Page 23 - Print 21 Magazine May-June 2019

Paper
Paper trade deficit
The gap between paper imports and exports is declining, but it is not good news, says Tim Woods from paper industry bible Pulp & Paper Edge.
Australia’s trade deficit for printing and communication papers fell to $488.3 million in 2018, ending below $500m for the first time in at least two decades.
The deficit declined 2.6 per cent on 2017’s previous low. That sounds like good news – the value of imports was down – but as Tim Woods of IndustryEdge explains, it also means paper demand continues to fall.
“Usually we would say that a falling balance of trade deficit was
a good thing,” says Woods, the managing director of paper industry market analysis and consulting firm IndustryEdge. “After all, that means the value of imports fell or the value of exports rose, or both. But 2018’s deficit reduction also means a lot less paper was imported to Australia.
“Over the decade, the total value of imports declined by more than half, plunging an average 7.2 per cent per annum,” Woods told Daily Timber News. “Over the decade, very little
of that value was taken up by local producers. What it actually reflects is sharply falling demand and generally lower prices.”
“Despite the momentary and shallow recovery in 2010 after the devastations of the GFC in 2009,
the value of imports has fallen continuously for more than a decade.”
In 2018, the balance of trade deficit for printing and
communication papers was $488.3m, with the value of imports down 2.3 per cent to $578.9m and the value of exports 0.5 per cent lower at $90.5m.
“Unfortunately, it is impossible
to avoid the impact of falling consumption in the latest balance of trade data, or that of the last decade.
“Equally significant, the solid
price rises over the year were the sole saviour for the constantly falling value of imports. Without price rises, the import value would have plunged further. Had the price rises not
been implemented, supplies of some grades would have been under serious pressure. No one will supply paper at a loss for very long,” Woods said.
IndustryEdge says in the February edition of Pulp & Paper Edge that this sobering data is a reminder that in a rational market, paper (or any other product for that matter) retains its value for those who need it.
“Some higher value grades of paper are not made in Australia at all, and grades that are made locally are at full production,” Woods
said. “We rely on imports of paper for books, magazines, high-end brochures and so on, to supplement local production.
“Advertisers, marketers and
others who need paper for their communications – let alone the rest of us who need paper for printers and copiers – cannot have it both ways. If
Above
we need supply, we need to pay global market prices, and that means a higher trade deficit into the future,” Woods said.
The race to the bottom, in terms of price, hastens the end of supply, and ultimately therefore of consumption. For the customer that needs a print solution, that is unacceptable.
The only solution that will sustain supply is rising prices, even if that means the balance of trade deficit has to rise again.
The IndustryEdge month by month Pulp & Paper Edge includes extensive details on Australia’s printing and communication paper markets. 21
plunges below $500m
Australia’s Balance of Trade in Printing & Communication Papers: 2008-2018 (AUDM)
400 200 0 -200 -400 -600 -800 -1000 -1200 -1400
Imports
Calendar Year
Exports BoT
Source: Pulp & Paper Edge: February 2019
Falling: paper trade gap
Imports slump by 10.5 per cent
Printing and communication paper imports fell by 10.5 per cent in the year to November, to 605,000 tonnes, according to the latest Pulp & Paper Edge Report by Tim Woods, and it was quality commercial stocks that fell the most.
Pushed lower by declining imports of printing and communication papers, Australia’s total imports of paper and paperboard fell 3.0 per cent over the year-ended November 2018, to 1.077 million tonnes.
The aggregate printing and communication grade imports were
down 10.5 per cent over the year-ended November 2018. Within that, of the four main grades, only Coated Mechanical (CM) grades experienced a rise, up by 11.6 per cent for the year. Uncoated Mechanical was down by 11.8 per cent, Coated Woodfree down by 21.6 per cent and Uncoated Woodfree down by more than
a quarter at 27.1 per cent.
Imports of newsprint were hammered, down by 61 per cent to just 20kt. Coated woodfree grades – the highest quality printing stock, were savaged, down by more than a fifth. As coated woodfree are fully imported in Australia the figures are particularly alarming.
Uncoated woodfree – copy paper and the like – fell by an even greater amount, but there is domestic production, and the latest anti-dumping duties have prevented much imported stock from getting past customs.
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