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Foreign Media: China Is Facing An Alarming Shortage Of Waste Paper
- Jun 06, 2018 -

Market experts recently discussed the impact of China's "sword action" environmental policy on the huge paper industry in the country.

China has always relied on imported recycled paper. In general, recycling of waste paper accounts for 67% of pulp, paper, tissue and wrapping paper, of which about 41% of waste paper comes from imports.

But the decision to restrict imports of recycled materials severely disrupted the supply chain.

"Importing waste paper, as a very valuable and important commodity, will cause a lot of damage to China's paper industry," TeddPowers, a senior adviser to FisherInternational, a market research agency, said in a report last week.

He also pointed out that this could also cause great pressure on global pulp supply.

In 2016, Powers said that Chinese producers imported about 28 million 500 thousand tons of recycled paper, and about 12 million tons of material were "bleached recycled paper", which he called mixed paper, newsprint or various office paper.

"Replacing 12 million tons of bleached fiber will cost 20% of the world's original bleached pulp," Powers said. "It's very moving," he said.

He admits that this simple one to one contrast is not objective, because the yield of the recycled pulp and the primary pulp on the paper machine is different, so the original pulp imported by the manufacturer is certainly less than 12 million tons. But even if conservative 50% estimates are needed, 6 million tons of virgin pulp will be consumed, which will still consume 10% of the global supply of bleached pulp.

"This is a global change," Powers said.

Paper mill profits soar

China's major paper makers are particularly dependent on recycled paper. According to FisherInternational, the five largest companies, led by nine dragons, have consumed nearly 1/3 of the world's recycled waste paper, including waste from China's waste and imports.

"This is a big problem for these companies." He said. "These are very powerful, very large and influential companies that rely on the free flow of recycled waste paper to keep paper machines running."

So how did these companies behave in massive market chaos? Several major paper makers have received most of the import approval issued this year, for example, in the first round of this year's issue, nine dragons were given nearly half of the import quotas.

However, the number of imports of waste paper has dropped sharply. According to the previous report of us resource recovery, China imported 2 million 510 thousand tons of recycled paper in the first two months of 2018, compared with about 4 million 670 thousand tons in the same period last year.

The decline of the amount of foreign waste imports is having an impact. For example, one of China's largest paper companies announced last week that four paper machines relying on recycled pulp will be shut down until June 4th. Pulp research company RISI reported that the company mentioned a shortage of recycled paper in its downtime letter. Last week, nine dragons announced that they would buy two virgin pulp Mills Corp, the company's first investment in the US pulp mill.

There are signs that Chinese paper makers have taken more primary pulp to offset the gap in imported waste paper, but Powers points out, "but the increase in China's primary pulp is not enough to offset the loss of imported waste paper."

As a result, China's paper production has been reduced, paper mills have been closed down, or gamble has been made by hoarding raw materials.

But for the paper industry, the decline in demand and output is not necessarily a bad thing, Powers said. He cited the earnings reports of the four largest listed Paper Co in China (nine dragons, Richard, Mountain Eagle International and Chenming Paper), all of which showed a surge in revenue and profit.

"At least now, these big companies are doing well, thank goodness," Powers said. "Even with such strict import restrictions, the situation is very good."

He believes that the increase in revenue is because these companies monopolize the import of waste paper, greatly pushing up the price of finished products, and the big paper factory is in a more and more strong position in the industrial chain.

Domestic factors

Powers points out that not only imported pollution has led the Chinese government to take restrictive actions. He pointed out that the World Bank estimates that by 2015, China will surpass the United States and become the largest producer of solid waste in the world.

According to World Bank estimates, China now produces 190 million tons of garbage per year. But it is estimated that by 2025, China's waste volume will double, generating 510 million tons a year. This makes it far higher than the second ranked us (2025 is estimated at 256 million tonnes).

"This is a big problem that China must solve," Powers said.