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.

This graph shows the annual volume of Canadian pulp exports to China and the U.S. from 1995 through 2012. Canadian pulp exports to China have been growing at annual average rate of 17% since 1995 while Canadian pulp exports to the U.S. have declined in eight of the last ten years since peaking in 2002.

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

Two pie charts are shown comparing the share of Canadian pulp exports by region to China, the U.S., Western Europe, Japan, South Korea and the Rest of the World in 1995 versus 2012. China’s share increased from 3% in 1995 to 41% in 2012 while shares for Western Europe, the U.S. and Japan fell to all time lows.

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.