ACPWP97 THE STATE OF THE INDUSTRY - JAPAN
April 1997 FO: ACPWP 97/2

ADVISORY COMMITTEE ON PAPER AND WOOD PRODUCTS

THIRTY-EIGHTH SESSION

Rome, 23 - 25 April 1997

THE STATE OF THE INDUSTRY


JAPAN

Economy

The Japanese economy has been stagnant during the past several years with real GDP growing only marginally as follows:

1992 19931994 19951996
Growth 1.1 % 0.2 %0.5 % 0.3 %3.0 % (preliminary)

Real GDP for 1996 is expected to have grown by 3 percent, but it lacks momentum. Growth for 1997 is also expected to be slow for the following reasons:

  • Increase in consumption tax from 3 percent to 5 percent as from 1 April 1997, repealing of income-tax reduction enacted in 1995 and hike in social security payment will slow down consumer spending;
  • Corporate capital expenditure will be flagging due to weakening profitability.

As to the real GDP for the fiscal 1997 year (ending March 1998), the government projected a 1.9 percent growth, while private think-tanks forecast 1.4 percent on average.

Pulp and Paper Industry

Production and Shipment in 1996

Production of paper and paperboard in 1996 increased by 1.2 percent over 1995 to 30 014 thousand tons and shipment was up 0.8 percent to 29 894 thousand tons.

Demand for newsprint and printing/communication papers was fairly strong. Shipment of newsprint increased to 3.6 percent thanks to the Olympic games and Lower House Election. Commercial printing for fliers/catalogues and copy paper were also favourable and boosted demand for printing/communication papers.

Operating rate for paper machines was roughly 95 percent and 90 percent for paperboard with overall operating rate for paper and paperboard machines standing at about 93 percent.

Production and Shipment of Paper and Paperboard in 1996

(thousand tons)
Grade
Production
1996-95

(%)
Shipment
1996-95

(%)
Export
1996-95

(%)
Newsprint3 140 1.43 135 1.429 (69.5)
Pr.& communication 10 8142.4 10 7291.8 316(10.0)
Wrapping1 086 (0.3)1 077 (1.3)17 18.0
Hygienic1 647 5.81 639 4.40 -
Other1 083 (6.4)1 088 (6.3)8 10.5
Total paper17 770 1.717 668 1.2370 (20.9)
Containerboard9 048 0.39 024 0.044 (64.2)
Folding carton2 148 0.62 158 0.8185 16.4
Others1 048 0.91 044 0.50 -
Total paperboard12 244 0.412 226 0.2229 (18.7)
Total paper and board 30 0141.2 29 8940.8 599(20.1)

Shipment includes export.

( ) denotes decreases.

Import and Export of Paper and Paperboard in 1996

Import grew sharply while export declined, making a sharp contrast. During the first half of the year, import increased greatly due to strong demand and yen appreciation, but export dropped. As a result of import increase, imports shared about 5 percent of the total demand.

Import and Export of Paper and Paperboard in 1996 (Jan.-Nov.)
Import
Export
Tonnage

(thousand tons)
1996-95

(%)
Tonnage

(thousand tons)
1996-95

(%)
Paper1 230 28.7434 (26.3)
Paperboard224 17.4212 (20.9)
Total1 456 26.7646 (24.6)

Raw Materials

Wastepaper

The Japan Paper Association set up a target to boost the utilization rate of wastepaper up to 56 percent in the year 2000, however, the rate remained around 53.3 percent in 1996. Responsible for the rather low rate was an increase in production of such a high grade printing paper, which does not accept higher mix of wastepaper.

