years, Vietnam’s recovered fiber imports have come “primarily from the United States and Japan,” Bao said.

Thailand also has a growing presence in the ASEAN region’s paper industry.

Speaking at the same RISI event, Bhakkawat Bhasipol of Thailand-based SCG Packaging and the Thai Pulp and Paper Industries Association (TPPIA) said ASEAN nations feature growing economies and the prospect of increased paper and board consumption by their citizens.

While the U.S. and Japan consume more than 460 pounds of paper per person per year, Thailand is at the 143-pound level, and Vietnam is at 75 pounds per person.

Bhasipol said Thailand collects enough fiber to supply about 70 percent of its domestic recovered paper needs but imports the other 30 percent—about 1.1 million metric tons in 2016. He said about 70 percent of the recovered fiber Thai mills consume is OCC (old corrugated containers).

In 2015, Japan “accounted for more than 30 percent” of those imports, Bhasipol said, followed by the U.S. and Australia. “We are trying to import more from European countries,” he added, “because the price is rising in the Japanese market.”

Bhasipol said the TPPIA is cooperating with government agencies in Thailand to boost the nation’s paper recycling rate. A goal is to “raise awareness in communities and schools—and educate the children to separate and recycle paper,” he said.

In the ASEAN region and India, however, establishing internal collections systems will take years.

The world is not flat

Statistics Bill Moore of Atlanta-based Moore & Associates gathered for a 2017 Paper & Plastics Recycling Conference Europe presentation help demonstrate the Indian subcontinent and the ASEAN region’s potential to absorb more scrap paper.

A bar chart Moore assembled shows recovered fiber usage having peaked and then stabilized in North America starting in the late 1990s. China, on the other hand, surged in its use of recovered fiber between 1997 and 2016, but its growth rate began to slow in the second half of this decade.

Recovered fiber use in the rest of Asia has grown more slowly than China’s on an annualized basis since 1997, but its growth rate has been healthier the last three years.

It is a trend Moore said he sees continuing, helping to shift shipping patterns slightly for Europe’s and North America’s scrap paper away from Chinese ports to destinations in other parts of Asia.

“Slowing Chinese recovered paper demand growth means further decline in its imports,” Moore said, adding that “improving domestic collection [in China] would result in about 4 million metric tons of import [reduction] between 2014 and 2019.”

The rest of Asia, he predicted, will generate a larger recovered paper trade deficit from 2017 to 2019 based on stronger demand and “less-efficient local paper recycling systems in the developing or emerging countries in this region.”

Vora said India “does not have the collection system other countries have” and that “too much paper is going to landfill.”

While acknowledging that their paper and board sectors are much smaller than China’s, Moore predicted that in “emerging economies such as India, Thailand, Indonesia, Vietnam, the Philippines and Myanmar, recovered paper demand growth will be faster than in China.”

He predicted net imports (the recovered fiber deficit) in Asia beyond China will double from 5 million metric tons in 1997 to 10 million metric tons in 2019.

The author is editor of Recycling Today and can be contacted at btaylor@gie.net.