Indonesia pulp industry expects recovery this year
Indonesia pulp industry expects recovery this year
JAKARTA (JP): The Indonesian pulp industry, which experienced
a slump last year, expects a recovery this year as pulp prices
show an increasing trend on the world market, the Indonesian Pulp
and Paper Association said Friday.
Association chairman Muhammad Mansur said international pulp
prices were climbing above the 1996 level of US$400 a ton, and
were projected to reach between $500 and $550 by the end of 1997.
The prices were expected to further climb above $600 in 1998,
he said.
"The price hikes will positively impact the Indonesian pulp
industry," Mansur was quoted by Antara as saying.
"Import duties for pulp now range up to 20 percent. Most
countries don't apply duties on pulp," he added.
Mansur said with such import duties, Indonesia pulp industries
could export pulp at competitive prices and sell it on the
domestic market at lower prices than imported pulp.
Indonesia's pulp and paper exports dropped 4.4 percent to $1.3
billion in 1996 because of low prices on the world market.
Pulp prices dropped to $400 a ton in 1996 from $900 a ton
several years earlier.
Pulp and paper was the only sector among the country's leading
export commodities to drop in export growth that year.
Observers said that current pulp price hikes were more from
the decrease in production by some leading producing countries,
like the United States, than from the increase in pulp demand on
the world market.
"It must be kept in mind that these price hikes are based on
the curtailing of production. Although there will be a temporary
shortage of pulp, there is no boom in sight for pulp demand," a
Finnish observer was quoted by Reuters as saying recently.
Mansur called on Indonesian pulp industries to use the current
price hikes as an opportunity to increase competitiveness against
main producing countries.
He said northern countries, like the U.S., Canada, China,
Sweden, Norway and Finland, control 85 percent of the market with
a combined production capacity of 180 million tons per year, or
62 percent of the world's total output.
Indonesian pulp production capacity reached 3.1 million tons
in 1996 and was expected to grow to 4.4 million tons this year.
Mansur believed Indonesia would be able to compete against
main producing countries.
He said pulp producers in those countries were facing
difficulties in finding raw material, while producers in
Indonesia were soon to harvest "industrial forest estates".
The cost to produce pulp using raw material from industrial
forest estates was lower than using raw material from natural
forests, he added.
Ministry of Forestry data says 13 companies have established
-- or were in the process of establishing -- pulpwood estates
which now cover 805,354 hectares of land.
The government has allocated 2.625 million hectares to these
companies for pulpwood estates.
Mansur said forest estates could be harvested in six to seven
years.
Some companies had started harvesting their forest estates,
but big harvests were projected to occur in ten to 15 years.
"At that time, Indonesia's pulp output will reach ten million
tons a year," he said. (jsk)