In the "Silver Age": How Competitive Is China's Paper Industry, Really?

China Pulp and Paper Research Institute Co., Ltd.

China Pulp and Paper Magazine

"2021 China Paper Industry Competitiveness Report"

Comprehensive analysis, competitiveness index,

innovation index, papermaking raw material analysis,

recycled fiber analysis, pulp and papermaking equipment analysis

and bibliometric analysis of biomass refining

providing the latest trends for the industry

After years of development, China's paper industry

is entering a new stage in its industry life cycle

The paper industry's previous growth model, which relied on factor-driven development, scale expansion and cost competition, is facing challenges, and there is an urgent need to promote sustainable corporate development through scientific and technological innovation.

But how competitive and innovative is China's paper industry? What level is it at now? What shortcomings does it have? ... These industry development questions need to be judged and analyzed through scientific evaluation.

Continuing to consolidate its global position

According to statistics, China's paper output achieved counter-trend growth in 2020, continuing to consolidate its global position.

According to the latest paper output data released by the China Paper Association, China's paper and paperboard output reached 112.6 million tonnes in 2020, up 4.6% year on year. Paper output approached the record high of 2017, achieving positive growth against the trend and quickly recovering to its peak level. Pulp output changed somewhat: as the ban on waste paper began in 2017, pulp output stayed in the range of 72 million-74 million tonnes from 2018 to 2020, below the high of 79 million-80 million tonnes in previous years.

This is mainly because waste paper imports continued to decline and growth in domestic waste paper recovery was limited, resulting in a severe shortage of recycled fiber raw materials. From 2021, imports of waste paper came to a complete halt, and the difficulty of a shortage of papermaking fiber raw materials will persist in the short term.

The paper products industry has fluctuated considerably. Paper product output fell rapidly for two consecutive years in 2017 and 2018; although it rebounded somewhat in 2019, it declined again in 2020, mainly due to the impact of the pandemic, which suppressed market demand on the consumer side and led to a certain degree of recession. As the Chinese economy gets back on track and the downstream consumer market recovers across the board, a rebound emerged in 2021.

Along with rising output, China's paper imports surged. Although performance improved somewhat, the pressure going forward has risen sharply. This comes mainly from three aspects: first, the "dual carbon" goals have a profound impact on the industry; second, coal shortages and power cuts are determining the survival of some companies; third, rising costs have significantly weakened competitive advantages.

From a global perspective, based on the characteristics of the industry, 28 specific indicators were collected across 8 aspects - fundamentals, economy, market, consumption, science and technology, trade, demand and potential. The data were standardized and reasonably weighted to obtain a comprehensive ranking of 97 countries. Overall, China and the United States are in the leading position, but China's paper industry still lags behind the United States in economic competitiveness and technological competitiveness.

Industrial innovation capability is a comprehensive assessment of all innovation capabilities in the innovation process. Based on the operating mechanism of industrial innovation, the report built an evaluation index system for global paper industry innovation capability, including 8 first-level indicators - innovation environment, ecology, fundamentals, resources, input, performance, output and potential - and 38 specific indicators, and ranked 97 countries worldwide.

The data show that the United States and China are in the leading position, but China is lower than the United States in 5 first-level indicators - innovation ecology, fundamentals, resources, input and potential - and needs to continuously strengthen innovation development in all areas, keep raising its innovation level and speed up its pace of catching up.

Structural adjustment remains a daunting task

Due to a combination of many factors, raw material shortages and price increases are affecting the development of the industry, and the adjustment of China's papermaking raw material structure remains a daunting task.

Specifically, China's pulp structure adjustment has accelerated and wood pulp imports continue to climb; waste paper imports are restricted and raw material structure adjustment continues to deepen; imports of hardwood chips and softwood chips have risen in both volume and price. As large amounts of new papermaking capacity come onto the market in China, the raw material shortage is becoming increasingly serious. Dependence on imported wood pulp remains a difficult problem to solve, and the quality of domestic waste paper has declined further since the waste ban. Facing these problems, paper companies need to adhere to strategic thinking for sustainable development and take multiple measures to solve the fiber raw material supply problem.

China's comprehensive waste ban in 2021 also had a serious impact on the use of recycled fiber in the country. China's papermaking fiber raw material structure has changed markedly: domestic waste paper recovery has increased somewhat, while imports of waste paper pulp have grown rapidly.

Globally, waste paper recovery and export volumes have declined in Asia, Europe and North America. China's waste paper pulp currently comes mainly from Southeast Asia. Prices of both waste paper and waste paper pulp have risen and fluctuated to varying degrees. The shortage of recycled fiber raw materials will continue to constrain the development of China's paper industry for some time to come.

Looking at the development of China's pulp and papermaking equipment over recent years, the number of enterprises has continued to decline, asset growth has been slow, performance has fallen sharply and operating pressure has kept increasing. In terms of exports, value has risen somewhat and the number of export destinations has grown steadily, but the number of units exported has fluctuated widely. As China's pulp and papermaking equipment improves, demand for imported equipment is decreasing, and both import value and the number of units are declining.

However, the prices of China's pulp and papermaking equipment are markedly lower than those of international manufacturers. Raising the prices of Chinese equipment by improving the quality and performance of domestically made equipment is one direction for the future.

At the same time, following last year's focus on nanocellulose, this year's report focuses on analyzing biomass refining, hoping to use bibliometric analysis to show its research hotspots and development directions and provide ideas for experts, scholars and enterprises in scientific and technological innovation.

Judging from the data on biomass refining papers, the number of Chinese papers has increased rapidly and is now far ahead. Among the world's top 20 research institutions, China accounts for 7, and among the top 5, China accounts for 4. This shows that China has caught up in biomass refining and is establishing a leading position for the future. In terms of patent data, biomass refining patents began to increase gradually from 2000, especially rising rapidly since 2010.

In terms of technical classification, they are mainly concentrated in pulp or paper pulp compositions, cellulose, fiber raw materials, polysaccharides and their derivatives, and polymer compounds.

The industry faces three major contradictions

The paper industry is currently undergoing dramatic changes and facing new problems, which can be broadly summarized as three major contradictions.

1. The contradiction between carbon peaking and industry development

Counting from 2000, the first decade of the paper industry can be called the "golden decade". From 2011 to 2030, industry growth slows, making this a "silver period". After 2030, dividing the years into 10-year periods and setting upper and lower limits for growth, forecasts show that the next 30 years will face enormous barriers to industry development. The biggest contradiction at present is how to coordinate the "dual carbon" goals with capacity growth.

1. The contradiction between pulp projects and wood chip supply and demand

Statistics for 2020 and the first seven months of 2021 show that in just a year and a half, domestic companies planned new pulp capacity of more than 6 million tonnes. How to solve the wood chip supply problem is a practical issue facing companies.

1. The contradiction between new capacity and excessively rapid investment

New or planned papermaking capacity reached 20.2 million tonnes in 2019 and 20.8 million tonnes in 2020, with another 4.8 million tonnes in the first seven months of 2021, totaling nearly 46 million tonnes, equivalent to one third of China's current paper output. The market will find it hard to absorb this in the short term, which will inevitably intensify market competition and accelerate changes in the structure of the paper industry.

Author's affiliation: China Pulp and Paper Research Institute Co., Ltd.

——This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-378798.html