China Will Face Another Shortfall in RCP Supply in 2020: Still Opportunities for Recycled Pulp and Containerboard Imports

Recycled pulp imports will continue to compensate for the national RCP supply shortfall. “Available domestic recycled pulp capacities, however, cannot sufficiently fill this gap yet. So there are opportunities for additional containerboard imports,” according to Stacie Wan, analyst F&A Supply Chains. “China’s containerboard producers, leading ones included, continue to be challenged by this new situation”.

In the coming one to two years, some domestic mills will continue to face lower operating rates, due to a lack of recovered fiber. With China’s move towards zero RCP imports, the cost advantage of leading containerboard producers might be weakened without access to import quotas, although they might gain other advantages in getting access to domestic RCP. Still, we expect them to continue to pursue a strategy to invest in overseas recycled pulp capacity to assure fiber supply for domestic containerboard production. It remains questionable whether it’s good timing for containerboard producers to invest in new capacity in China, unless substantially less efficient capacities leave the market. This might drive China’s leading companies to search for further growth opportunities globally.