Consumption of Wastepaper in 1996 (Jan.-Nov.)
Tonnage

(thousand tons)
1996-95

(%)
Paper4 104 3.8
Paperboard10 476 0.2
Total paper and paperboard 14 5811.2

Woodpulp

Production of Woodpulp in 1996

Tonnage

(thousand tons)
1996-95

(%)
Softwood bleached kraft 1 3207.9
Hardwood bleached kraft 6 2080.7
Unbleached kraft1 602 (5.1)
Total (include others) 11 5010.7

Import of woodpulp in 1996 (Jan.-Nov.)
Tonnage

(thousand tons)
1996-95

(%)
Softwood bleached kraft 1 220(7.6)
Hardwood bleached kraft 1 126(4.3)
Unbleached kraft107 (14.0)
Total (include others) 2 982(5.9)

Pulpwood

Tonnage

(thousand m3)
1996-95

(%)
% of domestic and import
Softwood, domestic 9 0042.0
Import7 157 0.1Import 65%
Total16 161 1.2Domestic 35%
Hardwood, domestic 4 101(5.4) Total 100%
Import17 247 1.4
Total21 347 0.0
Total softwood and hardwood 37 5090.5

Corporate Profitability

Sales of seven major paper companies in the fiscal 1996 year ending March 1997 is expected to increase by 2 percent over fiscal 1995 to 2 755 billion yen (US$ 23 billion) and pre-tax earnings will be down 9.7 percent to 147 billion yen (US$ 123 million).

The new Oji Paper and the Honshu Paper merged on 1 October 1996 to become Oji Paper, the largest paper company in Japan, with annual revenues reaching 1 155 billion yen (US$ 9.6 billion). In October this year, Nihon Shigyo and Jujo Paperboard are going to merge to become the second largest seller of paperboard in Japan.

From the latter half of this year to next year, there will be new capacity additions of 1 million tons of printing/communication paper, 600 000 tons of newsprint and 100 000 tons of containerboard. It is thought that the domestic market will absorb them.

Environment

The Japan Paper Association adopted the "Voluntary Action Program for the Environment", which will be honoured by all member companies. The gist of the programme is:

  • to make utmost efforts, including international cooperation, directed towards a solution of the global warming issue;
  • to aim at establishing a recycle-oriented society through environmental protection and efficient use of resources on a sustainable basis;
  • to further promote the environmental management system.

To be specific, each company will set up targets for the reduction of carbon dioxide emission and energy consumption, promotion of tree plantation and recycling, cutback on waste, etc.

Sustainable Forest Management

Two-thirds of Japan's land is covered with forests and stock of trees is steadily increasing. The majority of them are plantations which are not yet mature as trees were planted after the World War. The trend of forest areas and their stock are as follows:

1976
1986
1995
Forest areas (million ha) 25.325.3 25.2
Plantation (million ha) 9.410.2 10.4
Stock of trees (billion m 3) 2.22.9 3.5
Plantation (billion m 3) 0.81.4 1.9

(Figures of plantations are included in total Forest Area and Stock)

The Japanese forest policy is aiming at promoting improvement of forest resources in consideration of diversified ecological property of the forests, and establishing a sustainable forest management system that makes it possible to fully utilize the forest's multi-functions. However, certification concern in Japan is rather low as the size of forest ownership is small and forest products are hardly exported.

The share of imported pulpwood has been increasing every year and it currently accounts for 65 percent of the total pulpwood consumption. However, the rate of increase is slowing down. The government recently predicted that its demand would reach 40 million m 3 in 2010, taking into consideration an increase in wastepaper utilization. Since supply is anticipated to remain unchanged, demand increase will have to be covered with imports.

The Japanese pulp and paper industry has been developing tree plantations in offshore countries such as Australia, New Zealand, Chile, Papua New Guinea and Viet Nam and is planning to further expand its plantations. In the "Voluntary Action Program for the Environment" mentioned earlier, the Japan Paper Association set a target to expand the industrial plantations, at home or overseas, to 550 000 ha by 2010 in order to secure stable supply of raw materials and assure the contribution to the environment. We recognize the importance of industrial plantations which absorb and fixate carbon dioxide, and we believe our plantations, domestic or external, need to enhance international recognition.


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