SOUTH KOREA – steady market

South Korea currently produces over 550 thousand MT/Yr of Towel and Tissue (T&T) paper. That makes South Korea fourth in the Asia Pacific Region for T&T production. Much of this capacity is coming from smaller but modern machines. Over 50% of the machines in South Korea are less than 20 years of age with 37% of these machines (20% overall) being built in the last 10 years. A nation of 48 million and growing, South Korea is one of the G-20 major economies, with a GDP that ranks 14th in the world. Despite the obvious drawback of its proximity and relationship to North Korea, South Korea enjoys relative stability and strong potential for continued economic growth, evidenced by its swift recovery from the recent global financial crisis. As one of the world’s largest exporters and importers (6th and 10th, respectively, in 2010), South Korea’s economic well-being is highly dependent on international trade and it has made notable inroads in establishing trade agreements with the world’s major economies in the past several years.

The T&T growth in South Korea is clearly a result of its expanding economy as the country moves more heavily into high technology industries. However, unlike other areas in the world, the T&T growth in South Korea appears disciplined with modest size machine additions to existing facilities. Geographically, the T&T mills are located in the river valleys and planes along the western part of the country (Map 1). The country ranks fourth for T&T production in the Asia Pacific Region (Figure 1) and third in number of operating machines (Figure 2). T&T machines in the Asia Pacific Region vary from narrow twometre machines to six-metres. South Korea’s machines average on the low-end of the trim range for the Asia Pacific Region, with the average being in the 2.5 metre range (Figure 3). Average mill production in South Korea falls in line with that of the Asia Pacific Regional averages at approximately 60,000 MT/Yr as does technical age with an average at 18 years (Figure 4). On the other hand, fibre mix in South Korea is heavily weighted to recycled pulp compared with most countries in the Asia Pacific Region (Figure 5). A strong base in recycle aids South Korea’s cost position, placing the average cost at less than or equal to other larger producer countries (Figure 6).

T&T machine production rates in South Korea tend to be modest with 90% of the machines making 30,000 MT/Yr or less. Recent-activity is consistent with historical trends with all the new machines being less than 30,000 MT/Yr (Figure 7). Machine trims account for the less robust production rates. Slightly over 80% of South Korea’s machines are less than three metres in trim width (Figure 8). Machine speeds are somewhat more advanced with 50% + of the machines over 1,000 mpm (Figure 9). On an international scale, South Korean machines tend to have below average capacity and below average technical ages. Also noteworthy, South Korea’s growth in T&T production is evidenced by six new machines being added in the last 10 years (Figure 10).

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