China's boxboard industry, with +95% coated grades, began its upgrades from mixed fiber or fully recycled fiber duplex board to virgin fiber SBS board in the early 2000. And the transition accelerated after 2015 under enhanced government calls to protect the environment that requires the industry to eliminate at designated times those environmentally unfriendly mills in Eastern and Southern China. Except for 2018 when the country was under recession pressure, the changes had no much negative impacts on the overall output of the country's boxboard industry. In fact, production in 2020 would grow +5% from 2019 to 14.80 million/mt, in line with a +6.5% rise in consumption to 13.60 million/mt, according to the China Paper Association (CPA).

Today, the traditional mixed fiber or fully recycled fiber duplex board, once over 15 million/mtpy by capacity and run by hundreds of mid-to-small mills, have now yielded to +10 million/mtpy of coated SBS board capacity under the Big-4 headed by APP(China)! With the start-up of more new machines after the 3rd Quarter 2021, China's coated SBS board capacity will exceed 12 million/mtpy by 2022. Still, investors are confident of the growth prospects in consumption, given the double-digit projection of consumption growth for 2021 by some analysts who are elated by the country's further restriction on plastic shopping/food packaging bags and expansion in application of SBS board under the global pandemic.

Though mill shut-down and/or diversion continue, which cut capacity of coated/uncoated mixed fiber and recycled fiber duplex board below 10 million/mtpy by now and machine utilization rate as low as 50% at one point, moderate improvement was seen from the 3rd Quarter this year and the industry may contribute half of the volume to the overall boxboard production in 2020. In addition, there are new and scale investments, such as the start-up of a 300,000/mtpy uncoated recycled fiber boxboard machine at Jinlong Paper in Eastern China's Zhejiang Province in early December.