Nine Dragons to focus on domestic paper sources, imported pulp and low-cost quality fibre imports

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Nine Dragons Paper mill
A Nine Dragons recycled paper mill

Chinese paper packaging giant Nine Dragons Paper has revealed its focus for the upcoming year as part of its annual results.

In revealing increased sales by 3.5% of RMB 54,647.4 million (£6 billion), but lower profits by 15.4% of RMB 3,859.7 million (£423 million), the company outlined its strategy for the next year.

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A statement in the results document by Nine Dragons Paper chairlady Cheung Yan revealed that over the next year it will focus on sourcing more paper from domestic sources, increasing its supply of recycled pulp, and quality imported paper at a low price.

She wrote: “[We will] integrate domestic raw materials and market segments to make up for the raw material supply gap — in view of the [Chinese] government’s increased efforts in the implementation of waste sorting to promote the recycling of domestic recovered paper, we have also strengthened our efforts in expanding the domestic purchase channels for recovered paper, and continued to explore opportunities to expand the production capacity of recycled pulp overseas with an aim to fully utilise quality imported recovered paper procured at low price as our raw materials.

“We believe that this two-pronged approach would help to ensure both the supply and quality of our raw materials.”

With its purchase of a Malaysian paper company with pulp capacity and increased pulp production in United States, the Chinese paper packaging company now has a total design capacity for pulp of 0.85 million tonnes per annum.

It intends to increase this to 2.0 million tonnes per annum by 2021.

Cheung Yan, chairlady, Nine Dragons Paper

Cheung Yan also wrote that the market for raw materials and finished product remained challenging.

She added: “During FY2019, the packaging paper industry in China has seen unprecedented challenges. With the trade tension between China and the US remaining unresolved, downstream demand has been under pressure amid the complicated and evolving economic environment both at home and abroad.

“Coupled with the progressively tightening control on the import quota of recovered paper by the Chinese government, both the prices of domestic recovered paper and renminbi experienced significant volatility.”

She also expected that Chinese economic stimulus including favourable taxation, increasing trade between China and ASEAN and EU countries, plus consolidation in paper manufacturing will benefit her business.

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