Shanghai Perfect Packing Technology Co Ltd recently installed a 2.5m Fosber S/Line corrugator in its new Shanghai plant. This is the second Fosber line that the company’s owners operate in East China. Commissioned at the end of 2017, Perfect Packing’s new Fosber S/Line is the first of several major new machinery investments the company is planning over the next few years to expand sales in Shanghai’s fast moving corrugated sheet market. Opened on 8th September, 2017, Perfect Packing’s new plant is located in Jin Shan Industrial Area in south Shanghai.
“We have a 10,000 sqm factory. There is enough room here for one corrugator,” said Leo Li, General Manager of Shanghai Perfect Packing Technology Co Ltd. “We chose a 2.5m Fosber S/Line with a maximum speed of 300m per min. Already in the first few months of operation, we are averaging at least 220m per min, which is a good achievement from our crew,” continues Li. “We are producing 200,000 sqm per day here – our target is 300,000 sqm per day or 7.5 million sqm per month.”
Leo Li, General Manager of Shanghai Perfect Packing Technology Co Ltd
Perfect Packing’s new corrugator is the company owner’s second Fosber S/Line. The first is installed in associate company, Eva Packaging Co Ltd, at its corrugated plant in the coastal city of Taizhou, which is situated 300km south of Shanghai in the Zhejiang Province.
The Fosber S/Line at Perfect Packing features automated process control, making the process simpler for the operators. “In the past, our corrugating lines had manual glue control, temperature control, pressure control, but for the new machine we selected automatic controls for ease of operation. Previously, we needed more experienced operators, but now we can rely on the process control system and use less experienced operators.”
Perfect Packing chose its Jin Shan location due to the large number of sheet plants in the area. Li noted that many companies are relocating their factories from central Shanghai to out lying city areas, such as Jin Shan, due to stiffer government environmental protection regulations that are looking to reduce city centre urban pollution.
“We supply customers in a 50km radius from here; there are about 1,500 converters in the area,” Li said. “Now we have about 300 customers for our Shanghai factory. They are of many different size and include some really big converters who supply boxes for on-line shopping companies.”
Double wall sheet accounts for 70% of the Jin Shan plant’s output and single wall sheets the remaining 30%. Doublewall sheets are predominantly AB, while single wall sheets are available in A, B or E flute. “A and B flute sheets are most important for our Shanghai factory as customers here need stronger boxes,” Li remarked. “Most of our single wall sheets are supplied to foreign companies in Shanghai. The paper grammage is usually 220gsm for single wall and 500gsm for doublewall products. Doublewall sheets are being used to make boxes for electrical appliances, mobile phones, flat screen TVs, mechanical parts, international shipping boxes and other valuable goods.”
Li explained that Perfect Packing has chosen a special operating schedule to enter the highly competitive Shanghai corrugated sheet market. “We are different from other sheet feeders as we currently operate our corrugator only at night time to take advantage of off-peak power rates – it’s more efficient that way. We produce board at night so it’s ready to deliver to customers in the morning, ready for when they start work. Our production volume depends on orders. We don’t hold much stock, as we ship out sheets straight away.”
Shanghai’s corrugated sheet and box market continues to grow, albeit at a slower rate than previously, as new foreign and local investors set up operations in the area. “Our business in Shanghai is good, that’s why we set up here. The market is huge, but there are many competitors,” Li commented. “The market for sheets is growing, but only slowly as the market here is already quite big. More manufacturers are setting up in this area – it makes for stiff competition.”
Paper prices remain a major concern for Perfect Packing – and other Chinese corrugating companies – as prices have fluctuated widely over the past 15 months which has affected customer orders and profitability. “Like all mature corrugated markets, customers usually pay attention to two things – sheet prices and quality,” Li said. “We have decreased prices and increased our quality, so we have lost some margin, but this is the best way to create capacity demand for our business. To run this business, we need to pay attention to paper prices.”
Perfect Packing is looking to expand production in Shanghai and has plans to install additional Fosber corrugators in future. At present, the owners are still deciding whether to move to a new, larger factory or to open a second plant in the north of Shanghai. Longer term plans include listing Perfect Packing on the Shanghai Stock Exchange.
“In 2019, we are planning a second Fosber line in Shanghai. Our second line will be for doublewall sheet production,” Li said. “Our future looks good. Our goal in three to four years is to be a public company. We need three to four corrugating lines to generate the sales volume and revenues needed to become a public listed company.”
Perfect Packing expects Shanghai’s corrugated board market to achieve a double digit growth rate over the next few years, even as the industry enters a new consolidation phase. “We think the market for corrugated sheets can increase 20% in the next two to three years as lower volume corrugators will be closed by the government because they are inefficient machines,” Li said. “We believe that smaller, less efficient corrugated companies will close, meaning good opportunities for efficient and environmentally-friendly companies like our own.”
Customer service from Fosber has ensured that the corrugator production output, quality and efficiency are all in hand. These are the prime reasons that Perfect Packing intends to install additional Fosber equipment in future.
“We have been running a Fosber S/Line for 10 years at our Taizhou factory. We know their production quality and efficiency, that’s why we continue to use Fosber’s solutions,” Li said. “Our experience with the S/Line in the Shanghai plant has been very good, so we have no hesitation in looking at another line for the factory over the coming year or so.”
Business conditions are brisk in Taizhou, Zhejiang Province, according to Li, where Perfect Packing’s associate company, Eva Packaging Co Ltd, operates a 2.5m Fosber S/Line in a 30,000 sqm plant. Installed in 2009, the Fosber replaced a locally made 2.2m corrugator that was in service when the plant was acquired five years previously in 2004. The Taizhou plant’s S/Line currently runs at an average of 200m per min and produces about 6 million sqm of corrugated sheets per month.
“About 60% of Eva Packaging’s corrugated board is doublewall and 40% is single wall,” Li said. “We supply sheets only in the Taizhou area. The doublewall market is important because we earn more profit from this grade. We supply customers in a 50km radius of our Taizhou factory.”
Customers have different requirements in Taizhou compared to Shanghai, reflecting the different products being manufactured in the Taizhou area. Doublewall board customers include many furniture factories and electric bicycle companies, along with metal mould makers for the plastics industry, (which is a massively growing market at the moment). Single wall sheets are used by converters for fruit boxes and trays, mineral water boxes and soft drinks packaging. The single wall sheet market there is stable.
“Our Taizhou corrugator is running at full capacity. That’s why we started a new business here in Shanghai last year,” noted Li.
Eva Packaging estimates that there are about 800 corrugated sheet plants in the Taizhou city region. High quality doublewall board sells at a premium in Taizhou, an important competitive advantage that Eva Packaging is keen to maintain. “We have good business in the Taizhou area. We have no doubt that the Fosber S/Line has helped ensure we remain as a leading player in the area, thanks to the quality of sheets that it produces.”