Current Situationof

The Japanese Paper Industry

Akiyama Tamio

Japan Paper Association

December 10, 2019

Japan Paper Association (JPA)

1. Established in April 1972

2. Member (as of December 2019)

- Regular members

30 companies and 6 associations

- Associate members

41 companies and 1 association

3. Total paper & paperboard production

of member companies (2018) : 23,118MT

(88.7% of Total Production in Japan).

Secretariat

General Assembly

Board of Directors

General Affairs Committee

Paper Committee

Pulp & Recovered Paper

Committee

Technical & Environment

Committee

Labor Committee

General Affairs & Public

Relations Div.

Paper & Paperboard Div.

Raw Materials Div.

Technical & Environent Div.

Labor Div.

Pulpwood Committee

Paperboard Committee

2

World Paper and Paperboard Production and Top 10 Producers (2017)

10,117

10,145

10,464

10,932

11,257

11,652

22,930

26,516

72,279

1,15,766

0 20,000 40,000 60,000 80,000 1,00,000 1,20,000 1,40,000

Sweden

Finland

Brazil

India

Korea

Indonesia

Germany

Japan

USA

China

Total World Production: 419,667 thousand tons

3

(1,000 tons)Source: RISI Annual Review

Domestic Demand & Production in Japan

Domestic Demand

4

Production

Source: Ministry of Economy, Trade and Industry, Japan Paper Association

• Domestic demand and production have remained at around 27 million tons in recent

years.

• By grade, while demand for graphic papers (newsprint and printing paper) continues

to decline, demand for sanitary paper and containerboard have remained stable.

(1,000 tons) (1,000 tons)

31,967 31,774

28,293

26,866 26,718 26,587 26,094

20,000

22,000

24,000

26,000

28,000

30,000

32,000

34,000

2000 2005 2010 2015 2016 2017 2018

31,828 30,952

27,363

26,228 26,275 26,512 26,056

20,000

22,000

24,000

26,000

28,000

30,000

32,000

34,000

2000 2005 2010 2015 2016 2017 2018

Imports & Exports

Imports

-10.8

-2.6

-20.6

17.4

-25.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

0

500

1,000

1,500

2016 2017 2018 2019(1H)

Other paperboardBoxboardContainerboardOther paperPrinting & CommunicationNewsprintY-on-Y change (total paper & paperboard)

Paper

Paper

Paper

Paper

Paperb

oard

Paperb

oard

Paperb

oard

Paperb

oard

5

14.4 16.1 12.0

-21.6 -25.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

0

500

1,000

1,500

2,000

2,500

2016 2017 2018 2019(1H)

Other paperboard

Boxboard

Containerboard

Other paper

Printing & Communication

Newsprint

Y-on-Y change (total paper & paperboard)

Paper

Paper

Paper

Paper

Paperb

oard

Paperb

oard

Paperb

oard

Paperb

oard

Exports

Source: Ministry of Finance

• Exports have posted a record high for the third consecutive year since 2016.

• However, in the 1H of 2019, the exports dropped by 21.6% over the same

period of 2018.

(1,000 tons) (1,000 tons)(%) (%)

Domestic Demand and Production Capacityin Japan (2000 vs. 2018)

GradeDomestic demand Production capacity

2000 2018 18/00 2000 2018 18/00

Newsprint 3,699 2,609 ▲ 29.5 3,667 2,951 ▲ 19.5

Printing & Communication 11,866 8,019 ▲ 32.4 12,467 9,721 ▲ 22.0

Uncoated paper 3,512 1,912 ▲ 45.6 3,081 2,392 ▲ 22.4

Coated paper 6,462 4,296 ▲ 33.5 7,113 5,799 ▲ 18.5

Communication paper 1,891 1,811 ▲ 4.3 2,273 1,530 ▲ 32.7

Wrapping paper 1,041 723 ▲ 30.5 1,156 1,023 ▲ 11.5

Sanitary paper 1,725 1,974 14.5 1,896 1,866 ▲ 1.6

Other paper 924 743 ▲ 19.5 1,266 1,169 ▲ 7.7

Total paper 19,254 14,069 ▲ 26.9 20,452 16,730 ▲ 18.2

Containerboard 9,392 9,314 ▲ 0.8 10,366 10,307 ▲ 0.6

Linerboard 5,719 5,614 ▲ 1.8 6,180 5,992 ▲ 3.0

Corrugating medium 3,673 3,700 0.7 4,186 4,315 3.1

Boxboard 2,314 2,029 ▲ 12.3 2,335 1,940 ▲ 16.9

Other paperboard 1,006 682 ▲ 32.2 1,144 785 ▲ 31.4

Total paperboard 12,713 12,025 ▲ 5.4 13,845 13,032 ▲ 5.9

Total paper & paperboard 31,967 26,094 ▲ 18.4 34,297 29,762 ▲ 13.2

6Source : Japan Paper Association

(1,000 tons, %)

1. Decreased population

Population in Japan has gradually decreased since 2010 (126.4 million).

