Many years ago, when the sportscaster Andres Montes broadcast NBA games on, at that time, Digital Plus, he resorted to a topic that interests us today: There are a lot of Chinese in China.
That little joke was used by the popular journalist to justify why the basketball player Yao Ming, Chinese, had managed to start all the NBA All-Star games of his career at the expense of the popular vote.
Well, now we again recover the ‘there are a lot of Chinese in China’, but for a very different issue. In addition, we are going to add toilet paper and a Brazilian company called Suzano.
What is the reason for mix? Well, Suzano is the largest wood pulp exporting company in the world and China is its main market. So much as to account for 49% of the exports of this Brazilian industry. In general terms, for Brazil, the Chinese market buys 8.9 million tons of wood pulpwhich generates income for the Latin American country of 3.8 billion dollars. Understood within a more global context, China consumes 46 million tons of wood pulp which, among other industries, goes to the production of toilet paper.
The rest of the exports are summarized as 24% to Europe, 14% to North America and the rest to other countries. Currently, according to Ibá data collected Value Internationalwood pulp exports are the fifth, in order of incomeregarding the Brazilian agroforestry sector. A good bite that, as we say, has Suzano as the locomotive of a train that has been pulling very hard during the last decade.
This is where China comes in and, above all, the increase in its middle class and spending on items that in the not-so-past past seemed like luxuries like toilet paper. The question, points out Bloombergis that the wood that supplies this locomotive that does not stop investingseems to have a limit.
The limit is there, point out Bloombergbecause they are starting to appear Chinese companies that produce paper pulp and, therefore, make a dent in Suzano. I explained it Joao Alberto AbreuSuzano’s slim advisor, when he stated that the business in China shows stabilization signsalleviating the almost infinite rise that this market has meant for the Brazilian company. In figures, 40% of Suzano’s sales are made in China.
And that, evidently, clashes with Suzano’s intentions to continue growing and what to do with its investments. The truth, as pointed out Paulo Hartungexecutive president of Ibá, is that Brazilian wood pulp exporters have doubled in size and production in the last decade. The complicated thing now is to maintain that growth and how to open new markets when it seems that China is showing signs of stagnation.
And that, when Suzano is spending huge amounts of money to produce more, It is not the best sign for the Brazilian industry. The example is in the latest macroinvestment that this company has made in the state of Mato Grosso do Sul, where last June it launched the largest wood mill in the world, with a production capacity of 900,000 tons of wood currentlyalthough its capacity is 2.5 million tons. Neither more nor less than 3,500 million euros.
The point is that the Asian giant is waking up again. You need toilet paper (and other papers) and are tired of external dependency, which is why the ratios of plantation of forests for timber are skyrocketing in Chinaan industry in which it was deficient, and which can leave its current suppliers in the lurch in the medium and long term.
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