Coronavirus Outbreak Hits China Paper Industry, Muting Supply and Demand

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The coronavirus outbreak in China has brought the country’s paper and board industry to a semi-standstill with both production and logistics slowing down.

Most provincial governments extended the Lunar New Year (LNY) holiday until February 9 to limit the flow of people, in an endeavor to contain the spread of the never-seen-before virus, which has claimed 565 lives as of early February.

The break was originally mean to run from January 24 to January 30.

In the central province of Hubei, non-essential enterprises have been ordered not to reopen before February 14.

Its capital Wuhan (where the coronavirus originated) and other major cities there are under lockdown, which started as early as January 23.

All pulp and paper mills in the province have stopped operation.

According to preliminary data from the National Bureau of Statistics of China, Hubei saw total paper and board production of 4.16 million tonnes in 2019, ranking its industry 7th out of 31 provinces in the country.

Shandong Chenming Paper Holdings have two mills in Hubei. The one in Huanggang city houses a 500,000-mtpy chemical pulp line which can swing between paper grades and dissolving grades. The other, in Wuhan, has 220,000 mtpy of tissue, specialty paper and graphic paper capacity. Both facilities have been stopped for nearly two weeks.

The city of Xiaogan is a major hub for tissue production in China. Top producers, including APP China, Vinda International and C&S Paper, have a total of approximately 680,000 mtpy tissue capacity in the city. All of them are understood to be out of operation.

Contacts from the affected producers told Fastmarkets RISI that they highly doubt whether the facilities will be able to resume operations on February 14 as currently scheduled, as the number of confirmed cases of the coronavirus is still surging in the province and mandated lockdowns are expected to continue.

Paper and board manufacturers outside Hubei are also in a challenging situation.

Most recycled packaging board plants arranged downtime over LNY holiday this year as usual. Now that people across the country are being urged to stay home to avoid spreading infection, domestic recovered paper collection has practically stopped.

Mill workers who went back to their hometowns for LNY are struggling to get back to work as quarantine efforts have been stepped up beyond Hubei.

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