Corrugated Packaging Plays An Important Role In Paper Packaging
Feb 25, 2020

Compared with the major countries in the world, China's corrugated box industry started late, but its growth is very rapid. As early as 2003, China has surpassed Japan as the world's second largest producer of corrugated boxes, second only to the United States. According to the statistics of China Packaging Federation, in 2018, the output of corrugated boxes in China was 27.3346 million tons, accounting for 49.00% of the output of paper products in that year.

Corrugated board is a kind of composite board, which is made of box board paper and corrugated base paper. It is used to make corrugated box. The middle layer of the board is hollow structure, which can reduce the packaging weight and obtain high compressive strength and buffering performance.
Corrugated box refers to the packaging paper container made of corrugated board by printing, die cutting, nailing or pasting. As an external packaging, corrugated box mainly plays the role of storage and protection in the transportation process, and its printing content can also play the role of beautifying the appearance, displaying products and advertising. Compared with metal, plastic and glass packaging products, corrugated box has less waste and is easy to recycle and reuse. In addition, it mainly uses non-toxic and easy to decompose environmental friendly water-based ink when printing. It is recognized as "green packaging product" and widely used in home appliances, electronic products, it, food and beverage, books, daily chemicals, textiles and other downstream industries.
Corrugated packaging is a kind of paper packaging, which refers to the production activities of further processing paper products with raw materials such as paper and paperboard; and a series of activities of packaging services for products of related industries using the processed corrugated paper, paperboard, cartons, cartons, etc.
As a typical midstream industry, the box board corrugated paper packaging industry takes the box board corrugated paper base paper produced by upstream paper-making enterprises as raw materials to provide the finished products of corrugated boxes to downstream companies in the consumption fields of food and beverage, electronics, home appliances and logistics express companies.
Although the supply and demand of papermaking industry is basically balanced at present, the development of each market segment is not balanced, and the structural gap remains. The rapid development of the Internet has brought development opportunities for e-commerce, and people's acceptance of online shopping has been increasing. A large number of express packaging demand has brought a large development space to the box board paper and corrugated paper market where the company's main products are located. The market demand is strong, and there is a gap between supply and demand at present.
Box board paper and corrugated paper are the main products of paper and paper products industry, accounting for nearly 50% of the total. According to the statistics of China Paper Association, in 2018, the total output of box board paper and corrugated base paper is 42.5 million tons, the total consumption is 45.58 million tons, and the gap is nearly 3.08 million tons. In the past 10 years, the annual gap is 1.11 million tons.
As the raw material cost of raw paper accounts for more than 70% of the variable cost of cartons, the price of raw paper is the main factor affecting the average profit margin of the corrugated box industry, which is closely related to the upstream paper industry. At present, although the paper industry is facing the situation of overcapacity, due to the increasing pressure of environmental inspection in recent years, a large number of unqualified small and medium-sized paper mills have been eliminated, and the industry concentration has increased after the market clearing. Compared with the corrugated box industry with a lower concentration, the upstream paper industry with a higher concentration has a stronger bargaining power, and the upstream paper-making enterprises mainly adopt cost plus pricing. The pressure of price increase from imported waste paper, coal and other bulk commodities is easy to pass on to the downstream paper box producers.
Since the end of 2016, due to the impact of the rising prices of international waste paper, coal and other bulk commodities, and the impact of a large number of small and medium-sized paper factories' production restriction and shutdown under the pressure of environmental protection, the price fluctuation of base paper has increased. Take the market price trend of high-strength corrugated paper in China as an example. At the end of 2016, the price of high-strength corrugated paper increased by more than 50% compared with the beginning of the year. Then, after a short fall in 2017, it entered a new round of skyrocketing. After reaching a peak in October 2017, it fell back rapidly. Therefore, from the end of 2016 to 2017, there were two rounds of base paper price rising tide, during which the highest price of base paper reached more than twice the lowest price. Since 2018, although the price of base paper has continued to fluctuate, the magnitude of the shock is significantly weaker than that in 2017.
Compared with the major countries in the world, China's corrugated box industry started late, but its growth is very rapid. As early as 2003, China has surpassed Japan as the world's second largest producer of corrugated boxes, second only to the United States. According to the statistics of China Packaging Federation, in 2018, the output of corrugated boxes in China was 27.3346 million tons, accounting for 49.00% of the output of paper products in that year.
Limited by the sales radius of corrugated box products, corrugated box manufacturers are mainly located near the downstream consumer goods manufacturing base, with the Pearl River Delta, Yangtze River Delta and Bohai Rim accounting for nearly 70% of the share. In recent years, with the implementation of regional economic policies such as the development of the Central West and the rise of the central region, the manufacturing industry system in the central and western regions has been gradually improved, driving the new production capacity of the paper packaging industry, including corrugated boxes, to shift to the central and Western regions, and the regional layout of the industry has become more reasonable. In recent years, leading enterprises in the industry such as Hexing packaging and Jielong Industry have invested and set up factories in Hanchuan, central Hubei and Chengdu, Southwest China.

