The global impact of Asian RCP import policies

Why packaging producers are searching for alternative fiber sources

Global recovered paper (also known as RCP or PfR) markets have witnessed increased volatility due, at least in part, to the substantial changes in global RCP trade flows.

The Chinese government announced its plan to curb the imports of recovered paper in 2017, and officially stopped imports at the end of 2020 (a dramatic change from the 28.5 million tonnes just four years prior). Meanwhile, other Asian RCP imports surged together caused by the fast-growing demand. The global uncertainty will only continue to grow as other Asian countries, such as Indonesia, India, Vietnam and Malaysia, implement and consider their own various RCP import restrictions.  

Why does this matter to the packaging market?

For many packaging paper and board grades, recycled fiber is the single largest input cost in manufacturing. A mill’s cost sensitivity can be impacted significantly by the dynamics of RCP demand and supply.  

China is now facing a recycled fiber shortage as a result of the sharp decline in its imports. This RCP import policy has encouraged more containerboard investments in other Asian countries, some by Chinese paper producers. This has been one of the major factors behind the sharp increase in other Asian countries' RCP imports.

To keep up with demand, Chinese packaging producers have been looking for solutions to alleviate the recycled fiber shortage. In addition to steeply increasing containerboard imports, recycled pulp, made mainly from OCC (old corrugated containerboard) and mixed paper, has been one of the most important alternatives. This need has resulted in Chinese recycled pulp imports surging from virtually nothing in 2017 to about 2 million tonnes in 2020. In addition, China has significantly increased containerboard imports to meet the packaging demand.

Beyond Asia, the sharp decline in China’s RCP imports has had a global ripple effect. Major RCP exporting regions, such as North America and Europe, have expanded their recycled containerboard capacities, resulting in amplified domestic RCP consumption. This has been especially true for packaging production.

And the rise in e-commerce has only added more fuel to the fire. Although more direct-to-consumer doorstep deliveries results in increased residential RCP volume (and a decline in commercial volume), the RCP is more likely to be contaminated or lost.  This causes a tighter RCP demand and supply balance and ultimately leaves packaging producers searching for quality RCP supply.

Overall, global recycled fiber trade volume declined in recent years due to the ongoing changes in RCP trade regulations and the developments in paper and board markets. But trade has and will continue to play a critical role in balancing the RCP demand and supply on a worldwide basis.

Watch this video for recovered paper market insights:

The extremely volatile RCP market makes it even more critical for packaging producers and buyers alike to monitor fiber market dynamics to prepare for possible cost changes. Watch this video to gain a better understanding of current RCP market dynamics, then attend the upcoming Asian Conference to hear senior economist, Hannah Zhao’s complete forecast.

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