The Indonesian pulp industry is set to rebound from the global economic downturn as international orders have started to pile up with domestic pulp producers.
Indonesian Pulp and Paper Association (APKI) chairman M. Mansyur said foreign orders now amounted to more than 2.5 million tons of pulp this year – more than half of the country’s annual production capacity of 4.5 million tons.
With international pulp prices at around US$500 a ton, the total value of these foreign orders was roughly $1.25 billion.
“We welcome that so many foreign buyers want to order pulp from domestic producers this year. But the pulp factories can not serve them [all] because they are already flooded by orders. So sorry, we have to tell them we’re out of stock,” Mansyur told The Jakarta Post recently.
Mansyur said orders began being placed shortly after prices started improving in August, when the world began recovering from the global economic downturn. Pulp prices had nose-dived from $810 per ton in July, 2008, to $360 a ton in March this year and then bounced back to $500 a ton in August, he said.
“Business in the world is moving again. And Indonesia is popular in the international community as a pulp and paper exporter,” he said.
According to Mansyur, Indonesia comes ninth among global pulp producers and is also the world’s 11th paper producer.
He said the country recorded $4.5 billion in export revenue in 2008 and $4.2 billion in 2007, for both pulp and paper exports combined.
Price drops, Mansyur said, had forced pulp producers to cut their utilized capacity from 90 percent of 6 million tons a year in full capacity before the global economic crisis down to 30 percent early this year. At that time, conditions in the paper industry were no better, he said.
But the industry has begun to recover, with pulp factories already returning to running on 90 percent of capacity.
“In the long-term, factories may now expand production capacity, installing new machines [citing possible new peaks in orders in the future],” said Mansyur.
But wood and wooden product exports slumped 28.3 percent to $1.07 billion in the first half of this year, from $1.49 billion in the first half of 2008, according to data from the Central Statistics Agency (BPS).
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