In 2019, the Chinese tissue and dispersible paper market continued to grow, but it also faced periodical overcapacity and fierce market competition. New investment projects were centered on production expansion of leading enterprises and equipment upgrades at existing small and medium enterprises, which further improved the industrial concentration degree and overall equipment level.
The periodic overcapacity and severe environmental requirements exerted more operating pressure on small and medium enterprises. Relying on the sharp decline of market pulp price and their scale benefit, leading enterprises effectively increased the gross margin through effective measures such as energy conservation and consumption reduction, enhancement of new sales channels (including e-commerce) construction, optimization of product structure, and launch of new products with high added-value.
White Paper on Sustainable Development of Chinese Papermaking Industry Released
The white paper fully showed the efforts and achievements of the Chinese papermaking industry in sustainable development to the society for the first time. It is of great significance for all sectors of society to fully understand the development of the papermaking industry and eliminate some misunderstandings on the industry.
The Industry Continued to Maintain Growth Momentum and Accelerated High-end Development
Leading enterprises continued to expand capacity, while the small and medium enterprises continued equipment upgrading. The tissue machines newly put into operation in 2019 were dominated by the new crescent or vacuum cylinder tissue machines. The leading enterprises mainly chose imported tissue machines for their new projects. But they also began to choose tissue machines provided by domestic manufactures. The small and medium enterprises continued equipment upgrading and mainly chose homemade tissue machines.
The enterprises in the Baoding tissue paper base in northern China almost eliminated all the backward tissue machines with high energy consumption and low efficiency, while upgrading equipment and putting new tissue machines into operation.
According to CNHPIA, by the end of December 2019, the new projects are listed as follows.
- Leading enterprises continued to expand capacity. In 2019, leading enterprises such as Hengan, Vinda, C&S and Lee & Man steadily expanded capacity. The total tissue paper capacity of Hengan Group, Vinda Group, C&S Group and Lee & Man Group reached 1.454 million tons, 1.25 million tons, 760,000 tons and 965,000 tons per year respectively.
- Small and medium enterprises continuously upgraded and updated their equipment.
Addition of New Tissue Machines
In 2019, Sichuan Yibin Paper launched two A.Celli tissue machines with a capacity of 25,000 tons per year. More than 70 sets of medium and high speed homemade tissue machines were put into operation by enterprises such as Vanov, Fengsheng, Yusen, Golden Doctor, Xuesong and Chengxin. The equipment suppliers mainly included Foshan Baotuo, Shandong Xinhe, Shaanxi Bingzhi, Shanghai Qingliang, Guizhou Hengruichen, Zhucheng Dazheng, Xian Weiya, Mianyang Mutual Success, Tianjin Tianqing, Jiangxi OK, Baoding Weituo, etc. Almost 30 sets were provided to the tissue paper manufacturers in Baoding Hebei.
Rebuild of Tissue Machines
Jiangyin Dingchang Paper Machinery Co., Ltd. rebuilt four new crescent tissue machines for Pengzhou R Paper. Fangyuan Zhonghe and Tralin Group signed the rebuilding contract for one wheat straw pulp tissue machine in August 2019. The new crescent tissue machine which was rebuilt from the old tissue machine was put into operation in October 2019. Tralin planned to rebuild the remaining 16 tissue machines into new crescent tissue machines.
The performance of listed companies such as Hengan, Vinda and C&S maintained growth.
With periodical overcapacity and fiercer competition, the operating risk of small and medium enterprises was increasing. The related industry chain will probably be involved.
Due to the over-concentrated new capacity launched in recent years, fiercer competition, stricter national environmental requirements, RMB exchange rate depreciation, increasing marketing costs and other factors, the operating pressure of small and medium tissue plants continued to increase, and the industry entered a period of re-shuffling. The projects planned to be put into operation in 2019 were partially delayed.
Overcapacity also affected machinery suppliers. With the investment peak period of eliminating backward production capacity coming to an end, the future market demand will fall gradually. The risk of being eliminated for small and medium machinery suppliers will increase.
The projects to be launched in 2020 and after are mainly related to the existing tissue paper enterprises to increase capacity or construct new production base.
Gold Hongye, Vinda, C&S, Taison, Dongshun, Lee&Man and other leading enterprises continued to expand capacity. The projects to be launched in Baoding involve more than 10 enterprises, such as Gangxing, Dongsheng, Huabang, Ruifeng, Yongxing, Chenyu, Zeyu, Chensong, Xinyu and Hengxin. The projects to be launched in Northwest, Southwest, Central, Southern China and other areas mainly involve more than 20 enterprises, such as Jiamei, Zhongnan, Hulijia, Jiada, Jintong, Xurong and Aowei.
