By Annie Zhu, Features Editor, PPI magazine, RISI
SHANGHAI,
Sept. 23, 2008 (RISI) -
I have had a very busy and informative week over here in China. Starting in Shanghai, I attended the China Paper 2008 forum last Tuesday, I then hot footed over to the Metso Technology days, just before embarking on a tour of some of the most advanced paper mills in the country. Now I am in Beijing attending the China Paper Industry Chamber of Commerce (CPICC)'s first China Paper Development Conference.
This high activity all goes to prove that the Chinese pulp and paper market is still surging forward compared to the gloomy market in the US and Europe, which is being highlighted at all these events I have been attending.
The world largest producer
"China's medium and large scaled companies produced 48.51 million tonnes of pulp and paper during January to July, and the country is expected to produce 83 million tonnes by the end of this year, which will become the biggest pulp and paper producer in the world overtaking the US for the first time," says Guo Yong Xin, China Light Industry Information assistant director at the CPICC conference.
Major orders to both Metso and Voith also confirm that there is confidence in growth in the future.
Metso's order book in China for 2008 includes Zhanjiang Chenming, pulping line and recovery boiler; Fujian Nanping Paper, fine paper machine; Shandong Bohui, coated board line and for Nine Dragons, two board machines.
In addition, Metso Paper plans to strengthen its services in the nation by opening a new service center in Zibo, Shandong province in 2009, on top of its two service centers in Wuxi and Guangdong.
What's more, Metso Automation will invest Euro 20 million ($28.9 million) in China to support its global presence strategy. The investment includes new facilities for a valve factory and supply center, production of automation systems, and facilities for sales, project and engineering units.
Voith also has had a healthy order situation in the past few years, with Huatai's PM 11 and PM 12, Sun Paper PM 21, and Nine Dragons PM 11. The supplier also had a rebuild project at APP Ningbo Zhonghua PM 4, to name just one.
Other major new orders for Voith in 2008 include Oji Paper's 400,000 tonnes/yr coated woodfree paper machine at its greenfield mill in Nantong city, Jiangsu province, China. Startup is scheduled for mid-2010. Yueyang Paper has signed up Voith Paper to supply two new printing paper machines for a greenfield mill in Yueyang city, Hunan province, in China.
Voith Paper City in Kunshan, Jiangsu province, is the new home to Voith Paper in China, which include fabrics, rolls and systems. The supplier will also build a R&D center in the plant at a later stage.
In Huaihua city in Hunan province, in the southwest of China, the nation's largest BSK pulp line has started commercial production on a 400,000 tonne/yr pulp line, supplied by Andritz, at Hunan Tiger Forest & Paper's greenfield mill, Hunan Juntai Pulp & Paper, the largest BSK pulp line in China. (Please see PPI October.)
Next move
However, there are concerns about overcapacity in the booming Chinese market and the breaks were full of discussions on the subject at the events I attended during the last week. Word has it that some mills are not running at full capacity currently amid the gloomy world economy and high inventories piled up before the Olympic games. Also, it has become more and more difficult to secure bank loans or seek funding in the stock market to purchase machines amid the uncertain economy in China and the rest of the world.
So what is the next move for the major players in the Chinese market which have grown so fast in the past few years?
"Our focus is to make the company stronger by improving paper qualities, saving energy and protecting the environment, and controlling the speed of expansion," says Li Jian Hua, chairman of Huatai Group.
His statements are echoed by Wu Jialin, chairman of Hunan Tiger Forest. "We need to promote green paper and need to save energy and protect the environment, which is the trend in China currently," says Wu.
Cheung Yan, chairman of Nine Dragons believes that waste paper recourse is not a bottle neck for the company's further improvements, and China has a huge demand on the basis of its large population. "If it is possible, we should also export our products to compete with world players," says Cheung.
This, combined with other challenges such as the closing 6.5 million tonnes of "polluting" capacity by 2010, raw material challenges, quality and environmental issues, certainly are going to make for interesting coverage way into the future as China feels its way forward to becoming the leading producer of paper in the world.
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