Itochu's pulp experts discuss the prospects for Metsä Fibre's sales in Asia. (L-R) Tatsuro Kimura, Fumihiko Yamada, Daisuke Soda, Tsutomu Yamauchi.
Metsä Fibre relies on a network of expert partners to distribute pulp in various markets around the world. In Asia, this task is handled by the pulp division of Itochu, the second-largest "sogo shosha" (general trading company) in Japan, which also possesses an ownership stake in Metsä Fibre.
The two companies have been collaborating in various capacities for decades, sharing resources and pooling complementary strengths in different markets. With this in mind, the company's sales force may be the single best resource on the Asian pulp market and its complexities. We asked them to share their thoughts on the current climate in Asia and the opportunities it presents for Metsä Fibre.
ALL ROADS LEAD TO CHINA
Itochu are under no illusions about the state of the world's pulp markets, and locate the most meaningful signs of growth in Asia, particularly China and the South-East Asian countries. Tatsuro Kimura, deputy manager of the company's Overseas Pulp business section, provided a summary of their view.
"Pulp for paper in the so-called first-world countries is not enjoying huge growth at the moment," he points out, "at best sustaining current levels if not actually declining. So the growth is primarily in the Asian markets, particularly China."
“A presence in China is almost essential for any pulp producer or trader - there is no doubt about it.”
-Jin Asada, CEO, Itochu Fibre Limited
Jin Asada, CEO of Itochu Fibre Limited in London, concurs. "Nowadays, the demand for market pulp worldwide is over 50 million tons per year, of which China represents close to 30 per cent. A presence in China is almost essential for any pulp producer or trader - there is no doubt about it."
Some have commented that growth in Asia is stalling. Kimura takes this into account, but remains enthusiastic about the area's possibilities. "Yes, the growth level has not been the same as, say, five years ago, but we still see pretty strong growth there. The demand definitely exists, especially in the tissue paper sector. We see huge potential there."
ÄÄNEKOSKI IS CRITICAL
When huge potential is mentioned, a natural follow-up question might relate to how this potential can be addressed. Itochu's pulp specialists, however, need no such prompting, and are quick to bring Metsä Fibre's new ÄÄnekoski bioproduct mill into the conversation.
"I think that the upcoming project in Äänekoski will arrive with perfect timing to accommodate the new demand we're talking about," Kimura enthuses. "First of all, it is the single largest softwood pulp mill in the world. And when its additional capacity is added to the current volumes, Metsä will be the largest supplier by far to the Chinese market. That's going to change the pulp game quite a bit."
Daisuke Soda, general manager of Itochu's China Pulp department, explains precisely how this extra volume will affect the company's endeavors. "With the additional volume," he says, "we now have the option of exploring new sales possibilities, whereas in the past we had to limit ourselves to a certain number of customers. Our foremost strategy at the moment, not just for China but for the whole of Asia, is to expand our customer base, and we now have the volumes to do so."
THE FINNISH CONNECTION
With various Chinese industries tending towards overcapacity, pulp included, it might be tempting to ask why supply is needed from a small European country in the first place. Why is Botnia Nordic pulp still an appealing prospect on the Chinese market?
"It's a good question," laughs Asada, "but there is a perfectly logical explanation." He goes on to explain how the dynamics of pulp export have developed in the past few years.
"With Botnia Nordic pulp, we can differentiate in terms of quality." -Daisuke Soda, General Manager, China pulp, Itochu
"If you look at the various regions of the world in terms of softwood, the US and Canada used to be the mecca of softwood for the Asian market, but producing pulp in North America is getting more and more difficult by the day because of the environmental issues. Cost issues play a role here also: wood procurement is getting more difficult and the labor costs are among the highest in the world."
Soda elaborates: "In China, we need to compete with other softwood pulp suppliers and quality is one of the most important issues. For example, we are now trying to expand our sales to the tissue and hygiene sectors, and here, quality is the most important issue. Fortunately, with Botnia Nordic pulp, we can differentiate in terms of this need."