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China Paper Industry Back in Strong Growth Pattern

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In 2009, under the active macroeconomic policy control of the government, China's papermaking industry on the whole overcame such difficulties as shrinking demand, reduced capacity utilization, and augmented product inventories resulting from the financial crisis, and started rising gradually. A new report by Reportlinker, New York, N.Y., USA, titled China Papermaking Industry Report, 2010 notes that this year the industry accelerated the pace of development and has seen substantial growth in various economic indicators. The whole industry achieved operating income of RMB 361.2 billion and total profit of RMB 20.5 billion in the first eight months of 2010, up 31.67% and 58.66% year on year respectively, according to the new report.

Overall, China's papermaking industry has experienced several major changes in 2010, Reportlinker says. The revenue and industrial sales output value have risen sharply year on year. Costs have climbed due to the rise in prices of raw materials such as wood pulp. The packaging paper industry has grown rapidly, driven by growing export demand. The elimination of backward capacity has been intensified, and 4.65257 million metric tons of capacity was eliminated in August 2010. The production concentration has increased, and the top 30 papermaking enterprises (by output) are expected to account for more than 40% of the total industry output in 2010.

From the perspective of regional development, in 2010, China's papermaking industry is still concentrated in eastern and central regions, mainly including Shandong, Henan, Guangdong, Zhejiang, and Jiangsu, the Reportlinker report explains. In the first three quarters of 2010, top 10 regions by output of machine-made paper and paperboard, linerboard, and paper products achieved total output of 62.2423 million metric tons, 9.2134 million metric tons, and 27.5602 million metric tons, respectively, accounting for 84.81%, 83.43%, and 79.06% of the total output, respectively. The regional concentration of paper products decreased while machine-made paper and paperboards increased year on year.

The new report concludes that, under the influence of such factors as policies for backward capacity elimination, rising raw material prices, and RMB appreciation, China's papermaking industry will see a fall in the output and a rise in demand and prices. From the perspective of specific products, the low-grade cultural paper with straw pulp as the main raw material is the object of backward capacity elimination in 2010. Medium and high-end cultural paper, as the substitute for low-grade cultural paper, will see a rise in both output and prices. Packaging paper will witness a substantial increase in the demand as a result of the rapid development of downstream industries such as electronics and communications, household appliances, food, pharmaceuticals, household chemicals, textile, tobacco, and alcohol.


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