China’s paper industry is undergoing an unprecedented wave of capacity expansion, driving a historic reshaping of the global pulp market landscape. New large-scale projects are being launched in coastal regions such as Shandong and Guangxi, while leading companies accelerate their push toward integrated production.
Combined with policy adjustments and environmental upgrades, this China-led industrial transformation has triggered a chain reaction throughout the global supply chain, placing the industry at a crossroads between competition and transformation.
From the fourth quarter of 2025 through 2026, a series of major paper production projects—including Sun Paper’s Beihai base in Guangxi and Huatai Group’s new project in Shandong – are set to commence operations, further amplifying China’s capacity advantage in the global paper industry. According to Zhiyan Consulting, between January and August 2025, China’s output of machine-made paper and paperboard reached 106.659 million tons, representing a 2.7% year-on-year increase.
However, the industry’s average operating rate has remained around 60%, highlighting a deepening structural overcapacity. The imbalance between production capacity and market demand has directly squeezed profit margins. Financial reports from the first half of the year show that even large-scale listed paper companies are facing financial strain, while many producers are struggling on the edge of losses.
The impact of China’s capacity expansion has already rippled through the global pulp pricing system. As of September 2025, the reference price for softwood pulp in the Shandong market stood at 5,650 yuan per ton, down 70 yuan from the beginning of the month, while hardwood pulp edged up 70 yuan to 4,250 yuan per ton. Overall, the market remains in a state of “weak supply and weak demand”.
According to customs data, China’s total pulp imports from January to August 2025 reached 24.108 million tons, a 5.0% year-on-year increase. The continuously rising import volume has further intensified global supply pressures. At the same time, price disparities among pulp brands have widened sharply—the price gap between Russian Ust-Ilimsk softwood pulp and European/American Silver Star grades once reached as high as 1,100 yuan per ton—signaling a potential restructuring of the global pulp pricing system.
Insufficient domestic demand has accelerated the overseas expansion of China’s paper products. In the first half of 2025, China’s paper product exports grew 23% year-on-year, with particularly strong performance in the Indian market. During India’s 2025 fiscal first quarter, China’s paper exports to India surged 28% to 143,000 tons, making China India’s largest source of paper imports.
This trend has prompted several countries to adopt trade protection measures. The Indian government, for instance, has imposed a Minimum Import Price (MIP) on virgin multilayer paperboard, setting a CIF benchmark price of 67,220 Indian rupees per ton, effective until March 31, 2026.
Amid shrinking profit margins and volatile prices, major industry players are increasingly betting on the “forest–pulp–paper integration” strategy. Companies such as Nine Dragons Paper, Sun Paper, and Huatai Group have announced a flurry of new projects. Among them, Huatai Group’s 16-billion-yuan integrated project in Yulin, Guangxi plans an annual output of 400,000 tons of dissolving pulp, 600,000 tons of chemical wood pulp, and 900,000 tons of eco-friendly industrial paper, supported by a 1.5-million-mu (≈100,000-hectare) raw material forest base.
This vertical integration model, which connects forestry, pulp, and paper production, enables companies to control the entire value chain, mitigating exposure to raw material price fluctuations. Meanwhile, low-cost timber resources in Southeast Asia provide critical cost advantages for this strategy. Industry data show that by 2024, the top five pulp producers in China accounted for 45% of total market share, reflecting a trend toward increasing industry concentration.
Policy oversight is tightening in tandem with industrial expansion.
In October 2025, the General Administration of Customs of China, together with six other ministries, issued new regulations requiring importers to declare whether imported recycled pulp is produced via dry or wet processing. Imported products must comply with national standard GB/T 43393, and shipments containing more than 0.50% impurities will face return or destruction.
Earlier, on May 1, 2025, the new “Energy Consumption Limits per Unit of Output for Pulp and Paper Enterprises” came into effect. The regulation adopts a three-tier grading system (Level 1, 2, and 3) for energy efficiency, significantly raising industry entry thresholds. Analysts estimate that 15%–20% of small and medium-sized producers may be forced to exit the market between 2025 and 2027 due to cost and compliance pressures.
Supply chain sustainability challenges are also becoming more pronounced.
China’s papermaking industry is increasingly dependent on imported wood fiber, and some imports have raised concerns over “questionable fiber sourcing”. The upcoming EU Deforestation Regulation (EUDR) requires full traceability for all wood and pulp raw materials. Roughly 34% of China’s timber imports from Russia and Southeast Asia originate from high-risk regions, putting an estimated €4.7 billion worth of exports to the EU at potential compliance risk.
To address these challenges, leading companies such as Nine Dragon’s Paper and Sun Paper have jointly developed a BeiDou-based traceability system, while the adoption of blockchain technology in supply chain management has accelerated—by 2024, 30% of leading enterprises had already integrated blockchain solutions to ensure traceable and compliant sourcing.
Industry analysts believe the global pulp sector is undergoing a historic restructuring, with leading enterprises that possess upstream resource advantages and integrated production capabilities poised to dominate future competition.
For traditional pulp-exporting regions such as North America and Northern Europe, adjusting market strategies and seeking new growth drivers have become inevitable. As environmental policies, trade regulations, and technical standards continue to evolve, China’s paper industry is expected to enter a new stage of high-quality development—characterized by capacity optimization, green transformation, and enhanced global competitiveness.
News Courtesy: Chinapulppaper