Opportunities and Challenges of the Paper Industry in the Coming Time
The Vietnamese economy in general and the paper industry specifically have shown positive signs in the first five months of 2020. Estimated paper output reached 1.85 million tons, an increase of 7.8%; paper exports reached 656.9 thousand tons, up 97.4%; and paper imports reached 853.1 thousand tons, up 7.8% compared to the same period in 2019. Notably, packaging paper and tissue paper saw growth in production, exports, and imports.
Positive Trends
Domestic output of map paper and packaging paper is expected to rise sharply again from Q3 of 2020, due to the recovery of recycled paper supply within the country, improved global supply, and enhanced logistics capacity. Recycled paper prices are also decreasing, with a downward trend anticipated in the near future. Domestic demand for packaging paper is expected to surge from Q3 2020 onwards, as Vietnam is anticipated to announce the end of the pandemic in July 2020. The EVFTA (EU-Vietnam Free Trade Agreement) will encourage and stimulate exports of garments, seafood, footwear, and electronics, alongside increased FDI inflows into Vietnam. The government has set a GDP target of 4.5 - 4.8% for 2020.
Consumption of printing and writing paper is also projected to increase from Q3 2020. Similarly, the production and export of notebooks and domestic processing of goods are expected to rebound.
The demand for tissue paper is anticipated to rise again from Q3 2020 due to the growth of the food service sector and a tourism boost driven by stimulus packages in preparation for the peak season in Q3.
The price of pulp may increase in Q3 2020, as pulp mills in South America adjust their long-term maintenance schedules from Q2 to Q3, and the demand for printing and writing paper rises in Western Europe and North America.
The price of imported recycled paper is likely to fall sharply as supply recovers in Western Europe and North America. However, paper production demand in major importing countries like India, Mexico, and Indonesia has yet to recover, and economic activity remains sluggish due to the pandemic. China has approved imports of 4.51 million tons of recycled paper in the first four months of 2020, down 43% year-on-year. It is projected to import a total of 7 million tons by year-end (compared to 11 million tons in 2019).
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