Population in June 2019: 123.8 million

Aging population and a lower birth rate

2. E-media

Decreased paper-based publication.

Growing Internet advertising.

Efforts to go paperless in companies and governmental agencies.

7

Factors for the decrease in the demand of paper and paperboard

110

115

120

125

130

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Population in Japan

8Source: Census (1920-2010) and “Population Projections for Japan: 2011-2060” (2015-2060)

2,090 2,071 2,058 1,977

1,785 1,811 1,813 1,877 1,902

1,956 1,932 1,966 1,948 1,912

1,038 999 946

828

674 640

599 624 617 606 568 543 515 478 484 478

459 408

303 273 254 255 250 250 244 222 202 184

378

483

600

698

707 775 806

868 938

1,052

1,159

1,310

1,509 1,759

0

500

1,000

1,500

2,000

2,500

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

TV Newspaper Magazine Internet

9

Source: Dentsu Inc.

Advertising Expenses of Major Media (billion yen)

Sales of Publication

2,196 2,153 2,085

2,018 1,936

1,875 1,804

1,740 1,682

1,607 1,522

1,471

1,370 1,292

9 18

36 46

57 66 65

77

101

141

183

228

256

312

0

50

100

150

200

250

300

350

0

500

1,000

1,500

2,000

2,500

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Printed books & magazines (left scale)

E-books and magazines (right scale)

10

Source: Research Institute for Publications, Impress Corp.

(billion yen) (billion yen)

Note:

1. Sales of printed books and magazines are calendar year basis

2. Sales of e-books and magazines are fiscal year basis

Recovered Paper Collection in Japan

14,021 15,475

18,332

22,320 22,825 23,325 22,752 21,664 21,715 21,553 21,752 21,864 21,750 21,401 21,233 21,047 20,673

9,858

49.7 51.5

57.7

71.1 72.4

74.5 75.1

79.7 78.2 77.9

79.9 80.4 80.8 81.3 81.3 80.9 81.6 79.7

40.0

45.0

50.0

55.0

60.0

65.0

70.0

75.0

80.0

85.0

0

5,000

10,000

15,000

20,000

25,000Recovery volume Recovery rate

11

(1,000 tons)

Source: Ministry of Economy, Trade and Industry, Ministry of Finance

Note:

Recovered Paper (RCP) Recovery Rate = RCP Collection (RCP Shipments to Paper Manufacturers + RCP Exports – RCP Imports) / Domestic P&B Consumption

(%)

Recovered Paper Consumption in the Japanese Paper Industry

14,613 15,804

18,055 18,743 18,932 19,446 19,145

16,915 17,412 17,067 16,876 17,038 17,192 17,092 17,160 17,226 17,045

8,330

51.5

53.4

57.0

60.3 60.6 61.4 61.9

63.1 62.5 63.0

63.7 63.9 63.9 64.3 64.2 64.1 64.3 64.4

40.0

45.0

50.0

55.0

60.0

65.0

70.0

0

5,000

10,000

15,000

20,000

25,000

Recovered paper consumption Recovered paper utilization rate

12

(1,000 tons)(%)

Source: Ministry of Economy, Trade and Industry, Ministry of Finance

Note:

Recovered Paper (RCP) Utilization Rate = RCP Consumption (RCP consumption + Recycled pulp consumption ) / Total Raw Material Consumption

Recovery Rate vs. Utilization Rate

49.7 51.5

57.7

71.1 72.4

74.5 75.1

79.7 78.2 77.9

79.9 80.4 80.8 81.3 81.3 80.9 81.6 79.7

51.5 53.4

57.0

60.3 60.6 61.4 61.9 63.1 62.5 63.0 63.7 63.9 63.9 64.3 64.2 64.1 64.3 64.4

40.0

45.0

50.0

55.0

60.0

65.0

70.0

75.0

80.0

85.0

Recovered paper recovery rate

Recovered paper utilization rate

13

(%)

Recovered Paper Imports and Exports

634 479

278

77 72 67 61 44 44 42 28 30 34 35 43 46 42 19 22 42

372

3,710 3,887 3,844

3,491

4,914

4,374 4,432

4,929 4,890

4,619

4,261 4,138

3,734 3,779

1,467

0

1,000

2,000

3,000

4,000

5,000 Imports Exports

14

(1,000 tons)

Source: Ministry of Finance

Exports by destination in 2018

Destination Volume (1,000 tons)

China 2,741

Korea 275

Vietnam 203

Thailand 198

Taiwan 193

India 4

Others 166

Total 3,779

1. Structural transformation of traditional business

-Strengthening international competitiveness through streamlining production

system and further cost reduction.

