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April 10, 2018
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Bio Pappel delays US paper mill plans

The McKinley Paper Co. subsidiary of Mexico-based Bio Pappel reportedly has pushed back its plans to reopen a paper mill in the U.S. Pacific Northwest that it purchased in March 2017.

Plans to retrofit the mill in Port Angeles, Washington, have been “put on hold,” according to an article by the Peninsula Daily News. The retooling involved converting the mill from one that made graphic paper, including paper for phone directories, to one that produces linerboard.

The mill, formerly owned by Nippon Paper Industries USA, had been targeted for reopening before the end of 2018, but the paper quotes a McKinley Paper vice president as saying, “That’s not going to happen,” adding, “things are happening in the market” to cause the delays.

McKinley and Bio Pappel continue to operate a plant in Pruitt, New Mexico, that produces recycled-content linerboard.

When Bio Pappel acquired the Port Angeles plant in early March 2017, it said the purchase would allow it to double its production capacity in the U.S.

“McKinley will convert the production of this plant to its business line to efficiently integrate it with its current operations in the U.S., which will allow it to strengthen its presence and competitiveness, as well as capture the opportunities of the new cycle of economic expansion expected by a significant reduction of taxes on businesses, an investment-intensive infrastructure and extensive industrial and financial deregulation announced in that country,” the company’s March 2, 2017, news release stated.

“We consider that Bio Pappel is one of the companies best positioned to insert competitively into a new business environment where international paradigms are changing,” said Miguel Rincon, general director and board chairman of Bio Pappel, when announcing the purchase. “The company is convinced that Mexico, the United States and Canada are globally the best region to invest in, with or without the Free Trade Agreement.”

Bio Pappel produces several types of paper, including newsprint, corrugated cardboard graphic papers and kraft sacks at more than 40 plants in Mexico, the U.S. and Colombia.

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Nine Dragons reports half-year sales and profit increases

Nine Dragons Paper (Holdings) Ltd., Hong Kong, has announced its unaudited results for the six months ending Dec. 31, 2017. The company reports a sales increase of 34 percent to $4 billion in the half year and gross profits that rose by 80 percent compared with the second half of 2016. Nine Dragons also indicates its profit margin rose from 18.3 percent in late 2016 to 24.5 percent in late 2017.

In its management discussion and analysis, the firm’s executives say they have developed strategies to cope with China’s recovered fiber import restrictions.

The authors write, “As government environmental policy becomes more determined and stringent, and environmental enforcement becomes more extensive and rigorous, [the] group has adopted a proactive strategy to achieve the appropriate balance between selling prices, sales volume and inventory levels for optimal profitability and has recorded historical high sales revenue and profits during the period.”

Describing the company’s strategy, Nine Dragons’ managers write, “Although the import of recovered paper into China has become more restrictive, the group is still able to maintain a flexible procurement strategy that is based on the selection and purchase of raw materials offering the most optimal cost-value relationship by closely monitoring the market price trends of different sources. The purchase value of domestic recovered paper accounted for approximately 57.3 percent of the total value of the group’s purchase of recovered paper in the period.”

The managers portray Nine Dragons as potentially benefitting from paper mill capacity cuts in China and also hint that scrap import restrictions may yet be problematic.

“Noncompliant capacities in the packaging paperboard industry will continue to be shut down,” the company’s managers write. “New capacities of Nine Dragons Paper will offer more high-quality products to replace low-quality products in the market.

“Nevertheless, new capacities are expected to emerge during certain periods, and imported raw materials will also be tightened, representing challenges to be met by the group.”

The managers say Nine Dragons will adjust for changing supply-demand dynamics and enhance integration along the supply chain, creating value for shareholders.