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FI Insights

In Wake of China's RCP Ban, NA Recovered Paper Exports Find a New Home

May 13, 2021
Author: Xia Min

Global trade flows of RCP have been affected by China’s ban on imported RCP and structural changes to the segment that have taken place in recent years. In January 2021, recovered fiber exports in the US totaled 1.40 million short tons, a 1.45% increase from exports in January 2020. Specifically, during January 2021, shipments to India grew by 58.2% to 432,000 short tons and to Vietnam by 68.3% at 170,000 short tons.

Other importers of US recovered fiber in January 2021 included Mexico at 153,000 short tons, Taiwan at 95,000 short tons, Thailand at 89,000 short tons, Canada and South Korea at 80,000 short tons each, Malaysia at 70,000 short tons and Indonesia at 47,000 short tons. Meanwhile, China’s recovered paper imports stood at 45,000 short tons, about 3% of all US recovered fiber exports in January 2021, according to export figures released by the US Census Bureau. From these figures, we can see that:

  • The total export of RCP from North America has decreased
  • Import volumes to China have plunged
  • Imports in a number of Southeast Asian countries have increased

    may CI image

    Source: FisherSolve™ Next 2021 Fisher International, Inc.

The figure above illustrates key partner regions/countries for North American recovered paper exports (the US being the key exporter in North America). From this image, we can see that India, Vietnam, Taiwan, Malaysia and other Southeast Asian countries have significantly increased their RCP imports from North America in 2020, while RCP imports from other parts of the world remain unchanged. Due to geographical advantages, Southeast Asian countries import RCP before processing it into RCF pulp or finished paper for export to China to help meet China’s fiber gap due to its sharp drop in RCP imports, which will become a global industry trend in the future. This is a natural market development since overall exports of RCP from North America have been decreasing.

Since the overall recovery rate did not decline, the cause for the drop in NA exports in primarily due to increased investment in new production capacity of RCF-based products in North America. In the future, North American RCP will help supply China’s fiber gap in the form of RCP pulp and finished paper.

According to Fisher data, Malaysia, Vietnam, North America and other Asian countries have become the new hot spots of global containerboard investment. For the global RCP trade, the demand side has not changed structurally, and total demand is still growing with continued economic development and the rise of e-commerce. The real change in RCP trade lies in the distribution of this demand, which has shifted from the original dominance in China to a more fragmented trend taking shape in Southeast Asian countries and other regions. In the long run, the global price of RCP should be less volatile due to this new market trend, and it should better reflect the natural relationship determined by supply and demand.

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