Vietnam’s pulp and paper production market is still quite limited 2022
Vietnam’s pulp and paper production market is still quite limited. As of Q2 2022, Vietnam’s pulp industry can only meet about 35% of the demand for pulp for domestic paper production. The remaining 65% must depend on imported supplies, mainly from the North American and Latin American markets.
1. The situation of domestic pulp export and import in the first 6 months of 2022
Imported paper output in the first 6 months of 2022 decreased by 6.3% over the same period in 2021, estimated at 336.5 thousand tons. However, the import price of paper has increased by 20-40%, making the export turnover of paper and paper products in the first 6 months still grow by 3.5% svck 2021.
Figure 1. Pulp and paper factory
2. Packaging paper production is the driving force for the growth of the pulp industry
Packaging paper production in the first 6 months of 2022 reached 2,418.0 thousand tons, down 1.9% over the same period in 2021 and accounting for 86.1% of total paper production. Packaging paper is considered as the main growth driver of the paper industry because it has the highest output and consumption growth rate among paper products in recent years.
Figure 2. Output of packaging paper industry.
According to the Vietnam Paper Association, the consumption of packaging paper in our country in the period 2021 to 2025 is expected to increase by 12% thanks to the speed of urbanization. Packaging paper products are mainly used to pack products purchased online during transportation, which will promote the rapid development of the pulp industry. SSI Company forecasts the urbanization rate in Vietnam is estimated to reach 40% in 2024. This number increases to 37% compared to 2019.
3. Vietnam is quite dependent on the supply of imported recovered paper
According to data from VPPA, the expected output of all kinds of paper in 2022 produced by paper enterprises will reach nearly 7 million tons (of which packaging paper accounts for about 6 million tons). Thus, to meet the raw materials for the production of packaging paper, the paper industry needs 6.5 million tons of recovered paper (according to Vietnam customs data, about 4 million tons are imported).
Normally, in the production of paper from virgin pulp, the production process must go through many stages, consuming a lot of raw materials, chemicals, electricity and fuel, VPPA said. On the contrary, producing paper from recovered paper (recycling paper) has helped to reduce many stages, save fuel, chemicals, electricity, and especially, limit wood materials from plantations.
Figure 3. Recovered paper.
However, the collection of recovered paper in the country currently only meets 43% of the demand for domestic paper production. Therefore, for this source of raw materials, Vietnam depends quite heavily on the supply of imports.
4. Forecast of pulp industry in the last 6 months of 2022
VIRAC forecasts pulp supply in the last 6 months of 2022, as the shortage of recovered paper materials continues due to a decrease in recovered paper collection rates in North America and Europe.
The demand for pulp in 2022 has domestic consumption of paper packaging expected to increase again and exports to China and Southeast Asian countries. The main market is still China.
Price performance: In addition to high prices of pulp raw materials, shortages of containers and cargo, along with rising costs of fuel, energy, raw materials and chemicals are expected to reduce profitability of the paper companies.
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