UPM to Expand Labelstock Capacity with New Machine at Changshu Mill in China

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"This move is aligned with our strategic target to have more than 50% of our sales from well performing growth businesses in the latter part of the decade. It supports our growth in China and provides an excellent platform to strengthen partnerships with self-adhesive labelstock customers and expand into new end uses in Asia. It also supports the good profitability of our growth businesses," said Jussi Pesonen, UPM's president and CEO.

The new machine will be capable of producing up to 360,000 metric tpy of uncoated woodfree grades and high quality label papers. It will startup by the end of 2014. The investment will also include future-oriented infrastructure investments in the Changshu site. The total investment cost is CNY 3,000 million (EUR 390 million). In addition, UPM Changshu is finalizing a 100,000 metric tpy cut-size sheeting line investment that strengthens the Group's position in office paper grades in China.

Both label paper and uncoated woodfree papers have a healthy demand outlook in Asia. The annual growth of UPM's label paper mix is expected to be 8% in Asia and 4% globally. In uncoated woodfree grades, UPM focuses on high quality office paper, where the Chinese market is expected to grow by 8% annually, UPM notes.

"China and emerging Asia are our natural growth markets where we already have a unique market position, good customer base, and excellent distribution networks. Asian label paper customers with multiple end-use areas clearly pose a further opportunity for us," Jyrki Ovaska, president of the Paper Business Group, said. "It is worth noting that for the first time about 70% of the investment will be based on Chinese currency and we aim to maximize the use of Chinese subcontractors."

Ovaska adds that the Changshu site is very competitive with excellent environmental performance. It accommodates two paper machines, a labelstock factory, power plant, and a jetty. The site has been recognized by the Chinese state authorities for its sustainable production and innovative and low-emission technologies. "We are building the expansion with similar sustainability standards, using best available technology," Ovaska noted.

The Changshu mill is situated in China, at Changshu Economic & Technological Development Zone approximately 90 km west of Shanghai. The mill site hosts a 900,000 tpy fine paper mill, a labelstock factory, and R&D Center. It is logistically well located against the south bank of the Yangtze River. The almost 200-hectare site is equipped with auxiliary facilities including a power plant, an effluent treatment plant, a process water plant, and an in-house jetty. It has some 600 employees and two paper machine lines. PM 1 produces woodfree uncoated paper while PM 2 makes mainly wood-free coated paper and partly uncoated paper as well.

UPM consists of three Business Groups: Energy and Pulp, Paper, and Engineered materials. The Group employs around 24,000 people and it has production plants in 16 countries. UPM's annual sales exceed EUR 10 billion. UPM Paper has 22 paper mills in Finland, Germany, the U.K., France, Austria, China, and the U.S. Many of them are large recycling centers and bioenergy producers, as well as paper manufacturers. UPM Paper employs almost 13,000 people. In 2011, the business group's net sales amounted to EUR 7.2 billion.