STOCKHOLM (From news reports) -- Finnish pulp, paper and board maker Stora Enso expects to sign its first orders for food packaging boards from a new mill in China shortly and is not concerned by slowing Chinese growth, its chief executive said.
Stora Enso has closed mills and cut thousands of jobs in the face of falling demand for paper as publishing moves online, shifting instead towards products such as packaging board.
Chief Executive Karl-Henrik Sundstrom said he was confident the new 800-million euro ($855 million) consumer board factory in Beihai, China would reach full production of 450,000 tonnes 18-24 months from its start-up in May as planned.
And the slowing Chinese economy has not changed his positive outlook for food packaging.
"Demand for this product correlates with China's steadily growing middle class. It is less linked to Chinese GDP growth," he said ahead of a capital markets day in London on Thursday,
The Beihai mill is now "pretty close" to signing contracts for the two board grades used for example in cups, ready-made food packaging and pasta cartons, Sundstrom said.
For the third carton grade at the mill, aimed at beverages, already signed-up clients are still running quality tests.
He said Stora Enso, whose packaging users around the globe include Nestle, Starbucks and Barilla, now aims to become market leader in China on high-end food and drink packaging board.
It is the world's biggest liquid packaging board maker and European No.1 in coated unbleached kraft board and food service board.
Its rivals in consumer board include Finland's Metsa Board, Sweden's BillerudKorsnas and U.S. Weyerhaeuser and International Paper.
In April, Stora delayed plans to build a 900,000 tonnes pulp mill alongside the board mill in Beihai.
Sundstrom said building and ramping up the board mill had proved challenging enough, and the pulp mill was not of critical importance for the board mill project.
"It's shelved, we are not working on it. If we take the decision (to build the pulp mill), we will do so in the second quarter of 2018 at the earliest," he said
Sundstrom said the company would discuss strategy, in which it was not planning changes, as well as investment plans for next year at its investor meeting.
Stora is currently working on a review of its paper business, which analysts have seen as a sign it could further reduce its exposure or even sell the division.
The CEO said that while paper's share of Stora's business shrink as other parts grow, a divestment or further capacity cuts were currently not on the agenda.
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