The only way for the transformation of carton enterprises - waste paper recycling

[China Packaging Network] Waste paper resources control has gradually become a bottleneck for business expansion, and the future of second-tier large paper companies with resource advantages is expected to quickly follow the giant's development path into the fast lane of development.

Nine Dragons Paper: Growth of Giants Originates from Waste Paper Resources

Nine Dragons Paper was established in Dongguan, Guangdong Province in 1995. In 2006, it was the first public offering on the Hong Kong Stock Exchange. It received 577 times oversubscription and raised funds of 3.8 billion Hong Kong dollars. It has now become China's largest producer of boxboard base papers. One of the world's largest manufacturers of boxboard base paper products. Looking back at the growth history of Nine Dragons Paper, we found that having stable waste paper resources and channels is the key to its rapid expansion.

Prior to 2011, the high revenue growth of Nine Dragons Paper was mainly due to its possession of waste paper channels in the United States. Ms. Zhang Yin, Chairman of Nine Dragons Paper Co., Ltd. has been involved in waste paper recycling in Guangdong and Hong Kong, and invested in the establishment of Zhongnan Holding Company in the United States in 1990 to purchase and provide recyclable waste paper resources for its factories in China. About 30% of the waste paper of Haolong is purchased from the domestic market, and the other 70% are mainly from the Central and South America. For many years, the United States has provided a stable source of waste paper for it, which saves a very considerable amount of raw material procurement costs and drives Xilong. The rapid expansion of the paper industry. In 2008-2011, except for the impact of the international financial crisis in 2009, other annual income scales achieved a high growth rate of around 40%.

Domestic channel construction and technological advantages further help its business operations. At the same time, Nine Dragons Paper has established different waste paper supply channels at home and abroad to reduce raw material costs during price fluctuations. The paper mills that have been put into operation in recent years use full waste paper as the raw material design. The control of waste paper recycling channels and the technological advancement of waste paper making in Nine Dragons Paper will help enterprises to further reduce production costs, improve operating efficiency, and promote Business growth.

Waste paper has gradually become the bottleneck of corporate expansion

In recent years, the consumption of waste pulp has slowed down, and the proportion of imported waste pulp has fallen. According to statistics of the Paper Industry Association, since 2005, the total consumption of waste pulp, including imports and domestic production, has fallen from 22% in 2005 to 2% in 2015, basically showing a slow downward trend. At the same time, in the category structure, the proportion of imported waste pulp consumption has dropped, from 48% in 2005 to 38% in 2015. This shows that while the domestic waste paper resources have been shrinking overall year by year, the imported waste paper resources have become more tight.

The paper output of the United States, Europe, Japan and other countries has been down for a long time, and the value of waste paper resources has been highlighted

As imported waste paper is imported garbage, the state has increasingly stricter management and control over imported waste paper. In 2007, the State Environmental Protection Administration issued the “Announcement on the Relevant Matters concerning the Examination and Administration of Imported Waste Paper”, which stipulates the scale and environmental protection standards of enterprises that apply for imported waste paper as raw materials. The 2015 version of the “Imported Waste Management Catalogue” issued jointly by the Ministry of Environmental Protection, the Ministry of Commerce, the National Development and Reform Commission, the General Administration of Customs, and the General Administration of Quality Supervision, Inspection and Quarantine has adjusted the use of waste paper from the automatic license import category to the restricted import category, and has passed the import license. Management controls waste paper imports.

Imports of waste paper by major importing countries have peaked in recent years. The United States, the European Union, and Japan are the major sources of waste paper imports in China. In 2014, waste paper imported from the United States, the European Union, and Japan accounted for 80% of China’s total waste paper imports. However, the export of waste paper from China to the EU and Japan peaked in 2009, and the export of waste paper to China in the United States peaked in 2012. Affected by the decline in the amount of importable waste paper, large papermaking companies have lost their support for new capacity.

The domestic waste paper recycling rate is low, and the processing level still needs to be improved

The recovery rate of waste paper in China is gradually upward, but there is still room for improvement. In recent years, with the development of the recycling of waste paper in China, the recycling rate of waste paper has generally increased. In 2001, the waste paper recycling rate in China was only 27.5%, and by 2015 it had increased to 46.8%. However, compared with major developed countries and regions, China's waste paper recycling rate is still low. In 2013, the waste paper recycling rate in China was 46%, which was far below the levels of 63.5%, 71.7% and 80% respectively in the United States, Europe, and Japan in the same period. This further shows that there is still much room for improvement in the recovery rate of waste paper in China.

In addition, China's waste paper recycling still has the problems of chaotic management system, low technical level, and lack of overseas acquisition of packaged waste paper industry systems. Therefore, a large amount of waste paper is still dependent on imports. However, the import of waste paper by enterprises is subject to operating risks such as environmental pollution, import and export costs and price changes, and it is also not conducive to the development of the waste paper recycling industry in China. The overall processing and recycling capacity is far from that of foreign countries.

Recent domestic and foreign prices of waste paper have risen upwards, and the value of resources has become prominent. Take the country's scraped yellow board as an example, prices in Guangzhou, Tianjin, and Shanghai have experienced a year-long low consolidation. Since the second half of the year, there has been a recovery. The second half of the year has risen by 15% to 20%. At the same time, due to rising costs, the prices of international waste paper have continued to pick up since the beginning of the year. The prices of US-waste 8# and US-waste 11#, which were quoted by foreign investors, have risen by 54% and 28% year-to-date. We believe that in the fourth quarter, affected by the peak demand of paper products, the price of waste paper may continue to increase. In the long run, the change in the pattern of industry supply and demand makes its resources more scarce, and it is expected to form a strong support for the price of waste paper.

Waste paper resources control power to become a business growth winner

To sum up, first of all, the development history of waste paper giants represented by the Xiaolong enterprise shows that it is precisely because of the possession of waste paper resources that it is rapidly growing. Secondly, in recent years, the growth rate of waste pulp consumption has slowed down, and the output of waste paper from the United States, Europe and Japan has declined for a long time. The value of waste paper resources has been highlighted. Third, the domestic waste paper recycling rate is low, and the quality is lower than the international level, and there is room for improvement. Therefore, the control of waste paper resources has gradually become a bottleneck for the expansion of enterprises, and the second-tier large-scale paper enterprises with resource advantages in the future are expected to quickly enter the fast track of development along the giant's development path.