3.6 Paper and Paperboard

Production

In 1995, the production capacity of paper is 7,285 thousand M/T, and it had increased 39.3% compared to 5 years earlier. Production capacity of Korea is the 10th in the world, but the paper companies have difficulties of raw material supply compared to timber resource rich countries. The increase in printing paper production is 59%, and in news print is 58%.

The number of paper companies was 113, and of mills was 135 in 1995. Up to 1971, the last year of the 2nd 5 Year National Economic Plan, news print and printing paper were the main products, but from 1972, kraft paper and board have been the main items. This is because of the increase of packing paper according to the development of industry.

Table 26. Production of paper in Korea (Unit: 1,000 M/T)

Classification	1970	1975	1980	1985	1990	1995
Total News print Wood free paper Wood containing Art paper Kraft paper Manila board Corrugated board Board paper Other	330 102 53 11 9 48 33 46 5 23	662 155 73 32 26 87 98 125 12 51	1,680 249 160 69 64 184 237 514 38 165	2,312 239 198 156 129 171 314 712 99 295	4,524 522 320 266 333 231 682 1,384 206 580	6,877 948 495 189 745 266 943 2,122 235 925

Source: Korea Paper Industry Association

The production of paper in 1965 is only 120 thousand M/T, but it increased 53 times to 6,435 thousand M/T in 1994. In 1995, the total amount of paper production was 6,878 thousand M/T, of which only 948 thousand M/T for news print. The increase rate of corrugated board and manila board is also very rapid.

Consumption

Korea consumed the total of 7,417 thousand M/T in 1995 of which 6,877 thousand M/T of paper is supplied domestically and 697 thousand M/T is imported.

Table 27. The demand and supply of paper in Korea (Unit: 1,000 M/T)

Year	Demand Domestic Export Total			Supply Domestic Import Total
1991 1994 1995	4,867 6,104 6,423	458 952 994	5,325 7,056 7,417	4,922 5,434 6,877	413 562 697	5,335 6,996 7,574

Source: Korea Paper Industry Association

In 2010, paper demand is estimated 11,939 thousand M/T by K.R.E.I. and 12,617 thousand M/T by FAO.

Table 28. Scenario of demand forecasting for Korea paper (Unit: 1,000 M/T)

Year	2000	2010	2020	2030	Assumption
Paper demand Economic growth ratio assumption (%)	8,219 6.90	11,939 4.27	16,748 4.00	21,958 3.50	annual paper price increase is 0.04%

Source: Korea Rural Economic Institute

Table 29. Forecasting of the paper consumption in Korea in 2010 (Unit: 1,000 M/T)

Total	Newsprint	Printing and writing	Other
12,617	723	2,557	9,337

Source: FAO

Imports

In 1995, Korea imported the total of 697 thousand M/T. It is also increased 24% compared to 1974. This is because of import increase of newsprint and other special purpose paper. But due to the increased local production capacity, this decreased from 1996.

Exports

The export trend of paper and board is slowly increasing. In 1994, Korean exported the total amount of 952 thousand M/T, an increase of 4.4% compared to that of 1994. Among them the board is 555 thousand M/T (58%), and printed paper is 308 thousand M/T (32%). But the value of paper export is $1,125 million which is an increase of 42.5% compared to 1994.

Table 30. Export of paper and board (Unit: 1,000 M/T)

Year	Total	Newsprint paper	Printed paper	Board	Other
1980 1985 1990 1991 1992 1993 1994	31 91 274 412 489 695 952	- - 40 120 200 16 29	- 1 35 78 51 171 308	14 27 70 76 93 472 555	17 63 129 138 145 36 60

Source: Korea Paper Industry Association

3.7 Particleboard and Fibreboard

Production

In 1995, Korea had 4 particleboard companies and 5 factories with a production capacity of 577 thousand cubic metres. It is estimated that they consume 931 thousand cubic metres of wood every year. The number of fibreboard companies is 5 and they have 10 factories with an annual production capacity of 1,042 thousand cubic metres and raw material consumption of 1,763 thousand cubic metres. When we assume their average capacity utilization as 110%, their real production of particleboard will be 624 thousand cubic metres, and of fibreboard 1,146 thousand cubic metres. Also, the raw material for particleboard and fibreboard is expected to be 2,694 thousand cubic metres per year. Up to now, the raw material for particleboard and fibreboard is mainly the waste products from sawmill, but recently the use of log is more popular because of collection difficulties of sawmill wastes. In 1992, of the total use of wood raw material for boards in Korea, logs were only 55 thousand cubic metres (5.1%), but in 1993, this share increased to 17.7% of the 1,260 thousand cubic metres, and 21.1% in 1994. It was expected to reach 37.3% in 1996. The production of 15 mm particleboard is 67.8% of total production while for fibreboard there is no dominant thickness.