2. Expanding overseas business

-Expanding overseas investment and sales network.

-Especially, the companies focus on Southeast Asia along with economic

growth, population growth, and improvement in living standard.

3. Business diversification

-Developing new businesses based on the accumulated technologies

and know-how in P&P business

Power supply, new products (e.g. cellulose nanofiber (CNF) , alternatives for

plastic products) .

15

Japanese Paper Industry

-Transformation of Business Structure-

Business Diversification

16

Power Supply Business

• Restructuring of nuclear power-dependent

energy supply due to Great East Japan

Earthquake in 2011.

• Feed-in Tariff (FIT) started in July 2012.

With an affluent know-how on power generation

in the background, Japanese paper industry

entered into power business.

• Packaging materials

• Food

• Chemicals

• Cosmetics

• Pharmaceuticals

• Filter

• Electronic materials

• Automobile parts

• Aircraft materials

• And more,

• CNF is expected to be put to practical use in a variety products such as automotive products, food products, cosmetics and etc. in the future.

• Japanese paper manufacturers have been focusing on the development of CNF.

• The Japanese government expects a 1 trillion yen market for CNF by 2030.

17

1 trillion yen market by 2030

Cellulose Nanofiber (CNF)

CNF

• Light and strong (5 times stronger than steel)

• Ultra fine fibers

• Low thermal expansion

• High gas barrier

• High transparency

• Environmentally-friendly,

and more.

18

Packaging materials with high barrier properties

Barrier properties

Degradation properties

• Movement to shit to paper straws from plastics

ones.

• Biodegradable plastics are hampered by high

manufacturing cost.

• Paper manufacturers are focusing on the

development of new paper products with both

barrier and degradation properties.

Source for pictures: Oji Holdings Corporation, Nippon Paper Industries Co., Ltd.

Trend Surrounding the Movement of

Ban on Plastic Products in Japan

19

Sustainability Efforts

in the Japanese P&P Industry

JPA’s Environmental Action Plan

1. Measures against Global Warming Issues (CO2 emissions reduction)

(1) FY 2020 target:

Reduce fossil-energy-derived CO2 emissions by 1.39 million tons from FY 2005 BAU levels.

(2) FY 2030 target:

Reduce fossil-energy-derived CO2 emissions by 4.66 million tons from FY 2005 BAU levels.

2. Efforts for Building a Recycling Society

(1)Paper recycling

Target: Achieve recovered paper utilization rate of 65% by FY 2020.

(2) Final disposal of industrial wastes

Target: Reduce the volume of final disposal to 130 thousand tons on a wet weight basis

by FY 2020.

3. Promotion of Effective Utilization of Wood Resource and Ensuring a Stable Supply

• Target:

-Promote the effective utilization of domestic thinned wood.

-Expand the forest plantation area at home and abroad to 700 thousand ha by FY 2020

20

Sustainability Efforts

in the Japanese Paper Industry

JPA’s Action Guideline for Biodiversity Conservation

(established in 2014)

JPA member companies shall:

• Develop their corporate action guideline;

• Actively disclose information about their biodiversity

conservation efforts; and

• Promote sustainable forest management through acquisition

of forest certification

Safety and Health Efforts in the Industry

1. National Conference of the Pulp and Paper Industry on Safety and Health

- Facilitate communication and share information concerning the safety and

health among members to improve their safety and health level.

2. Active Participation in Public-Private Council for Safety Measures in the Manufacturing Industry

- Promote information sharing with other manufacturing industries.

3. Efforts for elimination of fatal accidents

- JPA sets the target “Zero Fatal Accident in the Worksites of Member

Companies”

- To achieve this, JPA is working to identify the potential risks of fatal accidents

in each worksite and process to take countermeasures one by one.

21

Government

Private SectorCitizens

22

Towards the Establishment of

Effective Paper Recycling System

It is necessary for the establishment of effective paper recycling system

that close cooperation among private sector (paper manufacturers and

recovered paper distributors), governments and citizens.

Thank you

23