As China Goes Green, Paper-Making Giant Is a Surprise Winner

(Bloomberg) -- A lot of American waste used to end up in China. But as the Asian nation makes moves to go greener, old phone books, cardboard and other recyclables are now getting rejected because of contaminant concerns -- giving an unexpected boost to a giant in the paper world.

Now that China is buying more of the fresh stuff rather than using old waste, International Paper Co.’s shipments of containerboard to China have been rising since late 2017, Chief Executive Officer Mark Sutton said in a telephone interview Thursday. The company expects the exports will continue to increase until China figures out what type of recycled fiber it’s willing to accept, he said.

Earnings for the industrial packaging segment in North America were boosted by higher demand for containerboard exports in the second quarter, the company said in a statement Thursday. Operating profits for the unit surged to $537 million, up from $437 million in the first quarter and $64 million the year earlier.

“The amount of containerboard that we sent has gone up by an order of magnitude, not just a small amount,” Sutton said.

China doesn’t have enough fiber domestically to meet the packaging demands for its strong economy, and International Paper is “well positioned” to sell more to the country, he said. Still, it’s uncertain where China’s policy is headed, he added.

To contact the reporter on this story: Jen Skerritt in Winnipeg at jskerritt1@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Millie Munshi, Debarati Roy

©2018 Bloomberg L.P.