Pulp exports to surge this year

Pulp exports to surge this year

JAKARTA (JP): Thanks to steadily rising prices, Indonesian pulp producers are expecting a major increase in export revenues to about US$2 billion this year, an executive said.

"This year we expect to export approximately 750,000 tons of pulp, worth about $2 billion, as compared to last year's 200,000 tons valued at about $700 million," Suresh Kilam, an executive of the Indonesian Pulp and Paper Association, told reporters on Thursday night.

The executive's statement means that the commodity's price will continue to experience a major resurrection from $380 per ton in 1993, when the value of Indonesia's pulp exports reached $39.04 million only.

Kilam, concurrently managing director of the listed pulp company PT Indah Kiat Pulp & Paper, said that the increase in this year's pulp export revenues was mostly driven by the escalating pulp prices, currently reaching $1,130 per ton.

Industry analysts have said that pulp prices will likely continue to rise in the next two years.

The executive said that prices of pulp tend to fluctuate because of uncertainty in the movement of demand by non- integrated paper mills, or those which do not make their own pulp, throughout the world.

Non-integrated paper mills' demand accounts for about 11 percent of the world's total demand estimated at around 265 million tons.

Kilam also said that export earnings from pulp will soon replace plywood as Indonesia's major foreign currency earner after textiles.

Figures from the Central Bureau of Statistics show that during the first 10 months of last year, textile exports reached $4.76 billion and plywood exports $4.35 billion.

Production

Kilam also confirmed various evaluations saying that Indonesia will become one of the ten largest pulp producing and fifteen paper producing countries in the world in the next two years.

"We have major investments coming up. Companies like Barito Pacific Timber, Kiani Lestari and Raja Garuda Mas will all soon make a presence in pulp or expand production if they are already in the industry," he said.

An official of the Ministry of Industry said last year that Indonesia plans to hike the annual production capacity of pulp by 200 percent to 3.9 million tons and paper by 10.2 percent to 4.3 million tons in the coming five years.

Data from the Investment Coordinating Board states that Raja Garuda Mas, owner of the listed pulp maker Inti Indorayon, will set up another mill in Sumatra with a capacity to produce 600,000 tons per year.

Plywood giant Barito Pacific will soon team up with Marubeni Corp. of Japan to set up a $1 billion plant capable of producing 450,000 tons of pulp annually.

The data also shows that Indah Kiat will expand the annual production capacity of its pulp mill in Sumatra to 870,000 tons from its current level of 400,000 tons.

Indonesia's total existing annual pulp production capacity is around 800,000 tons, so far catering to only about one percent of the world's pulp demand, which is dominated by Canada, the United States and Finland. (hdj)