Wednesday, December 26, 2007

Learn Chinese - Papermaker sets eyes on Chinese forest holdings

BIZCHINA / Overseas Investment

Papermaker sets eyes on Chinese forest holdings
(Shanghai Daily)
Updated: 2006-09-07 14:07

Stora Enso Oyj, the world's largest papermaker, plans to triple forest
holdings in China, making its largest timberland investment outside
Europe, as rising paper demand causes a shortage of raw material.

Stora aims to increase its pulp-wood forest to 160,000 hectares by 2010,
said Kari Tuomela, president of the Helsinki-based company's forestry
unit in China. That's twice the size of New York City. Pulp, a mixture of
wood and chemicals, is the raw material for paper used in offices,
catalogues, books and glossy magazines.

China is the world's fastest-growing paper market, leading Stora and
rivals such as Oji Paper Co to invest about US$3 billion in high-speed
papermaking machines there in the past year. The government began
encouraging overseas investment in forestry five years ago to reduce
reliance on world markets. Pulp prices have risen 21 percent over the
past year, Bloomberg News reported.

"It makes a great deal of sense to be involved in domestic fiber," said
Linus Larsson, Stockholm-based analyst at ABN Amro Holding NV. "China is
a large net importer."

The price of northern bleached softwood kraft pulp, a benchmark grade,
has risen US$123.65 a metric ton in the past year to US$708.37 a ton
according to Forest Web.

China overtook the United States as the biggest buyer of pulp in 2004 and
has long been the biggest importer of wastepaper, which is used as a pulp
substitute and to make cardboard boxes. Stora is one of the biggest
foreign holders of forests in China.

"China's demand for pulp is on an upward trend, and won't slow down till
at least the first quarter of 2007," Alf Henrik Gistren, the general
manager of Brazilian pulp maker Aracruz Celulose SA's Asian unit, said.

Aracruz, Latin America's largest pulp producer, exported 400,000 tons to
China last year, the largest amount after Indonesia's Asia Pacific
Resources International.

(For more biz stories, please visit Industry Updates)

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