1. Sourcing of China’s Paper Fiber Supply & Recent Trade Trends Kerstin Canby

2. Where will the supply come from? Japan 1980-2000 USA Denmark Sweden Ireland UK Finland Canada Netherlands Austria Belgium Singapore Germany France Australia Italy Spain New Zealand Rep. of Korea Malaysia Greece Portugal Argentina Mexico Venezuela Brazil Turkey South Africa Russia China India China USA GDP per capita & paper consumption UK

3. China’s Total Papermaking Fiber Resources

4. Agricultural residues Wastepaper Office paper Used cardboard & cartons Mixed (cardboard, news, magazines) Used magazines, newspapers, etc Low risk forest / plantations Potentially threatened forests Low risk forest / plantations Unknown forest / plantations Vegetable pulps (short fiber, low strength, poor quality Bleached chemical wastepaper Unbleached draft wastepaper Other wastepaper (mixed) Mechanical grade wastepaper Chemi-mechanical pulp Bleached kraft pulp (sulfate) Hardwood pulpwood Traditional small- scale pulp & paper mills white paper liner cardboard corrugating core Large scale modern paper industry Packaging & other paper products for domestic use 53% Export-grade corrugated shipping boxes 22% Coated mechanical grades (newsprint) xxxxxxx11% Export-grade printing and communication paper 14% Resource OriginFiber Input TypeProcessingFinal Product Local pulp & wastepaper 53% Imported secondary fiber 33% Imported pulp 13% Imported pulpwood 1%

5. Agricultural residues Wastepaper Office paper Used cardboard & cartons Mixed (cardboard, news, magazines) Used magazines, newspapers, etc Low risk forest / plantations Potentially threatened forests Low risk forest / plantations Unknown forest / plantations Vegetable pulps (short fiber, low strength, poor quality Bleached chemical wastepaper Unbleached draft wastepaper Other wastepaper (mixed) Mechanical grade wastepaper Chemi-mechanical pulp Bleached kraft pulp (sulfate) Hardwood pulpwood Traditional small- scale pulp & paper mills white paper liner cardboard corrugating core Large scale modern paper industry Packaging & other paper products for domestic use 53% Export-grade corrugated shipping boxes 22% Coated mechanical grades (newsprint) xxxxxxx11% Export-grade printing and communication paper 14% Resource OriginFiber Input TypeProcessingFinal Product Local pulp & wastepaper 53% Imported secondary fiber 33% Imported pulp 13% Imported pulpwood 1%

6. Why is imported chemi- mechanical pulp considered low risk?

7. Why is imported bleached kraft pulp considered higher-risk?

8. Agricultural residues Wastepaper Office paper Used cardboard & cartons Mixed (cardboard, news, magazines) Used magazines, newspapers, etc Low risk forest / plantations Potentially threatened forests Low risk forest / plantations Unknown forest / plantations Vegetable pulps (short fiber, low strength, poor quality Bleached chemical wastepaper Unbleached draft wastepaper Other wastepaper (mixed) Mechanical grade wastepaper Chemi-mechanical pulp Bleached kraft pulp (sulfate) Hardwood pulpwood Traditional small- scale pulp & paper mills white paper liner cardboard corrugating core Large scale modern paper industry Packaging & other paper products for domestic use 53% Export-grade corrugated shipping boxes 22% Coated mechanical grades (newsprint) xxxxxxx11% Export-grade printing and communication paper 14% Resource OriginFiber Input TypeProcessingFinal Product Local pulp & wastepaper 53% Imported secondary fiber 33% Imported pulp 13% Imported pulpwood 1%

9. Why is imported pulpwood considered higher risk?

10. Agricultural residues Wastepaper Office paper Used cardboard & cartons Mixed (cardboard, news, magazines) Used magazines, newspapers, etc Low risk forest / plantations Potentially threatened forests Low risk forest / plantations Unknown forest / plantations Vegetable pulps (short fiber, low strength, poor quality Bleached chemical wastepaper Unbleached draft wastepaper Other wastepaper (mixed) Mechanical grade wastepaper Chemi-mechanical pulp Bleached kraft pulp (sulfate) Hardwood pulpwood Traditional small- scale pulp & paper mills white paper liner cardboard corrugating core Large scale modern paper industry Packaging & other paper products for domestic use 53% Export-grade corrugated shipping boxes 22% Coated mechanical grades (newsprint) xxxxxxx11% Export-grade printing and communication paper 14% Resource OriginFiber Input TypeProcessingFinal Product Local pulp & wastepaper 53% Imported secondary fiber 33% Imported pulp 13% Imported pulpwood 1% 63.5% 80%

11. 2007 trends continue….

12. 2007 pulp sourcing

13. Wood chips small but important to some countries...

14. Recommendations Be aware of where pulp, pulpwood and woodchips are coming from & develop tracking systems to verify origin Address the “weakest links” in China’s fiber supply system: the uncertified pulp and pulpwood coming from Russia and Indonesia – ensure certified harvested from sustainably managed forest operations & can be tracked through to the mill

15. 2007 import rise

16. Taking out p & p, logs dominate

17. Russian logs dominate….

18. Russian Exports to China, w/o logs Small increase in other Russian wood products…

19. Rise of PNG, Solomons, NZ, Gabon

20. Indonesian imports down

21. African imports up (but only 4-5% of total imports)

22. Where is it going? Adapted Fuller and Bernard. 2006. China's Rapidly Expanding Wood Products Market: Are they Sustainable? RISI

23. Where is it going?

25. Exports to US by Product Exports by Destination 2007 Exports to the United States

26. Jan-Apr 2008 Plywood and Furnitur Exports by Destination 2007 Furniture & plywood Exports to US 1 st Q 2008

27. Exports by Destination 2007 Importance of Middle East