Police investigations slow wood deliveries to Indonesian pulpmills
The police in Indonesia reportedly have been clamping down on illegal logging during the past ten months. There have been police raids in a numerous places, including in Riau and Jambi on Sumatra, to control harvest activities and the usage of illegal wood by a number of pulp companies.
The investigation by the police has included the Governor of Riau and four district heads. The local police Chief accused the local government of granting harvesting licenses for logging stands located in protected areas and natural forests. A member of parliament who tackles forestry sector has urged the Ministry of Forestry to stop issuing any logging licenses in Riau and review permits granted to companies.
The police have aggressively tried to seize illegal loggers including companies with forest concession supplying pulpwood to Indah Kiat P&P (subsidiary of Asia Pulp & Paper) and Riau Andalan (subsidiary of APRIL). It is reported that both APP and APRIL, together consume approximately nine million m3 of pulpwood per year, have increasingly had to rely on their plantations and have accelerated the harvests from land they had planned to cut in 2009 and 2010.
Indonesia to begin importing pulp?
In August, the supply deliveries were down to 25% of regular shipments at the Indiah Kiat mill and, as a result of the fiber shortage, the company has been forced to reduce production and has also stopped exporting market pulp. All pulp produced is now consumed internally. The company has laid off hundreds of workers and is considering importing pulp from Finland and New Zealand in November when their inventory of pulp is expected to run out.
Earlier this year it was predicted that pulp production in Indonesia would be slightly higher in 2007 at 5.8 million tons but with the interruption in the deliveries of pulpwood, production might instead be lower this year than in 2006.
As a result of the tight supply, pulpwood prices have gone up at least 25% from a year ago. However, pulpwood costs vary substantially depending on the location of the pulpmill.
China increases imports of hardwood chips
With pulpmills in China continuing to have problems supplying their wood-based pulpmills with domestic wood fiber, imports of hardwood chips have increased substantially the past two years and exports have practically vanished. In the 3Q/07, imports reached a record 308,000 tons, which represents almost a doubling of the volume compared to the same quarter two years ago. During the nine first months of this year, imports were 23% higher than last year (see graph).
The two major sources in 2007 have been Vietnam and Indonesia. Over the past few years there have also been a few shipments of Eucalyptus chips from Australia, but so far this year it has only added up to 25,000 tons.
China was exporting about 300,000 tons per year from 2000 to 2003. These shipments, which were destined for Japan and Taiwan are now being consumed by the domestic industry.
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