Baoding, China, 07 June 2011 -- /PRNewswire-Asia/ -- Orient Paper, Inc. (AMEX: ONP), a leading manufacturer and distributor of diversified paper products in northern China, is nearing completion of the renovation of one of its idle paper production lines, on which it plans to manufacture digital photo base paper and other higher profit margin specialty papers. The company is also making significant progress towards beginning trial production of its new corrugating medium paper production line in early July 2011.
Orient Paper has been renovating a small production line, which has been idle since 2007. The renovated production line is expected to produce up to 10,000 tons of digital photo base paper and/or other high profit margin specialty papers, including security paper with certain anticounterfeit properties. The company anticipates completing renovation after the installation of new power supply units at the workshop in July 2011. If test operations are successful, the company expects to begin by producing digital photo base paper to supply the production of the company's two existing digital photo paper coating lines by the end of the third quarter 2011.
Orient Paper's new 360,000 tons/year corrugating medium paper production line is on schedule to begin trial production in early July 2011. With the addition of this new production line, the company expects total corrugating medium paper production in 2011 to reach approximately 199,500 tons to 220,500 tons, of which up to 98,000 tons are expected to be contributed by the new production line.
In May 2011, the Ministry of Industry and Information Technology of the People's Republic of China (MITT) announced that it recently ordered the elimination of outdated production capacity for various industries for year 2011, including the closure of approximately 7.4 million tons of paper production capacity in 2011. The government mandated closure of paper capacity in 2011 comprises approximately 7.4% of the current 100 million tons paper production capacity in China, up 72% from 4.3 million tons eliminated in 2010. It is believed that a majority of the paper production capacity to be eliminated concentrates in northern China and includes cultural paper, low-grade packaging paper, and household paper. The paper production capacity closures in the Henan Province and Hebei Province in 2011 will be approximately 1.9 million tons and 1.1 million tons, respectively, according to the provincial level allocation by the MITT.
"With the new round of government-mandated closures of regional small and inefficient paper production capacity, we anticipate the pricing pressure will further intensify given reduced supply and stronger demand from our customers in the second half of the year," said Zhenyong Liu, chairman and chief executive officer of Orient Paper. "We believe our new corrugating medium paper capacity, which we expect to come online in July, will play an important role in our ability to meet the increasing market demand. The paper industry in the Henan, Hebei, Hunan, and Guangdong Provinces account for a majority of capacity eliminations, which hopefully will further strengthen our leading market position in northern China. Looking into the future, we plan to develop our expertise to offer new paper products such as security paper with anticounterfeit properties, to further expand our product portfolio and increase market share."
Orient Paper, Inc., through its wholly owned subsidiary, Shengde Holdings, Inc., controls and operates Baoding Shengde Paper Co., Ltd., and Hebei Baoding Orient Paper Milling Co., Ltd (HBOP). Founded in 1996, HBOP is engaged in the production and distribution of products such as corrugating medium paper, offset printing paper, and other paper and packaging-related products in China. The company uses recycled paper as its primary raw material. Baoding Shengde, founded in June 2009 and located in Baoding, is engaged in the production and distribution of digital photo paper. As one of the largest paper producers in Hebei Province, HBOP is strategically located in close proximity to Beijing, where the majority of publishing houses are based. For more information, visit http://www.orientpaperinc.com.
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