Selective Cuttings
Canada now exports more pulp to China than the U.S.
May 2, 2013
In 2012, for the first time ever, a country other than the U.S. became Canada’s main destination for pulp exports—China. While both the volume and value of monthly pulp exports to China have surpassed those to the U.S. on rare occasions, in 2012, this became the dominant trend where China was Canada’s leading pulp destination overall as well as for ten of the twelve months.
China has presented a fantastic growth market for Canadian pulp exports, increasing at an average annual rate of 17% since 1995. Exports to the U.S., however, have slid for eight of the last ten years after peaking in 2002 (Figure 1).
Figure 1: Canada’s pulp exports to China and the U.S.
Source: World Trade Atlas
While China's share of total Canadian pulp exports reached an all-time high of 41% in 2012 (and rising), the shares of the U.S., Western Europe and Japan fell to all-time lows—down by 24%, 78% and 68% in 2012 compared to 1995 (Figure 2).
Figure 2: Shares of Canada’s pulp exports by region
Source: World Trade Atlas
Through the medium-term, China is likely to remain Canada's main destination for pulp exports. Canada's main pulp export, Northern Bleached Softwood Kraft (NBSK), is renowned for its higher quality compared to other pulp varieties such as Southern Bleached Softwood Kraft (SBK) and Bleached Hardwood Kraft (BHK)—NBSK provides greater strength during the tissue paper manufacturing process and greater softness in the end product. These qualities position Canada favourably for supplying China's future pulp needs. While China will undoubtedly need more BHK and SBK, they will also need more NBSK to go along with it.
Industry analysts’ consensus is that Canadian exports to Western Europe, the U.S. and Japan are likely to continue to decline. In the past, these regions relied on Canadian pulp as the key input in the paper production process. However, with overall paper consumption in these markets in decline and a greater focus placed on recycling, their usage of Canadian pulp exports is expected to continue to fall.