In recent years, with the development of Chinese economy, the papermaking industry has continued to grow. In 2000, the total output of paper and paperboard was about 30.5 million tons and increased to 125.42 million tons in 2017, with the CAGR up to 8.7% from 2000 to 2017.
According to the analysis of CRI, the sub-sectors of the papermaking industry present diverse prospects. With the rise of internet media, especially the popularity of mobile Internet apps, traditional printing media like newspapers, magazines and books have gradually declined in circulation, leading the demand for and production of newspapers to constantly drop. For another, the improvement in the living standards of Chinese residents has driven up the production of household paper. Also, the output of packaging paper is lifted by the development of logistics, especially the increase in express delivery, which is fostered by the growth of e-commerce.
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The analysis of CRI shows that in recent years, wood pulp and waste pulp has taken up bigger shares in the raw materials for papermaking while non-wood pulp has been on the decline. Waste paper plays an increasingly important role in the development of the papermaking industry of China. The import volume of waste paper increased from 2.516 million tons in 1999 to 29.28 million tons in 2015 with the CAGR reaching 16.6% from 1999 to 2015. From 2016 to 2017, the amount of imported waste paper decreased due to the stricter policies of the government. Since Mar. 1st, 2018, Provision on Imported Waster Paper for Environmental Protection has taken effect. The new standards on the impurity rate of the imported paper have also been carried out, decreasing from 1.5% to 0.5%. The bar raised by the new standards poses great impacts on the amount and price of the imported waste paper. The new standard will lift the cost of sorting waste paper and thus affect its sales in China, the largest consumer in the world.
In terms of the approval of quotas for waste paper imports, many batches of small amount are adopted. Large enterprises like Panlong Paper, Liwen Paper, and Shanying Paper gain greater advantages to secure the quotas. In 2017, the top 5 papermaking enterprises obtained 62.6% of the quota. In 2018, the quota of large enterprises is expected to increase. Due to the decrease in imported waste paper, the price in the Chinese market will be lifted, which consequently drives up the cost of papermaking.
CRI report also indicates that Chinese papermaking enterprises are in great quantities in low market concentration. By the end of 2017, there were about 2,700 enterprises making papers and paper products with more than CNY 20 million in annual sales. The average annual capacity of those enterprises was less than 50,000 tons, far lagging behind the international level. In 2017, the number of enterprises which made paper of more than 1 million tons was less than 30.
From the perspective of the regional distribution of paper-making enterprises in 2017, the output of paper and paperboard in Guangdong was 21.7774 million tons, ranking first in China, and the output in Shandong was 21.7750 million tons, ranking second. The total output of paper and paperboard in the two provinces accounted for one third in the country. Now it has been the trend for papermakers to make investment or merger across regions, paring down the regionality. For example, Chenming Paper and Huatai Paper established factories in Shandong, Guangdong, Hubei, and Anhui. Nine Dragons Paper and Lee & Paper funded factories in Guangdong, Jiangsu, Tianjin, Chongqing, Fujian, and Sichuan. In another case, Hengan Group and Vinda located their workshops in different places across the country.
Currently, the export volume of paper and paperboard only accounts for less than 5% of the total output. In order to protect environment as well as satisfy domestic demands, the Chinese government does not encourage the export of paper and paperboard. Therefore, governments at all levels rarely publish supportive policies for the papermaking industry.
Chinese papermaking enterprises lack their own forestry property and mainly import raw materials for papermaking. The short supply of raw materials greatly affects the development of the papermaking industry as it rapidly grows. Also, the government policies and other extrinsic factors impact the import of raw materials.
CRI predicates that, with the development of Chinese economy and the rising living standards, the demand for household paper is growing. The development of e-commerce has promoted the increase in the express delivery, further driving the demand for packaging paper. It is expected that from 2018 to 2022, the overall demand for paper products in the Chinese market will maintain an annual growth rate of 3% or more, and the papermaking industry, to a certain degree, can bring about some investment opportunities.
Policy environment of the papermaking in China
Supply and demand in papermaking industry
Market competition in papermaking industry of China
Demand of the Chinese market for imported waste paper and other raw materials
Quota system of import waste paper by the Chinese government
Key enterprises in paper industry and their operation status
Price trend of raw materials in the papermaking industry of China
Driving forces and market opportunities in the papermaking industry
Threats and challenges faced by the papermaking industry
Forecast on development of China papermaking industry, 2018- 2022
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