Korean papermakers have seen their fortunes dramatically improve since the Asian financial crisis, but the fine paper sector is still plagued by overcapacity. Shinmoorim is one of the companies that is banking on a recovery in the market

Shinmoorim speeds up as market slows down

A couple of years ago, the likelihood of further expansion in the Korean paper industry seemed rather remote. The industry was burdened by overcapacity as local paper and board demand slumped by 23% in 1998 following the financial crisis of the previous year. Added to that, several of Korea's highly leveraged paper producers were facing financial difficulty in servicing serious levels of debt. Survival rather than expansion seemed to be the name of the game.

Despite the poor industry outlook, Shinmoorim Paper - Korea's second largest fine paper producer - remained optimistic about the future of the country's paper industry and persevered with its investment plans. In May last year, the company started up a modern 200,000 tonne/yr fine paper machine at its Chinju mill, following a delay resulting from financing difficulties. The new Valmet PM, which is followed by an IHI offline coater, has already broken world speed records since it came on stream.

The investment in new coated capacity is a step toward implementing the company's value-adding strategy and away from production of uncompetitive commodity grades, which Shinmoorim believes are best left to producers in countries with strong wood resources. Production estimates for this year clearly indicate that the company is moving in the value-added direction. In 2000, Shinmoorim plans to produce 347,000 tonnes of coated woodfree paper and just 37,000 tonnes of uncoated woodfrees.

The company had originally planned to start up the new PM in December 1998, following the start of construction work in June 1997. But funding for the project was delayed by the financial crisis. The company was later able to proceed with the project when the International Finance Corporation (IFC) and AIG - two major shareholders in Shinmoorim, which hold 20% and 15% stakes, respectively - provided the Won 126 billion ($90 million) required to complete the project in October 1998. Total investment costs for the project reached Won 314 billion.

Shinmoorim’s latest expansion means that its site in Chinju is fully occupied

Record breaker

The mill's new paper machine, PM 3, has a design speed of 1,600 m/min and a wire width of 4.15 m. The PM set a new speed record at the beginning of this year, achieving 1,472 m/min for a 24 hour period on January 20-21, according to Valmet. This followed a record startup speed of 1,203 m/min. The PM was operating at 1,300-1,400 m/min in August and the company plans to boost the level to 1,450 m/min this year.

PM 3 produces base paper for double-coated woodfree art paper in a basis weight range of 46-90 g/m2. Shimoorim markets this grade under the Neo Art brand name. The new PM has a dilution type SymFlo D headbox. The dilution control module improves cross-direction (CD) control compared to conventional slice lip controls, and delivers a high standard of profile stability. This is an important quality benefit for the mill and end-users.

Stock flows from the headbox to the SpeedFormer HHS MB gap former. The forming section is followed by the SymPress B press section, which features three nips including a shoe press. After the press section, the web proceeds to the single tier, one canvas drying section. An inclined Symsizer size press follows the pre-dryer and starch is applied at this point. An Optihard calender and Optireel complete the line. This is the first PM installation in Korea featuring the combination of a dilution type headbox, shoe press and Optireel, according to the company.

PM 3 features extensive automation, including Damatic XDi automation and PaperIQ for quality control. A Sensodec condition monitoring system has been installed on the paper machine as well.

Speed and productivity benefits

The new paper machine offers several benefits for the mill, according to Dr Byeong-Soo Kim, senior scientist at the Chinju mill. Firstly, the high machine speeds made possible by the gap former arrangement lead to good productivity levels at the mill. In addition, the two wire design of the gap former delivers reduced two-sidedness compared to other forming configurations, thereby improving the quality of the paper.

High bulk in the paper structure is another benefit of the gap former. The two direction dewatering of the gap former - from both the top and bottom of the web - leads to a more even distribution of ash throughout the paper structure than is the case with fourdrinier forming sections. The practical benefit of the increased bulkiness is improved calendering action and a smoother, shinier paper.

According to Kim, the PM offers additional benefits. For example, the shoe press delivers low moisture content before drying, while steam consumption - at one tonne per tonne of paper produced - is relatively low as a result. Meanwhile, he has found that the Optireel operates efficiently and quietly, with smooth changes and fewer breaks than is usually experienced on other reels.

Offline coating

The base paper proceeds by conveyor from PM 3 to CM 3 for coating. This offline coater has a width of 3.54 m, a capacity of 600 tonnes/day and a design speed of 1,800 m/min. In early August this year, the coater was operating at 1,400 m/min. CM 3 features blade coating and four coating heads. The base paper is coated in the following sequence: pre, pre, top, top. "This (coating sequence) reduces curling," Kim explains. The curling problem is associated with conventional sequences which pre-coat and top-coat one side and then the other. This coating sequence also delivers reduced two-sidedness. The pre-coating on CM 3 consists of coarse ground calcium carbonate (GCC). Starch and latex are used as binders in the pre-coating stage. A top coating of fine calcium carbonate and clay is then applied to the web.

The coater features an infrared dryer and automatic profile controller, which deliver improved surface characteristics and reduced printing mottle.

The startup of the new PM boosted the output of the Chinju mill to 450,000 tonnes/yr, making it Korea's largest single mill producing coated woodfree paper. The mill also features two earlier paper machines and offline coaters (Table 1). The installation of PM 3 means that the 77,955 m2 site is fully utilized, leaving no room for further expansion.

