Paper mills in China are experiencing a “shutdown.” Kowloon paper factory, the leading paper manufacturing company in Dongguan city, Guangdong province, has almost stopped working. Its output is down by nearly 220,000 tons of paper. The paper mill owner in Shenzhen said that the demand for paper is very low. Some paper mills can no longer continue to operate, and it feels like “the whole world has stopped manufacturing.”
The Dongguan Kowloon Paper Company shuts down production
On Aug. 17, Sina Finance said that the Kowloon Dongguan paper factory has once again issued a shutdown notice. It noted that eight paper production units of the factory in Kowloon would stop working, beginning the shutdown from Aug. 16. It’s expected the total output of cardboard, whiteboard, and notebook paper, will decrease by about 80,000 tons.
Already four production units have shut down since the beginning of August.
The Kowloon paper mill also plans to shut down its production branches in Hubei on the 16th.
On the 20th, a The Epoch Times reporter called the Kowloon factory to say that a female worker at the factory confirmed that some machines had stopped working but declined to give specific reasons. Instead, she said her job was only to answer the phone. She did not know the specifics and asked reporters to call back on the following Monday. Currently, the workers are still working as usual.
The Kowloon paper manufacturing company had previously issued a series of shutdown orders. It began to cease operations in July this year.
On July 26, Kowloon Paper Company announced that from July 26 to Aug. 26, 12 types of machines, including kraft paper machines, corrugated cardboard machines, and white paper production, will alternately shut down.
Dongguan Kowloon Factory is the most prominent paper production facility under the Kowloon Group. It includes 16 paper production stations, with an estimated annual capacity of over 5 million tons. China Paper Media said that as of Aug. 26, Kowloon had cut supply to the market by nearly 220,000 tons of paper.
In addition to Kowloon Paper Company, other paper companies such as Ly Van Dong Hoan Company, Kim Chau Dong Hoan Company, Son Ung International Company, etc., also announced their closure.
Generally speaking, early August is the traditional peak season for the Chinese paper industry and will last until the end of the year. However, this year, just before the peak season, paper mills had to shut down, highlighting the unusual weakness of China’s paper industry.
China’s paper industry is in recession, as can be seen from the industry’s financial statements. According to Longkun Media, the Ly Van paper company’s first half profit forecast has decreased by about 59% compared to last year’s period. The net profit of Son Ung international company, Bac Hoi company. etc., and other paper industries also decreased by more than 50%.
The paper industry has entered a recession: Many jobs lost
In an interview with The Epoch Times, Chen (alias), owner of Quan Lan packaging paper company in Shenzhen, said that sales have halved since the beginning of this year. Now the company has no orders, no production, and no business. Large and small companies have no jobs and can only maintain costs without making profits, and 10% of enterprises in the industry have closed.
Chen said, “The whole world has stopped production.” He just spoke to some Vietnamese customers, and their situation is also very poor. “Orders are less than half; it’s not that there are no customers, it’s that their business is down (no jobs). Everyone is consuming less. Ultimately it affects this manufacturing industry packaging and printing.”
Chen added that his industry cycle is very short, only 10 years. But in fact, many industries require the use of paper. For example, the real estate industry needs advertising paper; the painting industry needs album paper; the automobile industry needs paper used in cars, etc. However, now that real estate is in decline, they need to save as much as possible. The paper industry is also affected by e-commerce, which used to be newspaper and flyer-based advertising, but now everyone uses mobile phones. In recent years, there have been some growth segments in the express delivery industry, such as small cartons, but this is not very optimistic overall.
According to China’s Securities Times, experts say that the entire paper industry is in a recession. The price of pulp and raw coal is still high, and production costs have increased significantly.
The News Lens reported on July 29 that Taiwan industry observers said the firm closure of major Chinese paper mills highlights the fragile mainland paper market.