Vietnam significantly increased the amount of hardwood chip exports to China

Vietnam increased hardwood chip exports to China

The paradox of exporting large volume of hardwood chip while the packaging paper and paper products industry in Vietnam is lacking in raw materials to be produced is relatively one of the concerns.

Vietnam significantly increased the export of hardwood chip to China

According to the Economic News from Vietnam Pulp and Paper Association, China's imports of hardwood chip reached a record in the third quarter of 2018. It is noteworthy that Vietnam significantly increased its exports of hardwood chip compared to 2017 and has become the largest exporter to China, surpassing Australia - a large annual exporter (According to the agency's quarterly report from Wood Resource Management).

Since early 2018, many pulp mills in China have increased imports of hardwood chip, pushing import volume to a high record of 3.5 million tons (absolute dry - odmt) in the third quarter of 2018, up 21% compared to the same period in 2017. China Customs said that the biggest increase in supply in 2018 now belongs to hardwood chip from Vietnam, with the total volume in the first nine months of 2018 being 34% higher than the same period in 2017. At the same time, the average import price of hardwood chip of China increased slightly in the third quarter of 2018, to 180 USD/ton (odmt), 3 USD higher than the previous quarter.

Australia is the second largest supplier of wood chip to China. From September 2017 to September 2018, Australian chip suppliers reduced their market share from 35% to 28%. Beside Vietnam and Australia, which have accounted for more than 80% of China's imports in 2018, other important markets to China includes Chile, Thailand, Brazil, South Africa and Malaysia.

Paradox in the Paper Industry in Vietnam

During the past 15 years, Vietnam's hardwood chip export has tended to increase and is likely to reach a high record of about 10 million tons (absolute dry) in 2018.

However, due to the shortage of raw materials in the forestry and wood processing industry in Vietnam, Vietnam can implement a long-term policy to reduce exports of raw materials to expand the process and increase in added value of domestic products, so this export may decline from 2019.

This is considered a paradox in Vietnam's paper and wood processing industry, because while the export of hardwood chip has increased in volume, packaging paper and products from paper are now lacking pulp materials, imported pulp and recovered pape to produce. Experts say the production of pulp from hardwood chip is a significant step to bring the greatest added value to the paper industry.

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Source: VPPA News