According to Japanese media, papermaking enterprises in Japan began to increase capacity in 2019 to meet the demands for toilet tissue and other tissue paper in China. Oji Paper invested in China to expand the production capacity of tissue paper. Daio Paper increased its domestic capacity by 10%, which mainly supply the Chinese market and focus on high-end toilet tissue.
The price of the main raw material—market pulp fell sharply. The gross margin of enterprises increased.
- Price of market pulp fell back. In 2019, pulp price in the international market continuously decreased on the whole, which was mainly affected by weaker market demands in China, China-U.S. trade war, exchange rate change, increased inventory in pulp market and other factors.
- Pulp price drove paper price to decrease. Due to sharp price decrease of wood pulp, the ex-factory price of tissue manufactures’ parent tissue rolls fell accordingly. But the decline of paper price was lower than that of pulp price, increasing the gross margin of tissue enterprises.
- Non-wood-pulp tissue enterprises faced increasing difficulties.
In 2019, two famous enterprises which produce straw pulp tissue paper—Shandong Tralin and Ningxia Zijinghua announced bankruptcy reorganization and bankruptcy liquidation respectively. In the future, the industry re-shuffling is expected to accelerate. The non-wood-pulp enterprises and small and medium enterprises in particular will face greater operating risks.
Product Innovation Focused More on Functionality
In 2019, the markets of lotion tissue, cotton soft towel and easy-to-disperse toilet tissue highlighting use functionality and having individualized package further increased. Furthermore, unbleached tissue paper and other new products which catered to consumers’ concerns about their health and natural environmental protection, continued to emerge.
Market Shares of E-commerce Channel Grew Rapidly
Currently, the traditional distributors and modern supermarkets are still the main marketing channels for the tissue paper industry. Although the share of e-commerce is still relatively small, it is growing rapidly, which can be shown in the annual reports of listed companies.
Import and Export Markets
- The tissue products export volume kept stable, while the import volume fell sharply. In the first three quarters of 2019, the import volume of Chinese tissue paper declined notably. It reflects the increasing capacity of tissue paper in China, largely satisfying the demands of domestic consumers and continuously reducing the import volume. The export of tissue paper remained relatively stable. It’s noteworthy that the decline trend of total export volume in the first half year was reversed despite the pressure of China-U.S. trade friction.
- Tissue machine. Domestic equipment suppliers such as Baosuo, Baotuo, Shandong Xinhe, Shandong Fangyuan Zhonghe, Hicredit and Shaanxi Bingzhi signed the tissue machine export contracts and put exported tissue machines into operation in 2019.
Facing fierce industry competition, the manufacturers further enhanced cooperation with industry research institutes in terms of technology R&D and talent cultivation in 2019 to accelerate the development of differentiated products, deeply dig potential in the whole production process, reduce cost and increase efficiency. For example, Vinda and C&S cooperated with the China National Pulp and Paper Research Institute Co., Ltd., Hengan Group cooperated with Huaqiao University and Vanov Group cooperated with VTT Technical Research Center of Finland Ltd.
1. Standards published before and implemented from 2019
- Bathroom Tissue (including bathroom tissue base paper) (GB/T 20810—2018), replacing the GB/T 20810—2006, published on June 7, 2018 and implemented from July 1, 2019.
- Safety Evaluation and Management System of Tissue Paper and Paper Products Chemicals and Raw Materials (GB/T 36420—2018) published on June 7, 2018, and implemented from January 1, 2019.
- Paper, Paperboards and Paper Products—Measuring of Acrylamide (GB/T37859—2019) implemented from March 1, 2020.
- Series Standards for Test Methods of Tissue Paper and Related Products.
- Toilet Tissue and Hand Towel— Specification for Use of Recycled Fiber
- Unbleached Pulp
- Tissue Paper—Assessment and Monitoring Guidelines to Quality Safety Condition of Production Process
- Hand Towel
- Kitchen Towel
- Flushable wipes
- Andritz officially launched new textured tissue machine PrimeLineTEX in 2019.
- GP and Valmet have reached an agreement on eTAD tissue machines, allowing Valmet to supply, manufacture and install Advantage eTAD tissue machines for its tissue paper markets outside North America.
- Pulsar Shanghai Co., Ltd. was established in July 2019 to promote the application of new technology and new equipment for the tissue converting industry in China. Now the company is focused on equipment assembly and will gradually increase the proportion of equipment localization.
- In 2019, A.Celli (Foshan) Trade Co., Ltd., the subsidiary company of Italy A.CELLI, was set up, so as to provide commercial assistance, after-sales service, technical support and other services for nationwide customers, especially the customers in Southern China.