US-China Trade War Unnerves Japanese Cardboard Makers

choi

Shinnosuke Ogane, Trade War Pokes Holes in Japan's Cardboard Market; As China snaps up used paper, box makers fret over future supplies. Nikkei Asian Review, Nov 16, 2018.
https://asia.nikki.com/Business/ ... -s-cardboard-market

Quote:

(a) "even the cardboard used to package the affected products [in the US-China trade war] risks falling victim to disrupted supply chains.  Japanese [cardboard] manufacturers face a shrinking supply of the used paper from which cardboard is fashioned, as China, the world's largest producer, has switched its source of supply from the US to Japan.

(b) "Japan is expected to collect 11 million tons of used paper this year, while domestic paper manufacturers will need close to 9 million tons, according to estimates by the Kanto trade association. In other words, if exports do not exceed 2 million tons, supplies will be adequate.

"But Japan's used paper exports for the first nine months of the year reached 1.5 million tons, while the monthly average for the five months through September surged 40% from the year-earlier period to 200,000 tons. That translates to an annual rate of 2.1 million tons, raising the prospect of a supply crunch.

(c) "There is one further reason for Japan's cardboard crisis: tighter environmental regulations in China.

"In 2017, China produced 47.2 million tons of base board paper, five times more than Japan.

"This year, the administration of Xi Jinping set tougher limits on impurities in imported used paper. That has increased demand for used paper from Japan, which is higher in quality than that from the U.S. or Europe because waste is more carefully sorted in Japan.

"In May, China temporarily imposed a ban on imports of US waste paper, which failed to meet the new purity standards. Then, in August, Beijing slapped a 25% tariff on such paper in retaliation for US President Donald Trump's duties on a wide range of Chinese imports.

"These moves have fueled demand in China for Japanese used paper. China has bought more than 70% of Japan's used paper exports so far this year, causing prices to soar. [As a result, in Japan, prices of used paper in export and for domestic use have soared [the latter was due to the rise of e-commerce].

(d) "Pulp is not an economical alternative [in making cardboards].

My comment: There is no need to read the rest.