Han Yao, Packaging Economist, RISI
May 7, 2012
China's long-awaited, 12th Five-Year Plan for the pulp and paper industry was released on December, 30, 2011. The latest five-year development plan directing the pulp and paper industry through 2015 targets balanced growth of total paper and board consumption and production (at an annual growth rate of 4.6% for each of them). The final version of this plan is largely in line with market expectations, with a lower growth target and an emphasis on demand and supply rebalancing as well as industry optimization. Different development plans have also been tailor-made for different regions. For instance, the plan for the southern provinces should encourage them to further enhance their growth in the board sector.
However, as for the previous two five-year plans (2000-2005 and 2005-2010), the actual growth figures reached double-digits instead of the planned targets of 5-8% growth. The only exception was that the total paper and board consumption figure rose by 9.1% on average during 2005-2010, which still outperformed the 7.5% growth target set for the 11th Five-Year plan. Therefore, the new target should be viewed only as a floor.
In 2010, containerboard consumption and production accounted for 42% and 40% of total paper and board figures, respectively. Therefore, this slower-growth target, as compared to the previous Five-Year Plan, will surely have a large impact on the demand and supply outlook in the containerboard sector. Based on our simulation, containerboard consumption and production will account for more than 50% of total paper and board figures by the end of 2015, although the pace of the share increase should slow over the forecast period. After adjusting our forecast model for this policy factor change, our projections for Chinese containerboard consumption are closer to 7-8% for 2011-2015.
For boxboard, our estimate integrates both top-down as well as bottom-up approaches, which consider both macroeconomic trends as well as growth fundamentals in up to 15 major downstream industrial sectors. Based on this, we expect that boxboard demand in China will still to grow at an average pace of 5.7% between 2011 and 2015. Also, it is expected that China will become a net exporter for boxboard this year, as moderation in domestic demand growth have prompted producers to find more growth opportunities in external markets. The detailed analysis and forecast of boxboard demand end-use composition will be provided in the new China boxboard study to be released in next two months.
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For a detailed analysis about the impact of China's new Five-Year Plan as well as the Asian paperboard market forecast between 2012 and 2016, please read the latest issue of RISI's Asian Paper Packaging 5-Year Forecast.
Han Yao, Packaging Economist, Asian Paper Packaging, works out of RISI's Beijing office and can be reached at Tel: +86-10-5773-3992 or Email: firstname.lastname@example.org.