China's Slowdown Leads to a Diaper Depression

(Bloomberg) -- Not even diapers are safe from China’s economic slowdown.

The Asian nation is buying less of the fluff pulp used in baby diapers and adult incontinence products, according to International Paper Co. Sales to China started to soften in the fourth quarter, and it’s unclear whether buyers are using less or trying to draw down existing inventories, said Chief Executive Officer Mark Sutton.

It’s not known whether demand is likely to “snap back” after China’s Lunar New Year holiday, which takes place next week, Sutton said in a telephone interview. “We’re going to be watching that closely.”

The dip stands in contrast to a boom in global demand in recent years, including in China, where consumers have increasingly sought “semi-luxury products” as their incomes grow, Sutton said. Paper makers had been expanding production of moisture-capturing fiber known as fluff pulp used in diapers, partly as an aging population drove sales. China accounts for 30 percent of International Paper’s fluff-pulp sales.

“It’s an important market because it’s big and because it’s growing,” Sutton said.

To contact the reporter on this story: Jen Skerritt in Winnipeg at jskerritt1@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Millie Munshi, Patrick McKiernan

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