Fujian Liansheng and Dongguan Jinzhou Issue Shutdown Notices

Just as paper prices continue to fall, shutdown maintenance notices from paper mills are beginning to reappear in the market. Recently, Fujian Liansheng Paper and Dongguan Jinzhou Paper issued notices stating that they will shut down for maintenance in April. And not long before that, the four major coated paper manufacturers in China also announced that they would reduce supply in April. If March is called the "price-cutting month," will April become the "shutdown month"?

Fujian Liansheng and Dongguan Jinzhou Issue Shutdown Notices

According to Zhiye Lianxun, Fujian Zhangzhou Liansheng Paper recently issued a notice stating that due to power plant maintenance, it plans to shut down the entire mill from March 22, with production expected to resume around April 10. It is understood that Fujian Liansheng currently has 5 paper machines, covering containerboard, corrugated paper, grey-back white board and other paper grades; based on capacity, this shutdown is expected to cut output by about 110,000 tonnes.

Coincidentally, on March 24, Dongguan Jinzhou Paper also issued a notice stating that from 8:00 on March 27 to 18:00 on April 1, the No. 1 boiler of its thermal power department will be shut down for annual inspection, during which each paper machine must be stopped first and then restarted. Among them, the two paper machines PM3 and PM4 of Phase II of the First Branch will be shut down for 5 days, and PM1 and PM2 will be shut down for 1 day.

As is well known, the first quarter is the traditional off-season for the paper industry, and this year, due to the outbreak of COVID-19, market demand has fallen sharply. Apart from good demand for daily necessities, anti-epidemic packaging and express delivery, other industries are all facing considerable pressure. As a result, throughout March, packaging paper prices fell again and again, and market confidence was severely lacking.

Therefore, although the shutdown notices issued by the two packaging paper mills, Fujian Liansheng and Dongguan Jinzhou, cite "power plant maintenance" and "boiler shutdown for annual inspection," it cannot be ruled out that they are also affected by market conditions and are adopting a shutdown strategy for the purpose of reducing supply.

Four Major Coated Paper Manufacturers Announce Reduced Supply in April

Unlike the corrugated and containerboard industry, shutdown notices had already been circulating in the coated paper industry earlier. On March 20, China's four major coated paper manufacturers -- Sun Paper, Chenming Group, Sinar Mas Paper and Huatai Paper -- announced that they would reduce supply in April. Among them:

Chenming Group: the Meilun mill will shut down for 10 days from April 15, and the coated paper mill will shut down for 7 days from April 20;

APP (Gold East Paper and Hainan Jinhai Pulp & Paper): a production cut of 30,000 tonnes of coated paper for printing and writing paper in April;

Shandong Huatai Paper: coated paper machines will be shut down for maintenance, with a planned 9-day shutdown at an opportune time from early to mid-April;

Shandong Sun Paper: a 25% reduction in supply on the basis of normal levels in April.

Just like the corrugated and containerboard industry, the reason coated paper manufacturers are cutting output is mainly insufficient demand and slow shipments, with the market oversupplied in the short term and mills and distributors holding high inventories, leaving them no choice but to lower production. Therefore, in the short term, coated paper prices are likely to fluctuate, and it is possible that some distributors will cut prices to clear inventory.

Although the domestic epidemic has now been gradually brought under control, the epidemic abroad is developing rapidly, causing many local factories to cancel some orders. This has also inflicted heavy losses on China's foreign trade sector. According to media research, the head of a large printing plant in Heshan City, Guangdong Province, believes that this year the sales of export-oriented printing enterprises in the Guangdong region will generally decline by 10%-20%.

Given this situation, industry insiders are generally pessimistic about the market, and prices along the paper products packaging industry chain keep falling. Therefore, paper mill shutdowns are "only natural," as they can both reduce their own inventories and, to a certain extent, ease the oversupply. In the period ahead, there is a high probability that more paper mills will issue shutdown notices, and downstream enterprises must pay close attention.