Shanying Paper released its September business express report on October 11th. Data in the report showed company sales of paper and board reached 495,100 metric tons in September, +21.55% from a year ago and sales of converted packaging board rose to 150 million/m2, rising +22.83% at the same time. During the month, average sales price of paper and board went up +7.57% from 12 months ago to RMB3,530.37/mt and average sales price for converted packaging board reached RMB3.16/m2, after gaining +7.57% from that of 2019. The strong performance helped turnaround declines in the first two quarters of 2020 and enabled total paper and board sales in the 9-month period to top 3.30 million metric tons, which was up +0.58% from the corresponding period of 2019 and also allowed sales of converted packaging board to grow +8.92% to 1.04 billion/m2. Further, this minimized the declines in averaged price decrease in sales of paper and board to -1.58% and converted packaging board to -1.14% from the same period of 2019. Such achievement is really hard won under the current environment where the industrial packaging paper is facing greater challenges and profit margin is difficult to expand! To show its full confidence of growing performance, the company commits to publish its monthly data to the market for on-time review.

Through a decade of blazing expansion, Shanying Paper has overtaken many other producers and become the 3rd largest paper company in China after Nine Dragons and Lee&Man. It is now a conglomerate integrating such business as paper and board production, conversion and fiber sourcing. The completion in construction of the company’s new production base in Hubei, Central China, in addition to other bases in Eastern and Southern China, has expanded the company’s paper and board capacity in China to +6 million/mtpy and packaging conversion capacity to 1.2 billion/m2! More eye-catching is the start in construction of its Jilin Mill in September. Located in Northeast China, the project, at the planned capital investment of RMB11.2 billion and covering 166.67 hectares of land, will be able to produce 1 million/mtpy of pulp and 1 million/mtpy of industrial packaging paperboard after commercial runs. This is projected to add RMB7.0 billion annual output value and over RMB600 million pre-tax earnings to the whole group. Further, the company’s internet based packaging service has more than 20,000 registrants involving 39 contract production lines at the combined converting capacity of 590 million/m2 by end-June this year. Sources say the company has finished compilation and will shortly make public its 5-Year Strategic Development Plan.

Still, senior executives believe the excess supply over demand in the country’s packaging business is the result of structural issues in the industry capacity formation. In the years to come, industrywide elimination of obsolete capacity will speed up. Mills at a combined 19 million/mtpy of such capacity, whose individual capacity is below 300,000/mtpy and consume low-end domestically recovered fiber, will be eliminated and replaced. During and after the process, the industry operating rate will be improved and market position of large producers will be further strengthened.