Raw Material Layout Into The Core Competitiveness Of Paper Mills

Lead: In June 2019, China will impose tariffs on wood pulp, waste paper pulp and finished paper from the United States, which basically covers all types of imported wood pulp. The main pulp varieties, chemical softwood pulp and chemical broadleaf pulp, are subject to tariffs. 5%, the proportion of softwood pulp from the United States is about 20%, and the broadleaf pulp is about 2.7%. The overall impact of the US wood pulp plus tax is controllable, and the import cost of wood pulp is slightly increased. The overseas wood pulp production layout has become important. Cost advantage. Adding a 20% tariff on waste paper pulp. As China's waste paper import policy tightens, it is a technical possibility to make waste paper into waste paper pulp overseas. With the increase of tax on US waste paper pulp, the overseas bases of other countries will be abolished. The value of pulp is becoming more prominent.


1. Waste paper: In August 2018, the tariff was imposed on all varieties, and the tariff was 25%.

On the evening of August 8, 2018, China's Customs Tariff Commission issued the "Notice of the Customs Tariff Commission of the State Council on Adding Tariffs to Imported Goods of About US$16 Billion from the United States" (Announcement of the Taxation Committee [2018] No. 7). The announcement is a partial adjustment of the Notice of the Customs Tariff Commission of the State Council on June 16th on the Customs Tariff Commission's Notice on Adding Tariffs to Imports of US$50 Billion in Imported Goods (No. 5 [2018] No. 5) It is determined that the tariff will be imposed at 12:01 on August 23, 2018.


The List of Imported Waste Goods for the United States and Canada covers all imported waste paper varieties. The tariff on imported waste paper from the United States was 0 (the United States enjoys MFN status), and the current tariff is 25%, which means that the tariff on imported waste paper is = Customs duty-paid price *25%.


China's national waste quality is low, and it relies heavily on imports. We expect that the price of domestic boxboard corrugated paper will continue to rise. The price fluctuation of domestic finished paper will be limited to the price of imported finished paper. The price increase will determine whether paper enterprises will shrink the profit of tons of paper due to the inability to transmit raw material prices.


2, wood pulp and finished paper: the main wood pulp varieties are currently 5% tax rate, waste paper pulp plus tax 20%


In June 2019, the State Council Customs Tariff Commission imposed tariffs on a total of about 60 billion US dollars of imported goods, divided into 5%, 10%, 20% and 25%. This round of tariffs on US and Canada involves wood chips, pulp, and finished paper.


Involved in the paper industry, there are two main categories of wood pulp number 47 and paper products number 49, of which the wood pulp numbered 47 involves 25%, 20% and 5% third-order tariffs, mainly concentrated. On the 5% block; the paper product numbered 48 involves 25%, 20 and 5% third gear tariffs, mainly concentrated on the 20% tariff block. Waste paper is not involved in this list of tariffs (the first four customs numbers are 4707).


In terms of finished paper, the main taxation targets are: (1) newsprint, the tariff is mainly 25%; (2) double-adhesive paper, the tariff is mainly 20% and 25%; (3) coated paper: plus The tariffs are mainly 5% and 20%; (4) the corrugated paper of the box board, the tariff is mainly 25%; (5) the kraft paper, the tariff is mainly 5% and 20%. (In addition to the above, there are other cultural papers, special papers, etc.)


(1) Upstream raw wood chips: Generally, the impact on US wood chips is small. Coniferous wood chips or wood pellets, with a tariff of 20%, non-coniferous wood chips or wood pellets, plus a tariff of 25%. The import volume of softwood chips is 399,200 tons, and the United States is the third largest importer, accounting for 10.3%. The import volume of non-coniferous wood chips is 11.57 million tons, which is extremely low in the United States.


(2) The upstream raw material waste paper pulp has little impact at present. With the stricter import waste paper policy, the value of waste paper pulping production capacity outside the United States will be highlighted in the future: mainly involving fiber pulp extracted from recycled paper or paperboard, and tariffs are imposed. 20%, in 2016, China imported a total of 12,600 tons of waste paper pulp (fiber pulp extracted from recycled paper or paperboard, HS code: 47062000), of which the United States accounted for 22.1%, ranking second. As China's waste paper import policy has become stricter, it has become a technical possibility to make waste paper into waste paper pulp overseas. With the increase of tax on US waste paper pulp, the value of waste paper pulp in overseas bases of other countries has become more prominent.


(3) Upstream raw material wood pulp, increasing the import cost of wood pulp in China, there is an upside for the price of wood pulp, especially the price of softwood pulp: basically covering all kinds of imported wood pulp, the main pulp varieties chemical softwood pulp, chemical broadleaf pulp are added The tariff is 5%. In 2016, China imported a total of 8,035,100 tons of bleached sulphate softwood pulp, of which the United States ranked second, accounting for 20.1%; a total of 83.222 million tons of bleached sulphate broadleaf pulp was imported, and the United States ranked fifth. The proportion of wood pulp imported from the United States in 2017 was 9.19%, and the import value was 1.26 billion US dollars. In 2016, China imported 45.2% of waste paper from the United States and imported 2.36 billion US dollars.


If the Sino-US trade war continues to escalate, on the one hand, it will push up the price of wood pulp; on the other hand, it may accelerate China's strict implementation of the waste paper import restriction policy, and the domestic waste paper price and the price of boxboard corrugated paper will show an upward trend. Indirect exports account for more than 20% of China's container corrugated paper demand structure. If trade exports lead to reduced exports, the overall demand for boxboard corrugated paper will be affected.


Among the Chinese wood pulp import structures, the most important ones are bleached softwood pulp and bleached hardwood pulp. If China conducts tariff counter-measures on wood pulp from the United States, it will push up the price of domestic wood pulp and increase the production cost of wood pulp paper.


(4) Finished paper: All paper types are included in the taxation scope. Newsprint and double-adhesive paper have less influence. Coated paper, cardboard paper and corrugated paper are one of the main importing places, and the cost of imported finished paper is raised. The main taxation targets are:


Among them, the tariff on the corrugated board of the box board is mainly 25%; in 2017, the consumption of corrugated paper in China is 23.96 million tons, and the import volume is 650,000 tons, which is relatively small but the import volume has rebounded sharply; among them, the United States ranks first, accounting for 25.6%, which is relatively large.


Kraft paper: The tariffs are mainly 5% and 20%. In 2017, China's consumption of cardboard paper was 25.1 million tons, and the import volume was 1.37 million tons. The United States ranked first, accounting for 43.4%, accounting for a relatively large proportion. China's finished papers have low dependence on foreign countries, and the proportion of imports and exports to total output is low. The proportion of imports and exports of all kinds of papers does not exceed 20%. Therefore, this trade war has little effect on the demand for finished paper.


3. The United States announced a $300 billion tariff list for China, and plans to increase taxes on Chinese printed products by 25%.


On May 13th, the US Trade Representative Office (USTR) issued a notice to solicit 25% tariffs on Chinese goods for about $300 billion and hold public hearings on Chinese books, newspapers, printed pictures and Other printed matter; manuscripts, typescripts and design drawings. According to the data of 2018, China's export of printed materials is about 3.8 billion US dollars, of which exports to the United States exceed 50%. In 2018, the export of printed matter totaled 1.016 million tons, and the export of printed matter to the United States contributed about 500,000 tons of cultural paper.


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