Water-soluble Polymer Papermaking Chemicals Have Bright Market Prospects in China    

In recent years, China's papermaking industry has developed rapidly, with paper and paperboard output reaching 86.4 million tons in 2009, up 8.27% year on year. In the past ten years, its average annual growth rate reached 12.27%. As a result, China's annual paper output now ranks first in the world. With the rapid development of the paper industry, the demand for water soluble polymers like polyacrylamide (PAM) is surging in the paper chemicals industry.
   The growth impetus of the global papermaking chemicals market comes mainly from Asia. The papermaking chemicals markets of North America, Europe and Japan are already very mature. Although they still occupy a dominant position in the global market, their average annual growth rate is only 1% - 2% and even zero. Industry experts believe that, driven by market demand, Asia will continue to lead the global papermaking chemicals market, in which China will play an important role.
   According to the analysis of market situations in recent years, the papermaking chemicals industry has been deeply plagued by raw material prices. The dramatic fluctuation of international oil prices has brought about great cost pressure onto global papermaking chemicals manufacturers. In recent years, especially in 2008, international papermaking chemicals manufacturers subsequently announced to raise their product prices in response to the rise of raw materials prices and transportation costs. Because of the global financial crisis and increasingly fierce competition in the industry, a number of international paper chemicals companies have adopted mergers and acquisitions, expanded investment and divested their non-core assets to enhance their competitiveness, and some well-known companies have even phased out of the papermaking chemicals market.
   While the paper market in developed countries is becoming saturated, the Asian region including China has become the world's fastest growing paper market, leading to the rapid development of the papermaking chemicals market there. In recent years, China has occupied 50% of the global investment in papermaking machines. Large-scale modern papermaking machines were installed one by one in China. In 2009, China became the world's largest paper and paperboard producer. This has provided a rare opportunity for the development of China's papermaking chemicals industry. According to the estimates of the China Papermaking Chemicals Industry Association, China's papermaking chemicals market will reach RMB50 billion - RMB60 billion in 2015.
   Tempted by the huge market outlook, global leading papermaking chemicals makers have subsequently established joint ventures, wholly-owned enterprises or offices in China. Some have turned their earlier joint ventures into wholly-owned enterprises or raised their shares in the joint ventures to control them by purchasing the shares of Chinese investors. For example, the U.S. Hercules Inc. and Shanghai Chlor-Alkali Chemical Company Limited formed a joint venture - Shanghai Hercules Chemical Co Ltd; Harima Kasei Co Ltd, which is Japan's largest manufacturer of paper sizing agents, and Hangzhou Research Institute of Chemical Industry set up a joint venture, Hangzhou Harima Paper Chemicals Co Ltd, specializing in the development and production of dry strength agents (made from PAM) and paper sizing agents produced from rosin; and Kemira, the world's leading chemicals production and sales company, and Shandong Yanzhou Tiancheng Chemical Co Ltd jointly invested RMB360 million to set up a joint venture, Kemira Tiancheng Chemicals (Yanzhou) Limited.
   In terms of their raw material sources, water soluble polymers for papermaking can be divided into natural and synthetic ones. Natural water-soluble polymers mainly include starch derivatives, cellulose, vegetable gum and chitin, among which the demand for starch derivatives is the largest in the paper industry. Synthetic water-soluble polymers mainly include PAM, polyvinyl alcohol (PVA) and polyethylene oxide (PEO), among which the demand for PAM is the largest. In the paper industry, PAM is mainly used as dry strength agents, retention agents, filter aids, waste water treatment agents and fiber dispersion agents.
   PAM can be used in a variety of paper and paperboard products. If its usage in paper is 0.2% by weight, the annual demand for PAM will be 160 000 tons in China. With the strengthening of environmental protection, the demand for PAM in waste paper recycling and paper-making wastewater treatment is increasing rapidly in China.