[Gold Plate Emergency] 'Raw Material Black Hole' China Swallows Corrugated Cardboard

China Absorbs East Asian Original Paper Supply... Shortage Continues
Domestic Demand for Delivery Packaging Soars
Secondary Processors Suffer as Prices Surge

[Asia Economy Reporter Junhyung Lee] As China absorbs corrugated cardboard raw materials in East Asia, the shortage of corrugated cardboard continues. The demand for corrugated cardboard used for delivery packaging has surged due to the increase in online orders amid the spread of non-face-to-face transactions, effectively turning it into "golden cardboard."

Domestic corrugated cardboard raw material and fabric manufacturers are benefiting from the increased demand both domestically and from China, which acts as a "black hole" for raw materials. However, secondary processing companies that make boxes using these raw materials are struggling with soaring prices.

According to the Korea International Trade Association (KITA) on the 31st, China's corrugated cardboard import value last year was about 1.52 trillion KRW, more than 2.5 times the previous year's 596.4 billion KRW. The main countries from which China imports corrugated cardboard are Korea, Taiwan, Thailand, Vietnam, and Malaysia. Except for Taiwan, all countries saw their import values more than double compared to the previous year. In particular, Thailand and Malaysia recorded increases of 376.2% and 533.3%, respectively.

Consumption of corrugated cardboard in China continues to rise steadily. The domestic economy's recovery since the second half of last year and the spread of non-face-to-face transactions have fueled this trend. According to the China Zhongshang Industrial Research Institute, China's corrugated cardboard consumption last year was 86.85 billion square meters, an increase of 5.45 billion square meters from the previous year's 81.4 billion square meters. The institute forecasts that China's corrugated cardboard consumption will grow at an average annual rate of 3% until 2023, reaching 94.9 billion square meters in two years.

Industry insiders say that while this situation is favorable for domestic corrugated cardboard raw material manufacturers, it poses difficulties for secondary processing companies that purchase raw materials to make boxes. This is due to the industry's characteristic that raw material price increases cannot be immediately reflected in product prices. Corrugated cardboard raw materials lose quality over time as moisture evaporates, making it necessary to import from neighboring countries. This situation is expected to continue for the time being.

Domestic and international demand for corrugated cardboard is expected to continue growing steadily, supported by the growth of the online market. An industry official said, "Wood fibers like corrugated cardboard have a high recycling rate, which is advantageous from an ESG (environmental, social, and governance) perspective," adding, "If environmental issues are added to economic issues, the proportion of paper packaging materials could increase from the current 30% range to 60-70%."