(www.chinapaperonline.com) As announced on Jan. 10th, Shanying Paper – the 3rd largest containerboard producer in China - decided to relocate 1 million/mtpy of containerboard capacity from its Hubei project to Southern China’s Guangdong Province.
Previously planned as the III Phase, which would complete the company’s project in Central China’s Hubei Province with a 2.2 million/mtpy containerboard production hub, 1 million/mtpy capacity will now be diverted to Guangdong as a new and stand-alone project to be constructed from early 2020, along with recovered paper pulping, warehousing and waste water treatment facilities, and beginning commercial runs in mid-2021 at the investment cost of RMB2.6 billion that had be raised from a number of funding sources. Different from projects in other parts of China, the Guangdong project will not only produce 1 million/mtpy of containerboard, but also recycle pulp sludges into brakes and process carried-on plastics scraps into pallets, according to the company strategy.
Shanying Paper, originating from Fujian Province, Eastern China, began its expansion to Jinzhou, Hubei Province in Central China in 2015. In competition with Nine Dragons and Lee&man, Shanying Paper invested RMB1.32 billion through 2 phases of construction to install 2 containerboard machines in the area at the combined capacity of 1 million/mtpy. Under the feasibility study of the investment project, the company projected annual sales revenues over RMB3.96 million and net earnings of RMB412.54 million. At 10.56% IRR, the company expected to fully recover investment in 7 years.
Industry analysts believe, however, that market in Central China needs more time to grow as dynamic as that of the coastal areas such as Guangdong in the South. For decades, Guangdong keeps its leading position in China’s packaging paperboard production, meeting with the strongest corrugated box demand for both export and domestic consumption in Southern and Southwestern China. The new investment in Guangdong may enhance Shanying Paper’s competitive edge and future earnings when the company has a solid presence in the area. The issue now is to find enough recovered paper or recycled pulp to feed the project once in operation, according to market analysts.
