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Linerboard Propels The Progress
2021-01-11 10:00chinapaperonline.com
Further to our previous discussion on the remarkable show of the containerboard industry to China's paper industry as a whole, we now should give tribute to the linerboard segment in particular. Confidence of investors to the consistent growth in demand was further boosted by the spur of e-commerce as a result of the pandemic. The +11% increase in linerboard consumption in 2020 was easily able to entertain the +5% growth in production and +68% surge in imports, according to China Paper Association (CPA) estimates. This also lifted up the performance of the corrugating medium, which expected a +10% rise in consumption, +4% up in production and +92% jump in imports in 2020.



Being the propeller to the progress of containerboard and the country's paper and board industry, linerboard seems to be most favored by investors. Incomplete data shows that among the +12 million/mtpy capacity start-ups in 2019-2020 and schedules for 2021, +70% are linerboard. And as it ranges from virgin kraft, kraft-top, prime OCC to regular OCC, etc., in grades, Chinese producers have a wide selection in fiber supply sources from enhanced domestic recovery, recycled pulp imports, unbleached kraft pulp imports and re-pulping job-lots imports. In recycled pulp alone, for example, China's imports could increase +180% from 2019 to 2.6 million/mt in 2020, according to CPA. Corrugating medium, however, does not have the luxury in terms of fiber supplies. So far, regular OCC and even some mixed paper from local collections are the main furnishing in China's medium production. In search for more and secure fiber resources for both linerboard and medium production, professionals are now encouraging the industry to re-explore non-wood fiber, including wheat and paddy stalks, and its pulping technology as well as the development of new technology to slow down fiber aging and deterioration, such as hornification, to allow more recycling. In addition, greater efforts will be made to increase domestic collection and investment in pulp mills in foreign countries. Further, the reported progress in using eucalyptus pulp in linerboard production in Brazil should also inspire their Chinese counterparts to tap similar fiber from eucalyptus now vastly grown in Southern China.

While expecting the long-term solutions to come, China's linerboard and medium producers have to deal with upfront challenges of fiber shortages. To keep a balance between secure fiber stocks and active response to demand that has prompted rounds of price increases, mainstream Chinese producers will take to machine downtimes in the 1st Quarter 2021. Following Nine Dragons' announcement to alternately shut down as many as 14 machines affecting nearly 250,000/mt of production in January-February, Shanying Paper also told the market it planned to take up to 26 days of downtime affecting 16 board machine and 130,000/mt of production from February 1st to March 15th. As other producers are bound to follow, market observers believe the price of containerboard will go up further from January 2021.

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