Industrial papermaker Cheng Loong Corp (正隆紙業) yesterday downplayed concerns that the company’s peers in China might use Taiwan to avoid Beijing’s tighter environmental regulations.
As Beijing has been tightening environmental regulations on imports of recyclable materials, Chinese paper recycling companies are eyeing importing semi-finished wastepaper from Taiwan, leaving the nation to deal with more contaminants, industry observers have said.
“We only import the highest grade of wastepaper,” Cheng Loong president Tsai Tong-ho (蔡東和) said at an investors’ conference in Taipei.
The company’s major sources of wastepaper, the US, Japan, South Korea and Europe, have contaminant thresholds of about 1 percent, significantly less than locally procured wastepaper, he said, adding that processing lower-grade wastepaper would lead to additional costs.
Local papermakers have been in communication with the Environmental Protection Administration, which has since shifted its attention to the recycling of plastics and is expected to implement new rules to prevent pollution by the papermaking industry, Tsai said.
On the other hand, tighter environmental rules in China have made that country’s papermakers less competitive on the global market, giving Taiwanese suppliers the advantage, he said.
The firm’s revenue from China, which accounted for about 24 percent of the company’s revenue in the second quarter of this year, has fallen since September last year due to the stricter environmental rules, he added.
Meanwhile, in order to tap into growing demand in Vietnam, Cheng Loong has invested US$240 million in expansion projects in the country, which are expected to add 300,000 tonnes per year of capacity from December or early next year, Tsai said.
The company reported that net income in the first half of this year skyrocketed to NT$3.08 billion (US$100.27 million), compared with NT$731 million a year earlier, while earnings per share rose from NT$0.63 to NT$2.4.
However, consolidated revenue dipped 0.18 percent annually to NT$20.77 billion in the period, it said.
In the first half, revenue from Taiwan rose 9.37 percent annually to NT$14.42 billion and revenue from Southeast Asia gained 83.86 percent year-on-year to NT$1.91 billion, but revenue from China dipped 22.43 percent annually to NT$5.11 billion, company data showed.
In the same period, net income from Taiwan rose 79.16 percent annually to NT$1.4 billion and China returned to the black with NT$2.25 billion in profit, but business in Southeast Asia posted losses of NT$116 billion, the data showed.
Cheng Loong shares have risen 47.55 percent this year, closing up 1.05 percent at NT$24.05 in Taipei trading yesterday.
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