Secret Japanese takeover bid for mag paper market

Suppressed import statistics hide a strategy to flood the Australian and NZ market with coated woodfree paper at ‘dumped’ prices.

A fierce price war has broken out in the magazine paper market but no one officially knows who is behind it. A request to suppress the import statistics, including the origin of cheap MCW magazine grade paper, is denying industry analysts accurate data.

The paper is being sold at less than $800 per tonne, more than $200 below the trade-weighted average of similar grades from Europe, China and Indonesia. With the price of pulp hovering around $800 the imported paper is likely to be sold here at less than the cost of production, clear indication of a strategy to dominate the sector.

According to Robert Eastment, (pictured) industry analyst and publisher of the journal of record, Industry Edge, the current situation is delivering bargain prices to printers. However, the move to drive out other suppliers will eventually prove a disaster for the industry.

“They [printers] are making a rope for the hangman,” he said. “Other suppliers cannot compete at these prices and will leave the market. I’ve seen this happen a number of times, it’s a well recognised strategy.”
The Australian Bureau of Statistics (ABS) does not publish the origin of the paper grades while under the NZ regime the entire product line is wiped. The ability to suppress the publication of import statistics is due to a century old law designed to protect local businesses from the depredations of foreign trading companies.

According to Eastment, it is a colonial hangover with the original intent distorted to hide any imports.

He is convinced the CWF paper imports are from Japan and constitute a determined drive to dominate the magazine paper market. Two years ago there was practically no imports from Japan; it now accounts for 12% and is rapidly growing.

Following the closure of the Tasmanian mills by PaperlinX there is no longer any local industry to protect. ‘Dumping’ i.e. selling below the price in the country of origin, is now legal.

But the lack of transparency in import statistics is likely to come back and bite the industry if the market takeover succeeds.

Writing in this month's Industry Edge, Eastment says: During the latter part of the 1990s and early 2000s, the amount of data suppressed by the ABS was ridiculous and seriously devalued the quality of the ABS database. However, many of these suppression requests ran out and over recent years the quality of the ABS data has improved considerably.
There is now cause for concern with a recurrence of requests for the suppression of import statistics by some traders, especially for coated papers.
These suppression requests have been made and approved on both sides of the Tasman for the same grades of paper from the same source and are therefore likely to be from the same company or companies, to the detriment of the industry in both Australia and New Zealand.

Paper industry professionals and printers wishing to understand the dynamics of the industry in Australian and NZ could do no better than to access the industry bible, Pulp & Paper Strategic Review 2010.