Производители бумаги из Шаньдуна стремятся занять новую нишу в «зелёном» сегменте

Driven by economic recovery and a rebound in consumption, the papermaking industry showed widespread growth in its first-quarter results. Recently, a number of listed paper companies, including Shandong paper enterprises such as Sun Paper and Chenming Paper, released first-quarter earnings forecasts, most of which reported substantial growth, and quite a few even doubled.

Why has the paper industry grown so rapidly? The impact of the plastic ban cannot be underestimated.

Starting January 1 this year, in municipalities directly under the central government such as Beijing and Shanghai, as well as in provincial capitals, non-degradable plastic bags may no longer be used for shopping; disposable plastic straws have also disappeared from all beverage shops nationwide; and when dining in scenic areas of cities at prefecture level and above, disposable plastic tableware cannot be "put on the table"...

As demand for paper products and pulp grows sharply and prices rise rapidly, many paper companies are stepping up their efforts to seize the new track of "paper replacing plastic".

The plastic ban officially takes effect

The market for paper products is infinitely expanded

From steaming hot dry noodles to aromatic bucket-sized fried chicken, from tasty drinks at internet-famous milk tea shops to all kinds of leisure snacks... With the official implementation of the plastic ban, all kinds of food have begun to call for high-quality green packaging, and the market for paper products in the food sector has been expanded at once.

All of this stems from the implementation of the plastic ban.

Starting January 1, 2021, the production, sale and use of certain plastic products are prohibited or restricted in some areas of Jinan. By the end of 2022, non-degradable disposable plastic tableware will be banned in dine-in catering services in built-up areas of county towns (districts) and in scenic areas and attractions.

Demand always gives rise to substitutes. As the plastic ban squeezes non-degradable plastic products out of the market, some commonly used applications have no choice but to turn to "paper products". In the view of industry insiders, paper products have a high degree of substitutability for plastic. It is expected that from 2020 to 2025, demand for paper packaging products represented by white card stock, linerboard and corrugated paper will grow substantially, and paper products will become the backbone of plastic substitution. From this perspective, a number of Shandong paper companies, including Chenming Paper, will undoubtedly become the biggest beneficiaries.

According to public data, the three major food delivery platforms Meituan, Ele.me and Baidu Waimai alone handle about 20 million orders a day, and conservative estimates put daily packaging demand at at least 20 million pieces.

Data from Qichacha show that China currently has 35,000 papermaking-related enterprises, with 5,716 newly registered related enterprises in 2020, up 67% year on year. In terms of regional distribution, Shandong ranks first with 6,474 enterprises, accounting for 19% of the national total.

Innovative production of food-grade paper

Suitable for both hot drink cups and cold drink cups

Facing the huge development space that the plastic ban has brought to paper packaging, papermaking giant Sun Paper has actively engaged in product innovation and seized market opportunities by optimizing its product structure, achieving remarkable results.

Under the new version of the plastic ban, there is huge substitution demand for white card stock, keeping the white card stock industry highly prosperous. As a paper company with card stock production capacity, Sun Paper has also attracted considerable market attention.

On the evening of April 7, Sun Paper released an earnings forecast, expecting net profit attributable to shareholders of 1.072 billion yuan to 1.126 billion yuan for the first quarter of 2021, up 100%-110% year on year. During the reporting period, the market sentiment for domestic dissolving pulp products recovered and product prices rose, greatly improving the profitability of the company's dissolving pulp products.

As early as 2019, Sun Paper tried to enter the new materials field and developed "plastic-free coated food packaging paper", achieving in-line coating of barrier materials on the paper machine using the traditional doctor blade coating method. The product can be directly formed into cups, offers higher production efficiency and brings customers a better and more comfortable experience.

"This cooperation is a beneficial attempt by us to enter food-grade paper, and it has also laid the foundation for market expansion after the plastic ban," said Ying Guangdong, deputy general manager and chief engineer of Sun Paper. The new product meets national safety standards and can be widely used for food packaging paper such as hot drink cups, cold drink cups, ice cream and paper lunch boxes, achieving industry innovation and vertical extension of the industry.

In Sun Paper's food paper production workshop, the 3520 paper machine is running steadily under the control of automated programs. "Just before the Spring Festival this year, we completed the technical upgrading of the 3520 paper machine. It can not only be used to produce the PE-coated base paper for food packaging required by the market after the plastic ban, but its capacity has also increased significantly compared with the past," Guo Feng, production director of food paper at Sun Paper, told reporters.

If, under the plastic ban, the substitution space for traditional food packaging such as plastic packaging and plastic straws has triggered unlimited market imagination for paper companies, then Sun Paper's insistence on making its product chain and industry chain bigger and stronger has provided an inexhaustible driving force for the company's kinetic energy conversion and high-quality development.

Strong downstream demand for paper companies' white card stock

First-quarter capacity remains at a high level

As a leader in the papermaking industry, Chenming Paper has 2 million tonnes of white card stock capacity. It is understood that Chenming Paper's white card stock products currently hold a market share of about 20%. GF Securities believes that future increases in industry supply will be limited, and the continued implementation of the plastic ban will increase industry demand and push up white card stock prices.

Through scientific analysis of industry development trends, Chenming Paper began planning the layout of its entire industry chain more than a decade ago. Starting in 2005, Chenming Paper successively built five pulping and papermaking production lines bringing together internationally advanced technology in Zhanjiang, Guangdong. Since 2018, Chenming Paper has built two major pulping projects and two major papermaking projects in Huanggang and Shouguang, which have now gradually generated benefits. At present, Chenming's wood pulp capacity is about 4.3 million tonnes, making it the largest pulp and paper enterprise in China.

Recently, Chenming Paper released its first-quarter report for 2021. According to the disclosure, in the first quarter of 2021 Chenming Paper achieved revenue of over 10 billion yuan and a net profit attributable to shareholders of the listed company of 1.18 billion yuan, up 481% year on year. Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses rose 709% year on year. In its previously disclosed earnings forecast, Chenming Paper summarized the driving factors behind its performance growth as "rising market demand driving double growth in the company's machine-made paper prices and sales volume, and the highlighting of the cost advantages of pulp-paper integration under the waste import ban and the plastic ban".

Northeast Securities analyzed that downstream demand for Chenming's white card stock is strong. Against the background of the phase-out of white board paper capacity and the tightening of the waste import ban and the plastic ban, white card stock has substantial substitution demand from grey-back white board paper and non-degradable plastic. The company's first-quarter capacity utilization rate was close to full production, and demand is expected to remain hot throughout the year.

According to a CCTV news report, recently at a large paper company in Rizhao, Shandong, production line workers have been working a "three-shift" system. Each shift runs eight hours, and the machines operate at full load around the clock. Daily white card stock output is about 1,600 tonnes, and 500,000 tonnes of white card stock capacity has already been completed this year.

Industry insiders analyze that once leading enterprises expand their industry chain advantages, they will gain more room to perform, and the marginal cost advantages derived from scale advantages will drive improvements in marginal benefits. This logic has been repeatedly confirmed in the development history of leading enterprises such as Chenming Paper and Sun Paper. "The progress of the plastic ban and the pace of corporate capacity will both have an impact on the industry."

However, from a long-term perspective, thick, sturdy, environmentally friendly and convenient white card stock may become the mainstay of the "paper replacing plastic" transformation.

——This article is reprinted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-377218.html