Will Disruptions in China’s Scrap Paper Market Impact US Exports?

Though the Cheng Loong Corporation, the largest recycled containerboard producer in Taiwan, is permanently halting production at its recycled containerboard mill in Pudong, Shanghai, China by the end of this year, they plan to invest $1 billion to build a Ben Cat facility housing numerous board machines with the ability to handle 1 million tons of material per year.

The Chinese government wanted Cheng Long to switch the site’s thermal boiler from coal to a cleaner energy source by the end of 2017. The Chinese manufacturer decided the cost to replace coal would be greater than their ability to generate profit, provoking their decision to close the mill and sell their equipment, including a board machine with the ability to produce 450,000 tons of kraft-liner and testliner per year.

Though the production halt will likely disrupt the recycled paper and containerboard materials market, the corporation will continue operating 12 box plants they own throughout China, which have a total converting capacity of 612 million square meters per year. To continue to cut costs and protect manufacturing capacity, the company will also begin relocating factories from China to Southeast Asia. Currently, they are building a mill in Binh Duong province, Vietnam with startup scheduled for early 2018.

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