China’s leading paper manufacturer announced it has hard to stop production multiple times since July.
August is typically the start of the production peak for the paper and pulp industry in China. But a series of scheduled plant shut downs has been cutting into business bottom lines, according to Chinese media.
Nine Dragons Paper (Holdings) Limited is the leading paper and containerboard products manufacturer in China. Its 16 paper machines at its Dongguang base were designed to have an annual capacity of 5.85 million tons.
The Dongguan base had scheduled down time for Aug. 16 to 26, which will reduce the plant’s production by about 40,000 tons.
Factory down times scheduled through to September are expected to impact six production bases, and reduce market supply by nearly 200,000 tons, according to a ChinaPaper.net report.
According to the company’s release, the series of shutdowns was scheduled for maintenance. However, the analyst believes it is a sign of a poor market for the overall manufacturing sector in China.
No Upstream or Downstream Business
Mr. Chen (alias) is the owner of a paper and container packaging business in Shenzhen. He told the Chinese language edition of The Epoch Times that sales have halved since the beginning of the year; both upstream and downstream business has evaporated, and 10 percent of the industry has had to shut down.
Asked what he thinks is driving the drop in business, Chen said, “I can’t say. Surely it can’t be pointed at the foreign trade, or anything at the government level,” he said. He is just focused on hanging on, although he knows of some factories that have nearly gone out of business.
“The whole world seems at a halt now,” he said, adding that his Vietnamese customers were also experiencing a similar situation.
Orders have halved. Customers are still there, but people are avoiding consumption. This slowdown in product sales is flowing through to the printing and packaging industry, he said.
Chen explained that many industries need paper for their business, such as flyers for real estate, the printing industry, motor vehicles, etc. But the slow economy has forced everyone to cut down on the use of paper as much as possible. E-commerce has also had an impact on the paper industry. The growth was mainly in small cartons for the express delivery industry, but the outlook was generally not very optimistic.
Downturn in Manufacturing Sector
According to a recent report by China Business Journal, a senior executive of a listed paper company admitted that the overall situation for the paper industry is relatively depressing. The pandemic, the lower downstream demand, and the rise in the cost of pulp and coal, have resulted in a sharp decline in net profits.
A paper industry observer in Taiwan also said that the intensive shutdown of China’s large paper mills is just the tip of the iceberg; it highlights the sluggish Chinese manufacturing sector.
Xiao Lusheng and Gu Xiaohua contributed to this article.