Beginning from the middle of May, China market saw a new wave of price increases in coated SBS board. A few mainstream distributors added RMB500/mt to their sales price, claiming that price would go up further to exceed RMB1,000/mt by the 3rd Quarter. What drove sellers to repeatedly raise sales price were not only the rising cost of raw materials for the production of coated SBS board and the maintenance downtimes taken by large SBS board producers in recent months, which led to a 500,000/mt reduction in supply to the market, but more importantly was the fast and substantial growth in demand of the society. By May 11th, list price of brand board at 250-400gsm. basis weight from mainstream producers already exceeded RMB10,900/mt at delivered terms, up nearly 93% from 12-month ago! Even after some correction in the latter part of May, it was still staying at historical high!

For decades, the production of coated SBS board - as compared with those other industrial packaging boards such as linerboard, corrugating medium and duplex board that are produced in huge volume - has to primarily consume imported virgin wood pulp and run at high cost to serve high-end cigarette, pharmaceutical and cosmetic packaging. All this makes coated SBS board a "hardly affordable" board to investors and consumers! With the progress in social awareness on environmental protection in general and the government’s enhanced restriction on plastic packages in particular, market attention began to focus on coated SBS board in recent years. Especially the outbreaks of the epidemic in 2020 made people see the huge prospects of coated SBS board in food and new emerging packaging! Reports say 35% of consumers worldwide have increased their use of home delivery food services and over 15% will not likely go back to their past shopping practices when life returns to normal. At least in China, the fact now is that coated SBS board is no longer a luxury board and fast and instant food packaged by the board has become common to ordinary people. Driven by growing demand and government’s policy to restrict plastics packages, China’s total demand for coated SBS board in 2021 is expected to rise nearly 12% from the 10.50 million/mt in 2020. Environmentally friendly SBS board will be the preferred board for packages in super-markets, express delivery and takeaway food services. Demand for paper-based and environmentally friendly food boxes will especially surge on the fast-growing online shopping platform. As required by the government's "National Food Safety Standards for Food Contact Paper and Cardboard Materials and Products", food-grade paper-based packages must be built with virgin wood fiber to be environmentally friendly. Therefore, food-grade SBS board is expected to become the main board replacing other traditional materials. This presents a promising future for SBS board!

According to official information, there are 21 SBS board producers in China, running 32 production lines at the combined annual capacity of 13 million/mt. APP Group (including Bohui), Chenming Papr and Sun Paper are the top-3 producers with more than 10 million/mt of annual capacity, or accounting for ¾ of the industry capacity. And over 14 million/mt of new capacity are slated in the next 5 years, under available information. Between now and 2023 in particular, about 6.70 million/mt are scheduled to start-up, including the 1.8 million/mt mill at APP's Guangxi complex. It is expected that production capacity of food-grade and other environmentally friendly with unique performance grades will grow more in the overall percentage. In a word, China's SBS board capacity will exceed 27 million/mt by 2025 and give birth to a few world-class producers led by APP, if all plans come true!