Cheng Loong Corp (正隆紙業), the nation’s biggest industrial papermaker, yesterday provided a positive outlook for its business in the second half of this year, due to rising pulp prices and expected robust demand during upcoming local festivals.
“Global pulp prices are expected to hover at relatively high levels in the near term,” a Cheng Loong official said by telephone, citing company statistics.
International pulp prices have this month reached US$300 per tonne, compared with US$170 per tonne in the same period last year, said the official, who requested anonymity.
Regarding possible future price hikes, the official said that the company’s current product prices do not fully reflect the changes in international prices, but declined to elaborate.
PRICE HIKES
Cheng Loong in March announced that it would increase prices for this year’s shipments by NT$1,500 (US$49.35) per tonne, or nearly 10 percent on average, to cover rising raw material and transportation costs.
The adjustment was the company’s second price increase since December last year, when it announced an increase of NT$1,500 per tonne, or between 12 percent and 15 percent.
Apart from stable prices for raw materials, the firm is also upbeat about demand for paper products in the second half, Cheng Loong said.
The firm expects demand for paper boxes and packaging materials to grow during the Ghost Festival, for which Taiwanese prepare food to worship their ancestors.
CHINA
However, the company is more conservative about its business in China, primarily due to tighter environmental regulations and fierce competition, it said.
Cheng Loong plans to shut down one of its major units in Shanghai by the end of the year, due to rising operating costs to meet stricter environmental standards.
Shanghai Chung Loong Paper Co Ltd (上海中隆紙業) contributed nearly 10 percent of its parent’s total sales last year, Cheng Loong data showed.
Cheng Loong, which operates 12 paper plants in China, said it does not plan to withdraw from the Chinese market.
VIETNAM
However, it is seeking potential business opportunities outside of Taiwan and China, as the 57-year-old company is shifting its focus to Vietnam, where a new paper mill in Binh Duong Province is expected to begin operations in the second quarter of next year, the official said.
The new facility, which is to have an annual capacity of 300,000 tonnes, is part of the company’s efforts to develop a complete supply chain for industrial paper products in Southeast Asia, the official added.
Cheng Loong operates three carton plants in Vietnam, company data showed.
Cheng Loong shares yesterday edged down 0.66 percent to close at NT$15.15 in Taipei trading. The shares have gained more than 20 percent from nearly NT$12 at the end of last year, Taiwan Stock Exchange data showed.
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