THAILAND

1. GENERAL ECONOMIC SITUATION - 2002

The Thai economy grew by 5.2 percent in 2002 compared to 1.9 percent in 2001. The continual growth was supported by domestic demand, particularly private consumption and private investment, as well as export volume, which increased significantly in the second quarter. Low interest rates and government measures to revive demand for real estate were the main factors to stimulate domestic demand.

Thailand's economic outlook for 2002

	1999	Preliminary		Estimate (as of 17.03.03)
		2000	2001	2002
GDP (Current prices: billion baht)	4 637	4 917	5 123	5 431
GDP growth rate (1988 price, %)	4.4	4.6	1.9	5.2
Investment (1988 price, %)	-3.2	5.3	0.9	6.3
Private (1988 price, %)	-3.3	16.8	4.7	13.3
Public (1988 price, %)	-3.1	-9.7	-5.5	-6.8
Consumption (1988 price, %)	4.1	4.5	3.6	4.1
Private (1988 price, %)	4.3	4.9	3.7	4.7
Public (1988 price, %)	3.2	2.6	2.9	0.5
Export value (Billions of US$)	56.8	67.9	63.2	66.9
Growth rate (%)	7.4	19.5	-6.9	5.7
Import value (Billions of US$)	47.5	62.4	60.7	63.4
Growth rate (%)	17.0	31.3	-2.8	4.6
Inflation (%) - Consumer price index	0.3	1.5	1.6	0.7

Source: National Economic and Social Development Board, March 17, 2003

2. PERFORMANCE OF THE PULP AND PAPER INDUSTRY - 2002

As a result of the economic recovery, the pulp and paper consumption in Thailand grew by 9 percent over the last year. The consumption of pulp reached 1.0 million tonnes whereas paper and paperboard consumption was 2.4 million tonnes.

Total pulp and paper production capacity was 4.7 million tonnes in 2002: 1.0 million tonnes for short fibre pulp and 3.7 million tonnes for paper and paperboard. The overall industry utilization rate improved slightly by 2 percent from last year to 78 percent.

Performance of the industry

Product	Consumption	Production	Capacity	Utilization
Pulp	1 053	953	974	98%
Paper and Paperboard	2 355	2 698	3 691	73%
Pulp and Paper	3 408	3 651	4 665	78%

Year 2002, unit: thousand tonne

THE PULP INDUSTRY

a. Consumption, production and trade

Domestic pulp production capacity totalled 974 000 tonnes. Bleached Eucalyptus pulp of 842 000 tonnes accounted for 86 percent of total capacity while other grades (bagasse, bamboo, kenaf and chemithermomechanical) had a combined capacity of 132 000 tonnes. Without long fibre production in the country, Thailand relied on the import of long fibre pulp for its papermaking requirement.

The machine utilization rate was 98 percent. Most of the outputs were to supply the domestic paper mills while the balance was exported.

Production capacity of the five major producers (`000 tonnes)

Producer	Capacity	Grade
1. Advance Agro	457	Eucalyptus
2. Phoenix Pulp and Paper	220	Eucalyptus, Bamboo, Kenaf
3. Panjapol Pulp	110	Eucalyptus
4. Siam Pulp and Paper	107	Bagasse, CTMP
5. Siam Cellulose	80	Eucalyptus
Total	974

Domestic pulp consumption was up 8 percent from last year, reaching 1 053 000 tonnes, of which 790 000 tonnes were short fibre and 263 000 tonnes long fibre. The rising pulp demand was driven by growing consumption of paper, particularly in printing and writing paper and kraft paper.

In 2002, the imports of pulp were 392 000 tonnes, up 21 percent from the previous year. Long fibre accounted for 93 percent of the total of import of pulp. Major exporting countries to Thailand were Canada, the United States, Sweden, Chile, Russia and South Africa.

Pulp export decreased from 347 000 tonnes to 191 000 tonnes due mainly to the rebound in domestic demand for paper. Main export markets were China, Korea, Australia, Indonesia, Taiwan and Malaysia.

Import and export of pulp

Year	Long Fibre		Short Fibre
	Import	Export	Import	Export
2000	328	-	31	254
2001	307	-	16	347
2002	363	-	29	191

Unit: thousand tonne

Recovered paper

Recovered paper consumption, used mostly in kraft paper, paperboard and newsprint paper production, rose from last year by 5 percent to 1.8 million tonnes. Recovery rate improved to 53 percent, up 7 percent from last year. Total collected volume in the country reached 972 000 tonnes, resulting from an environmental protection campaign and a better collection promotion program by government.

Thailand is a net exporter of paper, resulting in insufficient recovered paper to supply the local paper producers. In 2002, total imports were 879 000 tonnes, a decrease of 7 percent from last year. The largest imported grade was old corrugated carton (73%) in proportion, followed by 14 percent mixed waste and 13 percent old newspaper. The imports were mainly from the United States, Japan, and Singapore.

Recovered paper

Year	Consumption	Import	Export	Collected	Recovery Rate (%)
2000	1 728	952	-	776	45
2001	1 765	947	1	819	46
2002	1 848	879	3	972	53

Unit: thousand tonne

b. Outlook for the future

The industry demand in the next five years is projected to rise by 0.9 million tonnes, for an average annual growth rate of 5 percent. Growth in the industry continues to be driven largely by the growth in domestic consumption and the export sector.

For the pulp industry, domestic consumption is estimated to grow by 5 percent, as a result of continual growth in demand in the paper industry. A new bagasse pulp mill is planned to start operation in the next two years with an annual capacity of 100 000 tonnes. Consequently, the capacity of short fibre production will be increased to 1.1 million tonnes.

