China thirsts for paper, buys all paper rolls from Vietnam

Domestic carton box and packaging paper manufacturers are struggling because of the skyrocketing price of carton rolls and scarcity, as Chinese traders come to Vietnam to buy up all of this product at high prices.

Chinese traders are hunting for cardboard rolls at high prices, causing many domestic packaging and cardboard box manufacturing enterprises to "starve" for raw materials - Photo: HUU KHOA

Meanwhile, Vietnamese paper manufacturers are benefiting greatly because they cannot produce enough to deliver to customers, and all their products are sold at high prices, with real money.

Producers laugh, buyers cry

For nearly a month, Mr. HQL, Director of P Food Company (Bien Hoa Industrial Park), has been restless as the price list of packaging made from cardboard rolls has been increasing continuously.

"In the past, we could easily fix the price because we ordered all year round and signed a contract every 6 months. But recently, the packaging manufacturer said there was no raw material to make it, so we signed whatever price was available, and the contract was valid for a maximum of one month," Mr. L. complained.

Mr. Thanh - in charge of marketing a large-scale confectionery brand in the Southern region - also worriedly said that all types of packaging and shipping boxes made from cardboard rolls have increased in price by at least 20-25% compared to the beginning of the year.

"The Southern market has never seen such a high increase in the price of raw cardboard rolls. But in the past few weeks, many packaging paper manufacturers have continuously changed their prices because Chinese traders are competing to buy raw materials, making them passive and unable to increase prices," Thanh shared.

Spread to countries in the region

"Chinese traders come to all large and small packaging paper factories in Vietnam and place orders at a price 1.5 - 2 million VND/ton higher than the domestic selling price, ranging from 11.5 - 13 million VND/ton depending on the type, and even pay in advance, so many domestic paper factories find it difficult to refuse," Mr. T., Director of a paper company in Binh Duong, revealed.

According to paper industry experts, this phenomenon certainly causes many difficulties for Vietnamese packaging and carton factories.

"If we have to buy raw materials at the same price as Chinese traders are buying, domestic businesses will no longer make a profit, or even suffer losses," an expert affirmed.

"Thirst" for paper from China

Many paper industry experts affirm that the sharp decrease in supply in China while demand increases is the reason why this market absorbs cardboard packaging paper, pushing up the price of these products recently.

According to an expert, over the past several years, the Chinese government has closed a series of pulp and paper factories, causing a sharp decrease in supply. The latest closure, which took place not long ago, has caused the supply of paper products to decrease by about 16 million tons.

Furthermore, since May 2017, China has also banned the import of 24 types of scrap, including unsorted scrap (one of the main raw materials for producing cardboard rolls), further causing the market to fall into a "paper crisis" from raw materials to final paper products.

"Imports are blocked while domestic production has decreased due to a series of factories being closed, causing paper prices in the Chinese market to increase sharply. Even scrap paper collected domestically is now equal to the selling price of products in Vietnam," said an expert.

This person affirmed that except for packaging paper, other types of paper (printing paper, writing paper, tissue paper using pulp as raw material) are not much affected.

Producing cardboard rolls at a business in Binh Duong province - Photo: HUU KHOA

Discount for Vietnamese businesses

Talk toPVMr. Han Vinh Quang, Chairman of the Vietnam Pulp and Paper Association (VPPA), admitted that the fact that Chinese traders are coming to collect packaging paper is causing many difficulties for domestic enterprises.

VPPA will have a meeting with paper manufacturing enterprises in October 2017 to discuss this issue.

According to Mr. Quang, at this meeting, VPPA will request domestic packaging paper suppliers to fulfill orders received from domestic partners, and at the same time request domestic manufacturers to have a policy of reducing selling prices to customers who are Vietnamese enterprises for a certain period of time.

"We will propose a price reduction to support domestic businesses that are also long-term customers. Whether packaging paper manufacturers accept it or not is up to them because the price must be suitable for the market. Manufacturers have the right to choose to sell to buyers who offer better prices. This is the rule. They cannot sell at a lower price," said Mr. Quang.

According to Tuoi Tre