Table 31. Status of particleboard and fibreboard company (1995)

Classification	Company	Location	Starting Year	Production Capacity (m3/y)*
	Company A	Inchon	1981	128,000	(22.6%)
Particleboard	Company B	Inchon 1 Inchon 3	1978 1995	48,000 135,000	(32.2%)
	Company C	Ulsan	1992	128,000	(22.6%)
	Company D	Asan	1992	128,000	(22.6%)
	Subtotal (4)	(5 factories)		567,000	(100.0%)
	Company A	Inchon	1989	58,000	(5.6%)
	Company B	Inchon 1 Inchon 2 Inchon 3	1986 1989 1994	64,000 76,000 100,000	(23.0%)
Fibre-board	Company C	Inchon Ansan	1995 1961	100,000 26,000	(12.1%)
	Company D	Gunsan 1 Gunsan 2	1991 1995	128,000 160,000	(27.6%)
	Company E	Asan Iksan	1991 1995	100,000 230,000	(31.7%)
	Subtotal (5)	(10 factories)		1,042,000	(100.0%)

* The share of ( ) means the total share of one company

Source: Forestry Research Institute

Over half (53.9%) of particleboard capacity is located in Inchon with 22.2% each respectively in Ulsan and Asan. For fibreboard 30.2% of capacity is also in Inchon, 9.5% in Asan, 27.6% in Gunsan and 22.1% (one, largest single factory) in Iksan. 67.8% of particleboard and 56.6% of fibreboard capacity has been added since 1992.

Due to recent increased use as plywood substitutes, the production of particleboard and fibreboard is steadily growing. In case of fibreboard, it is expected that supply will temporarily exceed the demand. The production of particleboard increased from 13 thousand cubic metres in 1966 to 524 thousand cubic metres in 1944, and fibreboard also increased from 10 thousand cubic metres in 1966 to 506 thousand cubic metres in 1994.

Table 32. Production and import of particleboard and fibreboard in Korea (Unit: 1,000 m³)

Year	1966	1970	1975	1980	1985	1990	1991	1992	1993	1994
Particleboard Domestic Import	13 13 -	16 16 -	39 39 -	68 68 -	167 110 57	568 165 403	648 155 493	771 320 451	960 444 516	927 524 403
Fibreboard Domestic Import	10 10 -	15 15 -	16 16 -	14 14 -	41 14 27	258 167 91	372 301 71	438 354 84	552 408 144	689 506 183

Source: Forestry Research Institute

Consumption

Particleboard is mainly used for the kitchen furniture, and fibreboard is mainly used for the general furniture. Consumption demand for board in future will be estimated to 2,163 thousand in 2010, 2,461 thousand in 2020, and 2,758 thousand in 2030.

Table 33. Ratio of board by use in Korea (Unit: %)

Classification	Total	Particleboard	Fibreboard
Total	100.0	100.0	100.0
For Kicken Furniture	34.9	55.0	-
For Office Furniture	19.5	25.0	10.0
For Instrument Cases	10.0	10.0	10.0
For General Furniture	26.5	5.0	60.0
For musical Instruments	4.1	-	15.0
Etc.	5.0	5.0	5.0

Source: Forestry Research Institute

Imports and Exports

In 1985, particleboard was imported 57 thousand cubic metres; this increased to 403 thousand cubic metres in 1994. For fibreboard, corresponding imports were 27 thousand cubic metres in 1985, and 183 thousand cubic metres in 1994 (Fibreboard exports were 7 thousand cubic metres in 1994, and 19 thousand cubic metres in 1995).

