China is changing the game in the fiber markets

China's importance to the global pulp and paper industry has grown rapidly over the past two decades. Today, the country dominates the global market for market pulp and also has a strong position in the markets for paper and packaging materials.

"What happens in China affects everyone in the industry," says Tom Wright, CEO of Hawkins Wright.

Three major changes in China

There have been three major changes in fiber consumption in China. The first occurred in the 2000s when the use of non-wood-based fibres, especially straw and reeds, declined sharply. Obsolete, low-quality capacity was phased out, mainly for environmental reasons, which meant that around five million tonnes of fibre were removed from the system.

The second change came between 2018 and 2021, when China imposed a ban on importing recycled paper and other solid waste. That decision meant that around 20 million tons of fiber disappeared from the China market.

The third and most recent change is the rapid expansion of domestic wood pulp production. According to Hawkins Wright, it has increased by more than ten million tonnes in just five years, and this has had a significant impact on trade patterns. Between 2010 and 2020, China's imports of wood pulp increased by an average of 1.5 million tonnes per year, but over the past five years the increase has only been about half a million tonnes per year.

"This is a very important change, especially for companies that are investing in new pulp capacity with the expectation that Chinese imports will continue to grow rapidly. In addition, the change is taking place during a period when there is virtually no growth in demand for market pulp outside China," says Tom Wright.

Cost pressure drives fibre switching

At the same time, the Chinese industry is characterised by significant overcapacity and weak profitability. While many Western countries have struggled with inflation, China has instead had problems with falling prices. This means that large parts of the industry suffer from overcapacity and low profitability. 

In the pulp and paper industry, this means severe cost pressure. In several segments, capacity utilisation is around 60–65 per cent. 

"Cost reduction is not a choice, but a prerequisite for survival. Very few producers in China have the opportunity to pay for anything other than the most cost-effective raw material," says Tom Wright.

Many mills have extensive substitution between different types of fibre. They alternate between softwood, hardwood, bamboo and other fibres, and also between different pulp qualities and product types.

Additionally, China's exports of paper and packaging materials are increasing rapidly. Over the past four years, exports have increased by more than nine million tonnes. This means that China's products are competing to a greater extent with producers in other regions, including Europe.

Raw material availability will be a key issue

A crucial factor for the pulp market going forward is the availability of pulpwood in Asia. The Asian pulpwood market is fragmented, and unlike many South American producers, the companies own their own plantations to a lesser extent, which makes the market more vulnerable.

Price movements for pulpwood in the region can therefore have a major impact on the competitive balance between integrated Chinese pulp and paper companies and South American market pulp producers.

 "This development, together with other changes in China, sets the framework for the global pulp market for the next decade," says Tom Wright.

This article is a summary of Tom Wright’s presentation at Valmet Pulp Customer Days held in Sundsvall, Sweden in March, 2026.

TEXT Kerstin Olofsson