Giants Rush into Molded Pulp: Just How Big Is This Market?

Recently, the packaging industry has been flooded with news about Dashengda's new pulp molding eco-friendly tableware project in Hainan.

Just a few days ago, Dashengda officially announced the signing of a strategic cooperation agreement with Jiteli. Together they will invest in the establishment of Hainan Dashengda Environmental Technology Co., Ltd. and build the "Intelligent R&D and Production Base Project for Pulp Molding Eco-friendly Tableware" in the Haikou National High-tech Zone, with a total investment of 500 million yuan.

On November 10, Hainan Dashengda was officially registered and established. Once the project is fully completed, it will have an annual production capacity of 30,000 tonnes of pulp molding eco-friendly tableware and is expected to achieve sales revenue of 626 million yuan a year. Dashengda holds a 90% stake in the Hainan project, with the remaining 10% held by Jiteli Environmental Technology (Xiamen) Co., Ltd. According to the latest announcement, Dashengda plans to use 277 million yuan of the raised funds originally intended for the "technical renovation project for an annual output of 150 million square meters of green, eco-friendly, intelligent high-end packaging cartons" for the construction of the pulp molding project of Hainan Dashengda. This also reflects, from one angle, the expectations Dashengda places on its pulp molding project.

After Hainan Dashengda is completed, it will receive support from Jiteli in orders, equipment and production. So who exactly is Jiteli? Let us take a closer look.

Relevant announcements show that Jiteli is a leading enterprise in China's pulp molding industry and entered the pulp molding market relatively early, making both pulp molding equipment and pulp molding products. It was established through cooperative investment by Far East Environmental Technology and a Hong Kong foreign investor, and specializes in the development and utilization of low-carbon new materials, as well as the technology and process development research and product production of low-carbon eco-friendly food packaging, low-carbon eco-friendly industrial packaging, low-carbon eco-friendly daily necessities, low-carbon eco-friendly new building decoration materials and other low-carbon eco-friendly series products.

Far East Jiteli Equipment has 36 green and eco-friendly packaging product production lines at the internationally advanced level. It holds 95 national invention patents and utility model patents and is described as currently the most powerful pulp-based eco-friendly food packaging production base in Asia.

The partnership between Dashengda and Jiteli can be described as a union of strong players. With funding, production lines and technology all in place, this efficiency is unmatched!

It never rains but it pours. In April 2020, Yuto Technology announced that it planned to invest 400 million yuan in the Haikou National High-tech Industrial Development Zone to build an eco-friendly degradable products and supporting high-end packaging industrial base.

The Hainan project of Yuto is planned to cover an area of about 80 mu and, once completed and reaching full production, will achieve an annual output value of about 640 million yuan, a scale roughly comparable to that of Hainan Dashengda. Moreover, it likewise takes pulp molding tableware as an important target product.

According to recent news released by Yuto, the pulp molding production line of its Hainan project has already started trial production. Some media reports say the site chosen by Hainan Dashengda is probably only twenty to thirty kilometers away from Hainan Yuto.

Which boss could have imagined that Yuto, originally focused on premium boxes, and Dashengda, originally focused on cartons, would one day become competitors in the pulp molding market?

Yet that is exactly what happened, quietly and unexpectedly.

This also fully proves how hot the pulp molding market has become in the past two or three years under the trend of "replacing plastic with paper".

It is worth noting that Dashengda chose to cooperate with Jiteli this time to develop the pulp molding market, and one of Jiteli's major shareholders is Shanying International. As for the potential hidden competition risk among the three companies, the person in charge of Dashengda explained that the pulp molding industry is still at a stage of rapid development, the willingness to cooperate among manufacturers is greater than competition, and the company has no such concerns for the time being.

In recent years, as demand for "replacing plastic with paper" has gradually been released, segments such as pulp molding have attracted capital from all sides, becoming the next outlet in the paper industry chain. A number of packaging giants, including Yuto Technology, Shanying International, Yongfa Group, Kaicheng Technology, Jielong Industry, Meiyingsen, Hexing, Jihong, Stora Enso and Huilin Packaging, have already quietly positioned themselves in the pulp molding industry.

