Throughout this decade, Chinese containerboard maker Lee & Man Paper Manufacturing Ltd. has aggressively added capacity each year to meet that nation’s seemingly endless need for corrugated packaging.
In an open forum with attendees of the 2008 European Paper Recycling Conference, however, company CEO Raymond Lee remarked that the year 2009 was likely to end that streak. “In 2009, we have no new capacity scheduled—it’s the first time in 10 years,” he stated.
After several years of 10 percent-plus growth in containerboard production in China, Lee characterized demand growth as occurring at a much slower rate than in 2008, and sees the same growth “if any” in 2009.
Lee cited weaker export markets for manufactured goods in China; potentially less household consumer consumption in China in 2009; less capital spending by the Chinese government (which makes up 30 percent of the nation’s economy, he noted); and less foreign capital spending as all being factors in the slowdown.
In addition to the relative lack of new capacity in 2009, Lee foresees some “small, inefficient” containerboard mills in China shutting down next year. Overall, he predicts “the net capacity change [in 2009] will be slight.”
In response to a question from moderator Bill Moore of Moore & Associates, Atlanta, as to whether Lee & Man will add production in places other than China (the company has a mill in Vietnam), Lee replied, “Geographically, we consider ourselves an international producer.” He added, however, that “China and Vietnam will be our core focus for the next three to four years [as they have] the greatest growth potential.”
The 2008 European Paper Recycling Conference, hosted by the Recycling Today Media Group, took place at the Marriott Amsterdam Oct. 6-7.