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Will More Containerboard Imports Be A Fair Option?
2019-04-01 09:05chinapaperonline.com
(www.chinapaperonline.com) China’s paper industry used to be a heavy consumer of straw and other types of non-wood fiber until the turn of the century when mass restructure took place to transit much of the industry to recovered paper consumption. This was especially true in the industry’s containerboard sector where almost all large investments were based on furnishing from OCC. As China’s domestic collection could at most meet half of the demand and there was a limit in adding chemicals to the board, the industry took to overseas OCC supplies to cover the balance of fiber demand.
Looking at the past 10-year industry performance, we saw a co-relation between China’s containerboard production-consumption and OCC imports. While medium production primarily consuming locally baled OCC, linerboard production relied predominantly on foreign OCC! When the country’s linerboard production and consumption grew, China’s OCC imports increased as well. And OCC imports contributed to at least 70% of the country’s linerboard production from 2009 to 2016. In 2017, however, China’s OCC imports fell -13% from 2016 – the 2nd historical peak of 16.74 million metric tons – as a result of enhanced environmental scrutiny and reduced import quota hand-outs from the government, regardless of the +3.5% growth in linerboard production and +6.2% rise in linerboard consumption. In 2018, situation was even harder as China’s OCC imports tumbled to less than 13 million metric tons and its contribution to the country’s linerboard production and consumption shrank to 62% and 60% respectively.

To the country’s linerboard producers, it is painful to gear down running of many of their large and state-of-the-art machines under billions of dollar capital investment because of the lack of fiber and thus being unable to respond to the active containerboard market and rising price. Even when the economy slowed down in 2018, online retail sales growth in China continued and required more corrugated boxes at all size!

Alternatively, China’s linerboard imports surged. In 2017, import volume nearly grew +46% from the previous year and by 2018, deliveries into China exceeded 2 million metric tons, rising +51% from 2017 and more than doubled from a decade ago!
The question now is: can more linerboard imports be a long-term alternative or replacement to China’s domestic production of testliner using imported OCC, taking into consideration the high cost in linerboard imports over that of domestic board production and more importantly the fact of the immense capital investment already made in China to build the No. 1 recycled fiber based containerboard industry in the world? Or put it another way: can the China market afford to more imports going forward? If not, what should be a fair solution?

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