3.8 Plywood and Veneer

Production

Plywood manufacture led the timber-related industry in 1970s and 1980s but because of the difficulty of tropical log import and the labour cost increase, its competitiveness declined in the 1990s. The number of plywood factories was only 6 in 1966, reached to 88 in 1985, then decreased slowly to reach 18 in 1994 because of various management difficulties; the survivors were mainly those which developed value added products for the domestic market. The plywood industry used to employ the biggest number of people in the timber related industry. The number of workers increased to a maximum of 29,857 in 1979, but this decreased until by 1994, only 4,259 of workers were employed in the plywood industry.

The production of plywood in 1966 was 445 thousand cubic metres, and the production amount increased steadily, and it peaked in 1978 at 2,557 thousand cubic metres, and after that it decreased slowly. The production of 1995 was only 974 thousand cubic metres or 38% of the peak volume. The thickness of major products of plywood in the past was 6 mm for furniture, but recently it changed to 12 mm for construction, engineering and concrete panels for the domestic market. And the production for export is very limited.

Table 34. Production and consumption of plywood (Unit: 1,000 m³)

Classification	1966	1970	1975	1980	1985	1990	1994	1995
No. of factories Production capacity Production Production per factory Export Import Factory capacity utilization (%) Consumption share of import (%)	6 557 445 74 346 - 79.9 97 -	10 1,449 1,067 107 1,055 - 73.6 234 -	14 2,426 1,809 129 1,304 1 74.6 502 0.2	84 2,517 1,575 19 953 23 62.6 691 3.3	88 2,409 1,227 14 127 11 50.9 1,035 1.1	72 1,329 1,124 16 76 735 84.6 1,746 42.1	18 1,069 886 49 61 1,003 82.9 1,837 54.6	- 1,032 974 - 104 1,307 94.4 - -

Source: Forestry Research Institute

The plywood industry has depended for raw material on imported logs. In 1970s and 1980s, the species of imported log for plywood industry was mainly Lauan, and after that it changed to Kapol, Keruing, and other mixed tropical hardwood species. Recently softwood is also imported for plywood raw material.

In 1994, the species breakdown of imported logs for plywood was as follows: mixed tropical hardwood was 73.2%, softwood was 15.2%, Kapol and Keruing was 8.1%, Lauan was 0.2%.

Consumption

The total consumption of plywood increased to 1,837 thousand cubic metres in 1994 from 97 thousand cubic metres in 1966. The consumption of plywood was mainly for furniture and packing and concrete form work panel. The consumption for furniture and packing is provided from imported plywood, and the domestic production is usually for 12 mm to use for concrete form work panels.

Table 35. Consumption pattern of plywood in Korea (Unit: 1,000 m³)

Classification	Year	Total	<3.5 mm	3.6-5.9 mm	6.0-11.9 mm	>12.0 mm
Import	1992 1993 1994	953 1,153 1,003	507 489 387	148 181 118	222 340 308	76 143 190
Domestic	1992 1993 1994	948 898 886	140 73 34	38 23 23	28 14 13	742 788 816

Source: Forestry Research Institute

Table 36. The share of plywood consumption by use(Unit: %)

Classification	Total	Construction	Building Structure	Container	Furniture	Packing	Other
Total Domestic Import	100.0 100.0 100.0	35.7 42.7 31.2	18.0 25.4 13.2	3.0 7.6 -	37.2 10.2 54.8	0.2 0.2 -	5.9 13.7 0.8

Source: Forestry Research Institute

The consumption will be expected to reach 2,813 thousand cubic metres in 2000 and 3,028 cubic metres in 2010.

Table 37. Scenario of demand forecasting for Korea plywood (Unit: 1,000 m³)

Year	2000	2010	2020	2030	Assumption
Plywood demand Economic growth ratio assumption (%)	2,813 6.90	3,028 4.27	3,175 4.00	3,171 3.50	annual plywood price increase is 0.05%

Source: Korea Rural Economic Institute

Imports

Since 1990, much plywood has been imported from the tropical countries and the share of imported plywood is now more than 50%. Generally the thickness of imported plywood is mainly under 11.9 mm for furniture and packing.

Exports

Korea exported the a total of only 61 thousand cubic metres of plywood in 1994, and 104 thousand cubic metres in 1995 to China.