According to Kyung Soon Lee, Shinmoorim's senior managing director, the Chinju mill is now a competitive, international scale, world class mill following the startup of PM 3 and CM 3. Lee also claims that the mill now boasts the highest level of productivity for a fine paper mill in Korea, given that its 599 employees turn out 450,000 tonnes/yr, equivalent to 750 tonnes per employee. This compares favorably to Hansol's Changhang mill, another leading Korean mill in terms of productivity, which has 1,000 employees and produces 550,000 tonnes/yr.

Thorough training of operators was an important factor in achieving a high standard of efficiency and productivity on PM 3. Operators selected to work on the new PM were trained for a total of six months, comprised of an initial month-long classroom component followed by on-the-job instruction.

Safety and maintenance were covered in detail during the operator training sessions. In addition, Valmet provided advanced training in Finland for a group of seven senior operators, who were then given the task of instructing colleagues on their return to Korea.

Shinmoorim has also upgraded other areas of the Chinju mill to increase value-added output. The mill's CM 2 was remodeled in July this year, to allow the machine to produce double coated paper - it formerly produced only single-coated paper. Meanwhile, CM 1 will continue to produce just single-coated woodfree paper.

The remodeled PM 2/CM 2 line has been set aside for production of medium weight grades, in the 70-87 g/m2 basis weight range. In the meantime, the original PM 1/CM 1 line produces the heavier weight grades, in the 90-230 g/m2 range. The new PM 3/CM 3 line is used to produce the lighter weights, ranging from 46-63 g/m2. The furnish used at the mill is a blend of bleached softwood kraft (BSK) and bleached hardwood kraft (BHK) pulp. A larger proportion of BHK is used for the higher grammages.

Shinmoorim Chinju draws its water supply from the nearby Nam river. Around 12,000 tonnes/day of water is used. Wastewater from the mill is discharged for treatment by the city effluent treatment facility. The Chinju mill uses 40,000 KW/day of electricity, all of which is drawn from the local grid. Shin Dong Energy, a sister company to Shinmoorim, supplies the mill's steam. The mill uses 2.3 tonnes of steam for every tonne of paper produced.

PM 3 set a new speed record of 1,472 m/min earlier this year

Largest coated paper player

This year, Shinmoorim is set to become Korea's largest player in terms of its share of the domestic coated woodfree market, according to the company. Shinmoorim's share of the market will increase to 25.5% in 2000, up from 20.7% in 1999.

This means that the company will overtake Hansol - Korea's largest overall paper and board producer - in domestic sales of this grade. Hansol will be left with an estimated 23.8% slice of the local market, falling from the 26% it held last year. On top of that, Shinmoorim's sister company, Moorim, which operates an 80,000 tonne/yr mill at Taegu, holds a further 4.5% of the coated woodfree market. The Taegu mill produces carbonless copy paper (CCP) and other specialty grades.

In the domestic market, Shinmoorim is able to provide just-in-time delivery to its customers. The company's central distribution center at Yaejang-Dong in Seoul services the traditional concentration of wholesalers and printers in the Chung-Gu district of the capital. A further two warehouses near Seoul and one in Daegu city serve the company's remaining domestic customers.

Although the PM 3 project has successfully set up Shinmoorim as Korea's largest coated producer, the impact of the new machine is not being felt as positively elsewhere in the country. The Korean industry is now faced with serious overcapacity in fine paper grades and producers are taking market downtime on a regular basis as a result. The startup of the new PM at Chinju has been one of the factors leading to the overcapacity. The setback to demand growth resulting from the economic downturn, which saw printing and writing demand fall by 37.5% in 1998, is another. The overcapacity situation has seriously hurt producer revenues - by August this year, prices had fallen to 23% below list prices.

Korean printing and writing paper producers began taking market-driven downtime this year in a move designed to restore a balance between output and demand as well shoring up prices to profitable levels. An average two days' market downtime was taken by producers of this grade in April, followed by a further four days in both May and June, and seven days in July and August.

Recovery ahead

While the present industry situation looks bleak, there is optimism regarding the longer term outlook. Shinmoorim's K S Lee is among the optimists and he expects demand to fully recover from the financial crisis-driven demand downturn during the course of this year. Furthermore, he forecasts continuing growth in demand going forward to restore the balance between demand and supply by 2002.

Meanwhile Shinmoorim, like other Korean producers, is placing its hopes on export markets to help make up for the shortfall in domestic demand. This year, the company hopes to export around half of its total output. Shinmoorim's main target markets are the US, China, Hong Kong, Australia, the UK and the Middle East. The location of the mill in the far south of the country near the port of Pusan - Korea's second largest city - is a good location for export purposes. The large Japanese market is right on Pusan's doorstep as well - although Korean producers have met difficulty to date in penetrating this lucrative market.

Prior to the 'IMF shock' crisis in the late 1990s, Shinmoorim had also been planning a major investment in coated fine paper production at a greenfield site in Yeonki. The project was delayed indefinitely by the financial crisis. However, the company has not abandoned the project and it plans to revive the project in the future once the domestic market recovers and the export situation improves. Shinmoorim has not sold the land purchased for the project and this is a significant indicator of the company's intentions, as level land suited for industrial uses is in short supply and costly in this mountainous country.

Whether or not this project goes ahead, Shinmoorim certainly has enough on its plate in the meantime. With a new PM at the mill, the company has to keep pace with the machine's ever increasing speeds and also make sure that the markets catch up in terms of paper demand.

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