Growth in China’s pulp market

26 April 2014

UPM has established itself on the global pulp market. The best prospects are in China.

In China, the increasing production of tissue paper, in particular, is boosting the demand for pulp.

For UPM, the past few years have seen a gradual shift from almost exclusively supplying its own paper mills to becoming a major player in the global pulp markets – serving customers operating in the growing end-use segments such as tissue and speciality papers as well as packaging board.

“UPM is not one of the biggest companies in the field, but we are known as a stable and reliable supplier. That is exactly what we have been aiming at,” says Tomas Wiklund, Vice President, Sales and Marketing, UPM Pulp.

Further growth in sight

In 2013 UPM’s external pulp deliveries grew 19% compared to the previous year. There was an increase in deliveries to both China and Europe.

“In 2014, we are targeting further growth in our external sales and also studying some new markets to achieve continued growth”, Wiklund says.

He believes that pulp sales volumes can be further increased in years to come, with rapid growth to be seen in China especially.

“Our customers are constantly investing in new production capacity. The biggest growth is taking place in the production of tissue paper. Packaging material mills are also being built in China.”

It has been estimated that the demand for tissue paper will grow annually by approximately 7% in China over the next 5–10 years. This growth will be stimulated by urbanisation and the improving purchasing power of consumers.

Effective networks for Asia-Pacific

Over the past three years, UPM has more than quintupled its pulp sales in China and the rest of the Asia-Pacific region. According to Wiklund, China has become the most important singlecountry market for UPM pulp sales in a short period of time.

In the Asian market, the company has also acquired new customers in South Korea, Indonesia, Taiwan and Vietnam.

“Our aim is to focus on specific markets and build extensive sales and customer service networks in these markets. There is no point in trying to cover every geographical area in the world.”

UPM also actively follows the development of other market areas. According to Wiklund, interesting areas include Southeast Asia, the Middle East and North Africa.

The important cost efficiency

The key to the company’s success is cost efficiency, which must be incorporated into the entire supply chain from forests to mills and the transport of finished products, Tomas Wiklund notes.

“Having a local presence and maintaining direct contact with customers are both important in the pulp business. We must be as close to the customer as possible in the markets we focus on and in China this sets us apart from our competition.”

UPM’s sales and technical customer service network covers the most important market areas in China and Europe. UPM’s office in Shanghai, China is near the production plants of many of the company’s local customers, so it can respond rapidly to customer needs.

 

Text Matti Remes

Photography Seilo Ristimäki, UPM

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