(News from RISI) – Asia Pulp and Paper (APP) has modified its ongoing tissue paper capacity expansion plans in China and Indonesia, aiming to erect five more large machines there that each have a capacity of 60,000tpy.
The firm initiated the ambitious tissue expansion scheme late last year.
It was unveiled that 42 machines would be installed at its facilities in China and 15 units in Indonesia.
These 57 machines, which include 41 large 60,000tpy units and 16 medium-sized 27,000tpy PMs, represent a combined capacity of 2.892 million tpy.
With the five additional large PMs added, the total planned increase in capacity is now 3.192 million tpy.
All 62 machines are planned to come on stream by 2016.
At that point APP’s total tissue capacity will skyrocket to 4.548 million tpy, towering over the current top global tissue producer Kimberly-Clark (K-C), whose capacity is projected to reach 3.864 million tpy in 2016 according to the RISI World Tissue Capacity Report 2013.
APP’s planned tissue capacity in 2016 would also surpass that of SCA Hygiene Products, presently the second largest tissue producer in the world but also poised to surpass K-C.
The Swedish producer’s tissue capacity is forecast to hit 4.474 million tpy that year with its acquisition of the Chinese manufacturer Vinda International.
And Vinda is set to boost its total tissue capacity to 1 million tpy by 2015.
Initially when APP laid out the aggressive growth blueprint, doubts were raised about its viability in terms of construction and market conditions.
Pundits questioned the wisdom of building so many machines in such a tight timeframe and expecting the market to absorb so much new capacity.
An APP senior executive told RISI that the firm has been constantly evaluating the situation and made adjustments to take into account factors unforeseeable when the project kicked off a year ago.
The review has led to its decision to rework the plan.
But instead of simply cutting the number of planned machines, APP has now decided to build more.
Former changes includes the cancelation of eight large PMs in China – six at its Haikou complex and two at the Xinmin mill – while adding an extra thirteen units of the same type – nine at the Suzhou facility and two at the Xiaogan mill in China, as well as two at a greenfield site in South Sumatra in Indonesia, where APP is building a two million tpy bleached hardwood kraft pulp plant.
The contact explained that the high cost of shipping parent rolls from the Haikou facility on China’s southernmost island of Hainan to the company’s inland converting plant across the country is the main reason behind its scale-down.
Other factors like limited space and in-house pulp availability were also taken into consideration.
As for the reduction at the Xinmin site, which is located in the country’s northeastern province of Liaoning, the company found that sales from the mill since its first large PM came online early this year have been slow, showing poor demand in the region.
As a result, it cut the planned additional machines for the plant from three to one. It is slated to be commissioned at the end of next year.
To make up for the shortfall resulting from the PM cancelations, APP’s affiliate APP China has chosen the spacious Suzhou facility in the southeastern province of Jiangsu to build nine large PMs, alongside three units of the same size that had already been planned.
These 12 new PMs are scheduled to start up in the next two years.
The Xiaogan site in the central-north province of Hubei already houses two large PMs, with another two units slated to start up next year.
The new machines there are planned to come online by 2015.
The original plan for the rest of the machines at other mills in China has not changed. Four medium-sized PMs produced by Jinshun Paper Machinery, APP China’s own subsidiary, will go up at the new site in Yaan city and two large units will go up at another greenfield plant in Suining city. Both sites are in the southwestern province of Sichuan.
However, APP China has not finalised the plan to install two large PMs at the Ningbo facility in Zhejiang province, which is operated by its cartonboard subsidiary Ningbo APP.
The firm is mulling over changing the location of the two units from Ningbo to the Dagang mill in Zhenjiang city, Jiangsu province, which is owned by its fine paper subsidiary Gold East Paper.
Top Chinese producer: So far, out of the 62 tissue PMs planned, APP has brought eight online, all of them at the Haikou complex.
These machines comprise four A Celli 60,000tpy PMs and four 27,000tpy units assembled by Jinshun Paper Machinery.
Their commissioning has taken APP China’s total tissue capacity from 772,000tpy to 1.12 million tpy, leapfrogging Hengan International to become China’s top tissue maker.
Hengan owns several mills in the country with a total capacity of 910,000tpy.
There are still 12 machines to be erected at APP China’s Haikou facility, including four large PMs and eight medium-sized units, with startup scheduled before the end of 2015.
Farther afield in Indonesia, APP is pushing forward with its plans to build 15 large tissue PMs at its two mills there – 14 at the Perawang site in North Sumatra and one at the Jumbi plant in Central Sumatra.
The startup of the first of the 14 PMs at the Perawang mill was originally scheduled for this month.
But the project hit a snag due to construction delays and its commissioning has been pushed back to early next year, according to the APP executive.
At the South Sumatra site where APP is working on the construction of infrastructure for the massive pulp line, the two large tissue machines in planning look set to be commissioned in 2016.
APP has planned an eventual total tissue capacity of half a million tpy for this mill.