Last week, Jinzhou Paper in Dongguan, Guangdong Province announced plans to take a 24-day downtime involving 3 containerboard machines effective from September 24th. Nearby, Lee & Man Paper (Guangdong) also told customers of schedules to shut down two containerboard machines for equipment rebuild from September 9th to December 31st. Unlike the industry tradition to take maintenance downtime or machine upgrades in the 1st Quarter of a year, most often prior or after the Chinese New Year holiday, Jinzhou Paper and Lee & Man Paper chose to stop their machines at the high season this time. Contrary to the clear statement of Lee & Man to shut down the machines "due to recovered paper supply shortage and the need to upgrade paper machines", Jinzhou Paper only informed customers of the downtime days.

It is learnt, however, that the downtime at Jinzhou Paper is primarily for equipment modification. The 3 machines affected are: PM4 (at 4.4m trim width and at 150,000/mtpy designed capacity), PM5 and PM6 (both at 4.6m trim width and at 250,000/mtpy and 200,000/mtpy designed capacity respectively). All three machines are producing various grades of recycled fiber based containerboard. After the modification, the machines will be able to run faster, with PM5 up to 800m/min. and PM6 up to 750m/min. in particular. This will increase the machines’ production capacity significantly. For Lee & Man, the affected PM7 and PM9 are also running recycled fiber-based containerboard at the designed capacity of 300,000/mtpy each. The shut-down will enable the company to replace the recovered paper pulping lines in the above two and other machines at the mill site with a new 400,000/mtpy wood fiber thermal pulping line.

It is true that production suspension for machine upgrades by two mainstream containerboard producers in the locality during the high season, especially the extended suspension of two relatively large machines at Lee & Man, may not only affect sale revenue of the two companies, but also impact supply to the market in Southern China where demand for domestic and export packaging peaks by tradition. Long-term, however, recovered paper resources are limited and tightness in supply is growing day after day. The deep dependence on recovered paper in containerboard production by local producers needs to be overhauled as early as possible. Taking into account the relatively developed economy in Guangdong with stronger demand for domestic and export packaging than interior parts of the country and strict environmental protection requirements, it would be more realistic for mills to do machine rebuild or system upgrades at the existing mill sites to consolidate and enhance their competitiveness in the Southern China market. In fact, the strategy has already been responded to by other mainstream paper companies in the region. The local government, for example, is now making EIA announcement on Jintian Paper’s 200,000/mtpy wood fiber thermal pulping line project. According to the plan, Jintian Paper will spend RMB1.8 billion to build the line to replace its same capacity recovered paper pulping line in an attempt to ease pressure by tight supplies of recovered paper. It is expected that more paper makers in the area will choose to upgrade their equipment at the existing locations in the coming years.