Demand for recovered paper is projected to rise by 4 percent in line with the estimated growth in kraft paper industry. Although the domestic collected volume has continuously increased and pushed the recovery rate up to 53 percent in 2002, however, the country still has to import recovered paper as well as high quality old corrugated carton.

Outlook

Year	2001	2002	2003*	2004*	2005*	2006*	2007*
Demand
Short Fibre	620	790	830	871	915	960	1 008
Long Fibre	356	263	276	290	305	320	336
S. Total	976	1 053	1 106	1 161	1 220	1 280	1 344
Recovered paper	1 765	1 848	1 922	1 999	2 079	2 162	2 249
Total Fibre	2 741	2 901	3 028	3 160	3 299	3 442	3 593
Capacity
Short Fibre	958	974	974	1 074	1 074	1 074	1 074
Long Fibre	-	-	-	-	-	-	-
Surplus (Shortage)
Short Fibre	338	184	144	203	159	114	66
Long Fibre	(356)	(263)	(276)	(290)	(304)	(320)	(336)

* estimated

Unit: thousand tonne

THE PAPER INDUSTRY

a. Consumption, production and trade

The production capacity of paper slightly increased due mainly to modernization and debottlenecking programs of paper mills. Total capacity was 3.7 million tonnes. Kraft paper has the biggest share of capacity at 60 percent, followed by 27 percent of printing & writing paper.

In 2002, the utilization rate improved slightly by 3 percent from 70 to 73 percent, resulting from an increase in paper consumption.

Consumption, production and trade by grade

Grade	Consumption		Production		Capacity		Utilization
	Volume	% of total	Volume	% of total	Volume	% of total
Kraft	1 260	54	1 473	55	2 196	60	67%
P&W	575	24	811	30	1 003	27	81%
Paperboard	205	9	197	7	283	8	70%
Newsprint	245	10	126	5	126	3	100%
Household & Sanitary	70	3	91	3	83	2	100%
Total	2 169	100	2 698	100	3 691	100	73%

Year 2002 Unit: thousand tonne

In 2002, total paper consumption went up to 2.3 million tonnes, a growth of 10 percent over that of the previous year. Per capita consumption of paper was 37 kg, up 3 kg from last year.

The paper consumption growth was driven mainly by an increase in the export sector and a continuing growth in domestic demand. Kraft paper grew significantly by 12 percent while growth in paperboard was up 7 percent. For printing and writing paper, domestic consumption increased by 9 percent as a result of the continual economic recovery which led to higher demand for printing and advertising materials especially in direct mail business.

The import of paper was 462 000 tonnes, an increase of 17 percent compared to that of last year. Newsprint paper, the biggest imported grade with 156 000 tonnes, accounted for 34 percent of total imports due to a shortfall in capacity and inventory building up from some publishers. Major exporters to Thailand were Japan, the United Kingdom, Singapore, Indonesia, Germany and Sweden.

Export was used as a means to balance the surplus production over the domestic demand. Export volume totalled 683 000 tonnes. Kraft paper accounted for 45 percent while printing and writing paper accounted for 44 percent of total export volumes. Main export markets were in Asia-Pacific regions such as China, Hong Kong, Malaysia, Taiwan, Philippines and Singapore.

Import

Import	Kraft Paper	P&W Paper	Paperboard	Newsprint	Sanitary	Others
2000	48	106	42	149	10	65
2001	46	89	40	137	11	69
2002	92	113	12	156	12	77

Unit: thousand tonne

Export

Export	Kraft Paper	P&W Paper	Paperboard	Newsprint	Sanitary	Others
2000	379	291	3	3	34	62
2001	346	325	8	5	38	45
2002	304	299	4	9	34	33

Unit: thousand tonne

b. Outlook for the future

For the paper industry, the consumption of paper is expected to increase by 6 percent, reaching 2.5 million tonnes in 2003. The additional capacity from Asia Kraft Paper of 150 000 tonnes of kraft paper has already started a trial run in the Samut Sakorn province (PPI Asia News, March 11, 2003). In addition, 10 000 tonnes of newsprint paper will be added up within 2003. If those projects would be completed as planned, total paper production capacity will reach 3.8 million tonnes in 2003.

Outlook by type

Year		2001	2002	2003*	2004*	2005*	2006*	2007*
Kraft paper	Consumption	1 129	1 260	1 323	1 389	1 458	1 531	1 607
	Capacity	2 196	2 196	2 346	2 346	2 346	2 346	2 346
Surplus (shortage)		1 067	936	1 023	957	888	815	739
Printing & writing paper	Consumption	536	575	621	652	685	719	755
	Capacity	998	1 003	1 003	1 043	1 063	1 073	1 083
Surplus (shortage)		462	428	382	391	378	354	328
Paperboard	Consumption	192	205	215	225	236	247	259
	Capacity	283	283	283	283	283	283	283
Surplus (shortage)		91	78	68	58	47	36	24
Newsprint	Consumption	236	245	255	265	275	285	295
	Capacity	126	126	136	136	136	136	136
Surplus (shortage)		(119)	(119)	(119)	(129)	(139)	(149)	(159)
Household & sanitary paper	Consumption	65	70	75	80	85	90	95
	Capacity	81	83	87	91	96	108	108
Surplus (shortage)		16	13	12	11	11	18	13
Total paper and board	Consumption	2 148	2 355	2 489	2 611	2 739	2 872	3 011
	Capacity	3 684	3 691	3 855	3 899	3 924	3 946	3 956
Surplus (shortage)		1 536	1 336	1 366	1 288	1 185	1 074	945
Population (million)		62.3	63.0	63.5	64.0	64.5	65.0	65.5
Per capita consumption (kg/person)		34	37	39	41	42	44	46

Unit: thousand tonne