The market demand potential is huge, and the process of equipment localization is accelerating

Papermaking equipment is a highly professional industry, involving machinery, chemicals, materials, anti-corrosion and other technical fields. China's papermaking equipment industry has a short development history, the overall technical level of the industry is relatively lagging behind, and the market size is small. From the international market, paper equipment manufacturers are mainly concentrated in Germany, the United States, Italy, Japan and other manufacturing developed areas, compared with the international paper equipment leading enterprises, domestic paper equipment suppliers in terms of scale, technology and quality, there is a big gap, for a long time large paper machinery and equipment are dependent on imports. In recent years, the state has introduced a number of policies to promote the innovation and development of technology and equipment in the paper industry and green transformation. Among them, in order to improve the technical level of China's paper machine and speed up the process of localization of large and medium-sized paper machines, the state has also arranged technical transformation funds supported by national debt to introduce some technical projects. Under the guidance of the "manufacturing power" strategy and related policies, participants in the paper equipment industry have gradually increased. With the paper equipment manufacturers have increased research and development efforts and aviation, shipbuilding and other cross-industry investors to participate in the layout of paper machinery and equipment research and development and production, the technical level of the industry has gradually improved. By the end of 2022, China has a total of 2,273 patents related to papermaking equipment, including 1,670 utility model patents and 578 invention patents. Among them, 164 new paper equipment patents will be added in 2022. And research and innovation of waste paper pulping complete sets of technical equipment, drum pulper, new closed screening equipment, double disk pulper, super calender and other equipment, equipment localization process continues to accelerate. In 2022, 164 new paper equipment technology patents were added in China, a slight decline from the previous two years, but it is still at a high level compared with before 2016, and industry research and development is accelerating. In recent years, with the continuous improvement of the level of papermaking equipment, China's market share is also gradually increasing. It is expected that in 2022, China's paper equipment market share will increase to about 28% of the global total, and the industry localization process will further accelerate.

Third, the downstream market is developing steadily, and the industry demand has great potential

The downstream market has an important role in promoting the development of the paper equipment industry, and the continuous expansion of the downstream industry is conducive to the market development and product research and development of the industry. Among them, pulp is the most important raw material in the paper industry, and there are many types of pulp production equipment, mainly including pulp grinding machine, scuttling and winding machine, pulp drying machine, compressor and other papermaking equipment. From 2017 to 2022, China's pulp production and consumption continue to increase. In 2021, China's pulp production and total consumption increased by 10.83% and 7.94%, respectively. In 2022, with the increasing demand for downstream paper, pulp production and consumption continued to grow, with a year-on-year growth rate of about 15% and 10.85%. In the future, with the continuous expansion of the scale of domestic pulp production lines and the continuous improvement of pulp quality requirements, the demand for pulp manufacturing equipment will further rise.

China's forest resources are relatively scarce, the forest coverage rate is far lower than the global average of 31%, and the per capita forest area is only 1/4 of the world's per capita level. Among them, the annual growth of timber forests that can be harvested is less than 100 million cubic meters, resulting in a greater dependence on pulp imports in China. In 2021, China will import 29.69 million tons of pulp, accounting for about 27% of the country's pulp consumption. After the Ministry of Ecology and Environment of China announced a total ban on the import of waste paper in 2021, China's pulp imports have declined, and 29.16 million tons of pulp will be imported in 2022, down 4.8% from 2020. In the case of limited pulp imports and rising demand, increasing the capacity of pulp production line is an important way for the paper industry to increase production, and the new pulp production capacity will drive up the demand for pulp production equipment.

Machine-made paper and paperboard are widely used in many fields, and data from the National Bureau of Statistics show that from 2018 to 2022, the production of machine-made paper and paperboard in China has risen steadily. In 2022, the national production of machine-made paper and cardboard 136.914 million tons, an increase of 0.79%, the industry continues to grow, the huge domestic demand for paper equipment provides a broad space for development.