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Cardboard prices soaring in China ahead of 'Singles' Day'

Dec 17,2018 2441

SHANGHAI -- China's e-commerce boom and recent ban on used-paper imports is causing demand for shipping cartons to soar, sending cardboard prices sharply higher.

A cardboard box shortage is feared ahead of the country's annual Singles' Day shopping spree in November -- an event that should see one-day sales of around 1 billion units.

The country's largest cardboard maker, Nine Dragons Paper Holdings, raised prices in mid September for the fourth time two months.

According to industry officials, cardboard prices surged to over 5,000 yuan ($759) per ton in September, up from around 3,000 yuan in July last year.

In China, e-commerce services from Alibaba Group Holding and other companies have risen sharply. The number of parcels delivered to homes in 2016 totaled 31.3 billion, up six times from four years earlier and 50% over the past year.

For comparison, this is eight times more than neighboring Japan.

Meanwhile, the government is toughening paper manufacturing regulations to address air pollution and other environmental problems. Small and midsize factories have been shut down for failing to comply with greenhouse gas emission restrictions and other regulations.

This has tightened supply amid increased demand, sending cardboard prices skyrocketing.

Price hikes, which were held to around 40% in early spring, are accelerating again because of restrictions on used paper imports.

Waste plastic and iron that China has been importing mainly from Europe in recent years -- categorized as "recycled resources" -- includes materials of poor quality, eliciting criticism that China has become the world's "garbage dump." This prompted the government to announce in July a ban on imports of certain waste, including used paper.

While details of the ban have yet to be disclosed, some customs offices have already refused to allow imports, according to informed sources.

China annually imports some 17 million tons of used paper to produce cardboard and other paper products.

Since cardboard prices began rising again in July, there has been concern over looming shortages. Singles' Day, the world's largest online shopping day, is held annually on Nov. 11. E-commerce may take a hit if there are not enough boxes to fulfill orders.

As supply tightens, used-paper collection businesses are becoming more prevalent in the country.

Chinese cardboard production in 2016 ate up 46 million tons of paper, amounting to one-third of world consumption. The global paper industry is watching as China's cardboard prices soar since further increases are likely to affect other markets.