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Commodities

Wastepaper demand surges in Thailand, Vietnam and Taiwan

Coronavirus disrupts collection, offering windfall for Japanese exporters

Japanese wastepaper suppliers have boosted exports by 10% this year. (Photo by Masahiro Shiroyama)

TOKYO -- Shortages of wastepaper in Taiwan, Thailand, Vietnam and other parts of Asia have driven up prices of Japanese exports of the recyclable material.

Export prices of wastepaper averaged 14.6 yen (14 cents) per kilogram in August, official trade data shows, up 50% from the most recent low of 9.9 yen in December 2019.

A rush of orders from Chinese buyers also has boosted prices ahead of China's full ban on wastepaper imports in January, suggesting the gains are unlikely to last.

"Exports were losing money until early spring, but now they're profitable," one wholesaler said.

The coronavirus pandemic has disrupted the output and collection of wastepaper, used to make cardboard and other products, in Taiwan, Thailand and Vietnam. Local paper manufacturers have procured scrap from Japan to fill the hole.

Chinese demand also has risen. Chinese paper companies have imported the material mainly from Western countries. But many of those shipments now are denied because the level of impurities in unsorted wastepaper does not clear new restrictions.

Faced with these changes, marine shippers have become reluctant to transport wastepaper to China, making procurement from the U.S. and Europe less feasible. On top of that, Beijing bans scrap paper imports entirely starting in January. With the prohibition fast approaching, Chinese purchasers have turned sharply to taking in scrap paper from neighboring Japan.

Japanese scrap paper suppliers mostly ship to domestic paper companies. But the coronavirus has caused a slump in Japanese paper production, freeing up more wastepaper for export.

Inventories of wastepaper in the Tokyo region dropped 30% from a peak in December to 39,541 tons at the end of August, according to the industry group Kanto Seishi Genryo Chokuno Commercial & Industrial Association. As shipments to domestic papermakers have dropped off, "we cut inventories by shifting to exports," a wholesaler said.

Japan exported 2.24 million tons of scrap paper between January and August, a gain of 10% from a year earlier.

Scrap paper export prices appear to be peaking, with purchases from China expected to cease in mid-November. Prices for this month's shipment of used cardboard have already started to dip, a scrap paper wholesaler said.

Japanese suppliers are scrambling to expand sales channels outside of China, such as in Thailand and Vietnam. But Western competitors apparently have the same idea, which could lead to tougher competition in Asia.

"A large drop in export prices will be inevitable going forward," an executive at a Japanese scrap paper wholesaler said.

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