gnspa - gns could trump 1h if bought gnspa, page-35

Lordo, I think you're on the money. Japan has traditionally paid high prices for Australian woodchips than any other country. I believe it was because their domestic pulp and paper industry was artificially protected by tariffs/regualtion. China cannot pay the same prices.

With the continual recessionary state of the Japanese economy, the demand for Aus woodchips has declined significantly. I'd think they'd now be giving preference to the better quality plantation wood compared to native forest pulp wood.

On the otherhand, the Chinese demand for pulp wood would have grown like everything other commodity has. I reckon they will have been driving hard bargins, and Gunns margin must have contracted significantly on those sales. The high Aus$ will have just aggrevated it further. I agree the Chinese will have been sourcing wood from closer sources (Vietnam etc). As the Chinese market for pulp wood is relatively immature, I reckon they would take cheaper poorer quality wood from anywhere, including Aus native forest chips, until they wake up to the processing cost it imposes compared to plantation hardwood.

I think the problem GNS faces in the short term is that the Japanese will now be arguing for "Chinese" prices. In the long term I think it will come right. The demand for paper in growing economies is enormous and correlated directly to GDP. As the revival in the world economies takes hold, the demand for pulp wood will eventually out-strip supply. The world is fast running out of production wood! Gunns (or its successor) will make a lot of money from China, India, and maybe a dribble into the declining Japan.