Strong demand from China explains why much more pulp has
been sold to China this year, when much less has been exported
to other destinations.
Almost 20mt (million tonnes) less goods of all kinds were
exported by Brazil in the first half of this year as in the same
period of 2008, a fall of 8%.
Demand for Brazilian manufactured goods has collapsed, as
demand and credit dried up, while much less of most
commodities and basic goods were exported as well.
Bucking the trend, however, 700,000 tonnes more market
pulp, an extra 21%, was shipped between January and June this
year as in the same period in 2008.
The same thing did not apply to paper, of which 180,000
tonnes less was shipped first half 2009 as in the same period last
year, a fall of 7%.
Timber products were hit even harder, and 870,000 tonnes
less wood was exported January to June this year, more than a
third less than was shipped in first half 2008.
Strong demand from China was the main reason why so
much more pulp has been shipped. Last year, about 30% of the
7.2mt of pulp exported by Brazil went to the Asian giant, about
50% to countries in Europe. So far this year, almost 60% of the
pulp has gone to China, while only about 30% went to Europe.
Japan, usually a leading market, but hit hard by the financial crisis,
has bought about 50% less pulp so far this year as last as well.
The strong sales to China reflects the continued buoyancy of
a country which because it is chronically short of land and has
few commercial forests, will never be an important producer of
pulp.
While China is unable to produce more pulp, much more
sanitary, as well as printing and writing papers, made from Brazil’s
short fibre eucalyptus pulp, will be needed each year for the
foreseeable future.
If the Chinese economy grows by the hoped for 7–8% this
year — and some analysts worry the figures are being massaged
— the strong shipments will certainly continue.
But China may have been buying so much because pulp has
been relatively cheap in recent months. Prices have fallen by at
least 30% from the peak of $780 dollars per tonne touched at in
the second quarter of last year, to less than $300 per tonne for
some grades and to some customers at the end of last year.
Although the fall in prices seems to have halted, pulp has rarely
been cheaper than it is today. This could mean that when
sufficient stocks have been built up, the Chinese will stop buying,
which would hit Brazil’s exports hard.
It costs $175–230 to make a tonne of market pulp in the
very super efficient mills which have been built in Brazil in the
past 10–20 years. This compares with the $400 per tonne it
costs to make pulp at elderly mills in the United States, Canada
and Europe. One reason for the dramatic difference is that
trees take two or three times as long to mature in countries in
northern hemisphere than the 7–8 years normal for eucalyptus
in Brazil, a semi-tropical country, where trees grow all the year
round.