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China’s Industrial Packaging Board Industry Grows Amidst Changes
2020-06-23 08:30chinapaperonline.com
Following the global trend for more recyclable paper-based packaging, China’s packaging paper and board industry has performed positively in general since 2010. Thanks to consistent growth in demand and active investment in capacity, with containerboard in particular, the industry’s annual production increased most of the time until 2018 when the country’s economy slowed down after decades of active growth.

The negative performance in 2018 appeared to be a short break as positive advance resumed in 2019. According to the annual report of China Paper Association (CPA), 65.15 million metric tons of packaging paper and board were produced in 2019, rising +3.8% from 2018 and +16.3% from 2010. This included 44.10 million metric tons of containerboard, which rose +3.8% from the previous year and +17.6% from 2010! The positive performance has thus enabled a near balance in production and consumption, leaving little room for either imports or exports.

Trade-off Performance. At a closer look, however, one can see that such near balance is achieved and maintained through the booming of containerboard industry on the one hand and increasing uneasiness in folding boxboard sector on the other. According to CPA data, China’s folding boxboard production – 95% from coated SBS and recycled board – began to significantly exceed consumption in 2013. Thereafter, production outpaced consumption by roughly 10% annually! And the volume had to find a home in the overseas markets, in order to keep the domestic market from chaos. This also speeded up capacity erosion, which shrank to about 20 million/mtpy by end-2019, according to industry sources.

Under enhanced environmental scrutiny from the government and great economic uncertainties in 2020, it is expected that more mid-to-small packaging paper and board producers will find it harder to keep operation, opening up new opportunities for industry consolidation and strategic repositioning by large and solid producers.

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