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November 25, 2019

Asian pulp and paper markets slow down as global economy cools

Asian pulp and paper markets slow down as global economy cools

From January to August 2019, production of paper products and pulp recorded mixed trends across selected markets. Whereas production increased in Brazil and decreased mildly in China, while pulp output fell in Japan.

Overall production and demand of paper and pulp are muted around Asia amid worsening global economic conditions and trade conflicts having a large impact on significant economies in the region. Meanwhile, in Japan, the outlook for pulp demand in the country is growing grimmer due to the pressuring global conditions and other domestic or regional constraints.

Brazil saw its paper production increase mildly in the first eight months of the year mostly boosted by exports, with domestic sales in this same period slumping significantly. The paper and pulp segment is one of the largest in the country, accounting for 1.3 percent of the Brazil’s GDP, and 6.9 percent of the industrial GDP in 2018. The lagging economy, along with the changing industry trends, led in part this decrease, although exports continue to expand, particularly to Asian destinations such as China, and European countries.

Output of paper and paperboard in China contracted nominally in January-August, with internal demand remaining strong on the back of a strong industry, although its slowing economy and the ongoing trade war with the United States had its significant impact in the sector, with earnings and profit dropping overall.

Japanese pulp production declined in the first eight months of the period, while consumption of the material remained mostly flat from the equivalent period of 2018, as the effect of the US-Sino trade war affected overall demand in the region, with typhoons and bad weather dampening consumer sentiment further. The industry’s outlook for the future remains bleak as the global economy is slowing down and the national sales tax increased on October 1, pushing expectations for demand even further down.

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