The Australasian paper trade with the EU and the UK will not be significantly impacted by Brexit. Paper imports from the UK, especially of printing and communication papers into New Zealand, 'can be expected to be cheaper in the short to medium term,' according to industry bible Pulp & Paper Edge.
In the short term, the turbulence in the EU and UK relationship will cause friction between the European region’s economies, but outside Europe and especially the UK, the implications will likely be limited to: Lower value GBP will make exports from the UK cheaper to many destinations, including Australia and New Zealand.
Despite low levels of paper imports from the UK, these may increase in the short term. In a detailed analysis titled Brexit, the UK and the Australian and New Zealand Paper Trade, the latest Pulp & Paper Edge, available from the IndustryEdge website, said:
Having depreciated approximately 15% as a result of the Brexit decision, it seems unlikely that the UK Pound (GBP) will recover the ground it lost to most currencies in the near term. This has flowed through to the higher valued Australian and New Zealand dollars, both ‘safe havens’ where relatively higher yield is available at relatively low risk.
While this will challenge exporters from Australia and New Zealand, including of paper and paperboard, the export lines are largely niche and are likely to prove resilient to the currency movements.
Imports from the United Kingdom, especially of printing and communication papers into New Zealand, can be expected to be cheaper in the short to medium term. In the longer term, the implications of Brexit for trade in paper and paper products is unlikely to be significant for Australia and New Zealand.
Some pressures for the UK to trade with member countries of the EU may have dissipated, to the advantage of other trading partners, but given the small Australasian trade profile, there is limited upside for Australia and New Zealand.
Of more significance, there is a growing trade in UK-made graphics equipment, a revival of what was once a significant machinery trade for the Australia/NZ industry. IndustryEdge said exports to the UK were unlikely to be impacted by Brexit.
There is no reason to expect disruption of Australia’s label exports to the UK, or of New Zealand’s exports of packaging materials.
These are clearly niche products, for which markets have been established over long periods of time.
However, IndustryEdge warned that the cheaper British pound could pose a future threat.
The only qualification, and this is potentially serious, is that the depreciated GBP makes all imports more expensive. Cheaper alternatives may become available, at the expense of Australasian paper and paperboard supplies.