Paper machine startup amid slow economy

By Annie Zhu, Associate Editor, Pulp & Paper International magazine

SHANGHAI, Aug. 27, 2009 (RISI) - It is always exciting to see the start up of trail runs of a new production line in a paper mill, especially during a slow period in the pulp and paper industry.

On my recent visit, pride, passion and good cheer was everywhere in the Yueyang Paper mill, around 2.5 hours drive from Changsha airport, Hunan province, in the south west of China, especially when the first fresh roll of offset paper (uncoated printing and writing paper) came off the brand new machine.



The 200,000 tonne/yr unit, PM 10, was supplied by Voith Paper. It has a wire width of 5.85 m and a design speed of 1,400 m/min.

“The technology we adopted for this project is widely used around the world and is mature and reliable,” says Doris Xu, project manager of Voith Paper China.

Nearly a quarter of the total paper machine investment of Euro 84 million was made up of machine parts manufactured in China.

Chinese speed

A big picture of Mao Ze Dong hangs on the wall at the site, hinting that this province is the home of China's political giant. Above it, a traditional Chinese banner in red, says “Congratulations on the start up of Yueyang Paper’s 400,000 tonnes paper production line in time”.

“It took only 16 months for us to start up this project, which maybe is the shortest time to complete a big project like this in China,” says Wu Jialin, chairman of Hunan Tiger Forest Paper Group, parent company of Yueyang Paper in an exclusive interview with PPI.

The speed of Chinese development should not be news to anyone, and almost all paper grades have expanded fast in the country in the past few years. In 2008, paper and board production in China reached 79.8 million tonnes, up 12.78% each year on average since 2000, according to China Paper Association.

However, the fast expansion has aroused over-capacity concerns when companies saw over stocked products and reduced prices, and the pace has been slowing down since the world financial crisis broke out last year.

Yueyang Paper’s project started up at a time when big projects in China were resuming construction and negotiations, after the government launched a RMB 4 trillion ($586 billion) stimulus package in November 2008, and eased bank credit to spur domestic consumption and industrial activity. However, some projects are still postponing their startup dates with the aim to wait for the market to pick up further.

“The Chinese pulp and paper industry has experienced an irrational development period, but we are clear now what the market needs…We made this project on time as we believe the market needs high quality offset paper at low cost, though the domestic market for this paper grade is more or less balanced. We hope that our production can replace some imports and hopefully we can sell abroad in the near future,” says Wu.

China produced 14 million tonnes of uncoated printing and writing paper in 2008, while consumption reached 13.85 million tonnes in the year, according to China Paper Association. The imports and exports reached 390,000 and 540,000 tonnes in 2008, according to General Administration of Customs of China.

“This paper grade is growing slowly and doesn’t involve much international trade, and over half of the output is of low quality. The sector needs to be restructured,” commented Dr. Cao Zhenlei, president of China National Pulp and Paper Research Institute, and vice president of China Light Industry during the RISI Asian Pulp and Paper Outlook Conference in June this year.

Voith is also supplying an identical machine for the same mill, PM 9, which is slated for startup in mid-October.

Voith and Yueyan personnel in front of the first roll produced by PM 10

Next steps?

When asked about the next steps for Yueyang Paper after the two new lines, Wu explained that the company will focus on “high quality, speciality and new products”, and might also look into tissue paper, liquid packaging board (LPD) and industrial paper grades, which are still lucrative in the domestic market.

“There is a Chinese saying – ‘if you have grain in hand, there's no need to worry’. One of Huan Tiger’s big assets is its 1.82 million mu (121, 333 hectares) woodland resource, which is a strong backup for us to explore the market further,” says Wu.