According to the statistics of China Packaging Federation, in 2018, the output of national corrugated box industry was 27.3346 million tons, down 3.99% year on year. The top five production areas are Guangdong Province, Zhejiang Province, Henan Province, Jiangsu Province and Sichuan Province. Among them, the cumulative output of Guangdong Province is 4.1876 million tons, accounting for 15.32%, a year-on-year increase of 9.54%; the cumulative output of Zhejiang Province is 3.1289 million tons, accounting for 11.45%, a year-on-year decrease of 20.87%; the cumulative output of Henan Province is 2.2489 million tons, accounting for 8.23%, a year-on-year increase of 8.87%; the cumulative output of Jiangsu Province is 2.1 million tons, accounting for 7.68%, a year-on-year decrease of 8.71%; The cumulative output of Sichuan Province is 1918200 tons, accounting for 7.02%, down 5.29% year on year.
In 2017-2019, the import amount of products in China's corrugated packaging industry showed a downward trend year by year, with an accelerated decline. In 2017, the import value of China's corrugated packaging was USD 4.087 billion; in 2018, the import value of China's corrugated packaging was USD 3.864 billion, down 5.44% year on year; from January to November 2019, the import value of China's corrugated packaging was USD 1.894 billion, down 42.70% year on year.
From the perspective of the structure of imported products, in 2018, the most imported products of China's corrugated packaging industry were "unbleached kraft paper or cardboard and corrugated paper or cardboard" (tariff No.: 47071000). In 2018, the import value was $3251393400, accounting for 84.14%. In 2018, the second largest import volume of China's corrugated packaging industry was "other corrugated base paper" (tariff No.: 48051900). In 2018, the import volume was US $479.2582 million, accounting for 12.40%. The third largest import volume of China's corrugated packaging industry in 2018 is "semi chemical corrugated base paper" (tariff No.: 48051100). In 2018, the import volume was US $58.2521 million, accounting for 1.51%.
On September 30, 2018, the Tariff Commission of the State Council issued the announcement of the Tariff Commission of the State Council on reducing the import tariff of some commodities. Among them, the import tax rate of corrugated base paper, cardboard, some special paper base paper and paper products dropped from 7.5% to 6%, which is expected to continue to drive the growth of the import volume of packaging paper such as corrugated box board. In addition to paper and paperboard, paper products, the tariff on the production of pulp and paper-making equipment also fell from 8.4% to 8%. China's papermaking machinery and equipment to foreign markets since the high degree. Therefore, the reduction of the tariff of papermaking equipment is conducive to the reduction of the investment cost for the new projects and technological transformation of the paper factory.
Corrugated boxes have proved popular in packaging, as sustainability has become a more important issue throughout the value chain – easy to recycle, and the pulp and paper industry has become adept at turning it into a new generation of cardboard. These qualities mean that the protection function of corrugated packaging is more and more popular compared with polymer based alternatives, such as foamed polystyrene (EPS) foam. According to the statistics of China Packaging Federation, as of October 28, 2019, there are 85 enterprises in the service life of corrugated products recycling mark.

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