(www.chinapaperonline.com) Large numbers of corrugated sheeting and box making operators in Southern China’s Guangdong province have announced to extend their facility shut-downs to February 13 or later, in line with the government’s enhanced prevention to possible spread of the novel coronavirus and the lack of workforce at factories as a result.
For those who are still able to operate at 50% rates, low stock of linerboard and medium is becoming a serious concern. Because of the heightened inspection and quarantine that almost halted collection and shipment of recovered paper, linerboard and medium producers in the country are also extending downtimes due to the lack of fiber supply and returned workers.
In other parts of China, situation is as serious. A survey made last week involving 65 sheeting facilities in Eastern China showed that only 3 were able to resume operation, indicating a 5% operating rate in the industry, according to media reports. While some sheeters remained hopeful of production resumption before February 17th, others would rather wait from the government’s further direction to pick a date.
Things could be even worse among the country’s box makers who would stock little converted sheets by tradition. In Zhejiang, Eastern China in particular, box makers, mostly running at tight cash flows in the general economic slowdown in 2019, would only begin to schedule diet cutting when corrugated sheets were delivered to their facilities. With barely any deliveries of corrugated sheets, their operations had come into a virtual stop!
In view of the above, more market observers are seeing that by late-February when the spread of the novel coronavirus is largely in control, there will likely be an outburst of demand in the entire paperboard production and converting industries for fiber from the containerboard producers, linerboard and medium from the sheeters and corrugated sheets from the box makers. And price of all related materials and products may spiral. The good news is that as of Feb. 10th, Chinese banks, led by the central bank, have injected RMB3 trillion into the economy through various monetary means and products. At the same time, the government is taking steps to reduce taxes to manufacturers, especially mid-to-small ones. More encouraging was the decision of the State Council to launch a number of “large projects”, which will quickly impact multiple industries The will allow the country’s manufacturers, including paper and board producers and converters, to avail themselves with more funding at lower cost and new orders to boost their business operation.