In addition to Yuto's further investment of 400 million yuan to build a new pulp molding base in Hainan, Jielong built five new pulp molding plants in two years, and Jihong had already spent 10.75 million yuan back in 2018 to acquire a 33% stake in Anhui Weizhi Eco-friendly Paper Products Co., Ltd.

Jihong put it this way: "In the overall environment that emphasizes food safety, and with the introduction of the plastic restriction order, eco-friendly packaging has become one of the important links in food safety. As the mobile internet develops rapidly, driving the popularity of food delivery goods, the scope of restrictions will gradually expand to plastic tableware, and demand for food-grade packaging with an eco-friendly concept (such as eco-friendly takeout food containers) will continue to maintain relatively rapid growth along with the development of the food delivery industry..."

Yongfa is a Hong Kong-listed company. As a century-old enterprise, it has a very keen sense of smell and began its pulp molding business back in 2014. Its pulp molding business segment consists of four companies: Yongfa (Shanghai) Molding, Yongfa (Henan) Molding, Yongfa (Jiangsu) Molding and Qingdao Yongfa Molding.

The above giants took the lead in positioning themselves in eco-friendly packaging products represented by takeout food containers, which is obviously driven by the full plastic ban process that has gained growing momentum in recent years.

If the plastic ban has freed up market space for substitute products, paper packaging products will clearly be one of the main beneficiaries. Because at present, there seem to be few better choices than paper boxes, paper bags and pulp molding products to replace hard-to-degrade disposable plastic products. This is presumably the main logic behind the eagerness of Yuto, Jihong and some other companies in the industry to try their hand in the plastic-for-paper market.

The question is: under the plastic ban, why did Yuto and Jihong coincidentally choose eco-friendly food container products dominated by takeout packaging?

A look at the relevant regulations of Jilin, Hainan and the National Development and Reform Commission makes it clear: although interpreted by many media as a "comprehensive plastic ban", the products mainly prohibited are in fact only two categories: disposable plastic bags and disposable plastic tableware. Restrictions on the use of plastic bags have been in place since 2008, 13 years so far. The scope of the current ban is expanding, but the room for imagination left to the market is no longer very large.

Disposable plastic tableware, meanwhile, has become one of the main sources of plastic waste with the explosive growth of food delivery. Moreover, the proportion of alternative eco-friendly products is still very limited.

While the domestic market is in full swing, foreign pulp molding giants are also watching. Denmark's Thornico is also positioning itself in the Chinese market; it is also the world's largest producer of molded fiber packaging products. At the end of 2019, Chuzhou Senwo Paper Packaging Co., Ltd. began construction. The project has a total investment of about 120 million yuan and plans to build a project with an annual output of 200 million pieces of molded egg packaging products. The production technology for the project comes from Hartmann, a company under the Thornico Group. The paper egg packaging products will use 100% recyclable and biodegradable materials, and the company is committed to an environmentally friendly and sustainable business model throughout.

As plastic pollution becomes increasingly serious and global plastic restriction measures advance, more and more countries will join the pace of global plastic restriction, and plastic restriction activities will become a global trend. In 2007, the State Council announced the implementation of a plastic restriction order starting from June 2008. In the early stage of implementation, the policy was fairly effective, but with the growth of plastic demand in the food delivery and logistics express sectors, the later effect of the policy was not significant.

In 2020, the state promulgated a new version of the plastic ban. Compared with the 2008 plastic restriction order and the 2020 plastic restriction order, the 2020 plastic restriction order has advantages such as gradual targets, full coverage and synergy. The new plastic restriction order especially introduces and explains plastic substitutes. However, because our country currently has a large gap in biodegradable plastics production capacity and its manufacturing processes and recycling systems are not yet complete, it cannot make up for the scale of plastics reduced by the plastic restriction order. Our country's paper industry is relatively mature, and the production capacity of white cardboard, linerboard and the like has grown steadily over the years, so paper products are expected to become the backbone of plastic substitution under the plastic restriction order.

——This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-378755.html