Paper and Pulp Industry In Brazil

Patrick Bruha

Staff Writer
The Brazil Business

Updated

17 September 2014

Brazil has a promising paper and pulp industry and is one of Brazil’s most profitable agricultural exports. Brazil ranks highly in the list of producers of these type of goods. In this article we will take a look at this industry.

Overview

Following the pace of other developing countries - again led by China - the Brazilian paper and pulp industry is experiencing steady growth. Spread across 540 municipalities, the 220 companies in this sector generate around 128.000 direct jobs - 77.000 working in the industry and 51.000 working in the forests. It also accounts for almost 640.000 indirect jobs.

Reforestation is a key objective in the Brazilian paper and pulp industry as this is the sector’s main source of trees. These industries planted more than 2,2 million hectares of trees in 2012.

In addition, it is worth mentioning that the success of the Brazilian paper and pulp industry - although it can be attributed to various factors - is also due to growth in the productivity rates presented by reforested areas:

• Eucalyptuses had a productivity of 24 m³ per hectare in 1980. In 2013 the productivity was 44 m³ per hectare
• Pine trees had a productivity of 19 m³ per hectare in 1980. In 2013 the productivity was 38 m³ per hectare

Market size and growth

In 2013 Brazil was the world’s 4th largest pulp producer, producing more than 15 million tons and ranking only behind Canada, China and the United States. The Brazilian production of pulp accounted for 8,3% of the global pulp production in 2013.

Brazilian paper production ranked 9th in 2013, with an yearly production of nearly 10,5 million tons. In relation to the global paper production that year, the Brazilian industry accounts for only 2,5%.

Figures posted in the Brazilian paper and pulp industry since 1970 show a steady growth. Pulp production grew at a pace of 7,1% per year and paper production grew 5,4% annually until 2013.

Compared to the same period in 2013, production of pulp in June 2014 presented a growth of 7,6% according to Ibá, the Brazilian Trees Industry which is the institution representing all industries that use planted trees as a main product source. Thus, the production of pulp in June 2014 reached 1,3 millions tons. In addition, the total quantity of pulp produced in the first semester of 2014 was 7,8 million tons which is a growth of 5,4% when compared to the first semester of 2013. It is also worth mentioning that the apparent consumption of pulp in Brazil - the total production plus imports minus exports was 6.129 million tons in 2013, a growth of 4,9% over 2012 and due to the increase in this sector’s production. Finally, the yearly production of pulp grew 8,2% from 2012 to 2013, totaling more than 15 million tons of pulp.

On the other hand, the paper production industry reported a growth of only 0,2% in June 2014 when compared to June 2013. According to Ibá it also reached 864 thousand tons in that same month. For the first six months of 2014 the total quantity of paper produced was 5.167 million tons, a growth of only 0,2% when compared to the same period in 2013. Moreover, the apparent consumption of paper in Brazil - the total production plus imports minus exports - was 9.852 million tons in 2013. Finally, the yearly production of paper grew only 1,8% from 2012 to 2013, reaching nearly 10,5 million tons of paper.

Foreign trade

The Brazilian trade balance of the paper and pulp industry has always been favorable to Brazil. According to Secex, Brazil’s Secretariat of Foreign Trade, the years when the paper and pulp industry was less favorable to Brazil were between 1996 and 1998, where the trade balance was just USD 1 billion. Since then the Brazilian paper and pulp industry trade balance has continued to grow, reaching its highest level in 2013, with a balance of USD 5,3 billion favorable to Brazil. This is a growth of 12,8% when compared to 2012.

One of the main factors in the success of this industry’s trade balance is the growth in productivity of the sector’s main source of trees - the reforested areas. These led to a growth in exports, while maintaining the imports levels at a relatively low rate. Exports of paper and pulp accounted for USD 7,1 billion in 2013 whereas imports were kept at USD 1,9 billion.

The future outlook for this sector is pretty optimistic: when compared to June 2013, the June 2014 exports grew by 23,6%, whilst the trade balance is accumulating growth by 7,3% in 2014 when compared to the same period in 2013.

Amongst Brazil's’ most important agricultural export products, paper and pulp are the second most rentable of them, when taking into account the profits made by each hectare planted. The Brazilian paper and pulp industry planted 2.2 million hectares of reforestation trees in 2012 and their exports totalled USD 6,7 billion. This makes a proportion of USD 3.026 per hectare, more than three times the same proportion of planted soybean - the top Brazilian agricultural export - which is USD 965 per hectare.

International and domestic producers in Brazil

Presented in the following table are the 10 most important international and domestic producers operating in Brazil: