Khon Kaen: SCG Paper, wholly owned by Siam Cement Group, has expanded the production capacity of its packaging business in the hope that new high-value-added (HVA) products will cushion the impact of declining sales in conventional paper.
Mr Panthep (left) and Mr Roongrote with samples of dissolving pulp.
SCG Paper president Roongrote Rangsiyopash said the company has added 400,000 tonnes of capacity, bringing the total to 2.3 million tonnes a year.
Combined with an overseas capacity of 1.03 million tonnes from acquisitions in Vietnam, the Philippines, Indonesia and Singapore, the firm bills itself as the biggest packaging and paper company in Asean.
The expansion is aimed at serving increased consumption in the region. SCG Paper estimates that Asean packaging demand will grow by 5% this year.
In terms of HVA products, the company has developed a dissolving pulp from eucalyptus wood that can be used in textiles and kitchenware. The innovation could also have applications in medicine and food, said Panthep Supachaiyakit, managing director of the subsidiary Thai Paper Co Ltd.
For now, 90% of the dissolving pulp produced is used by the textile industry and the rest in melamine production.
Conventional paper pulp sells for an average of US$610 a tonne, versus $900 a tonne for dissolving pulp.
"About 70% of the dissolving pulp produced will be exported, mostly to China and Taiwan, and the rest will be used domestically," said Mr Panthep.
According to SCG Paper, rayon fibre made from dissolving pulp accounts for 5% of the fibre used in the global textile industry. The company estimates global demand for rayon fibre of 4 million tonnes a year, with 6.3% growth expected in 2014.
SCG Paper has invested 400 million baht in its subsidiary Phoenix Pulp and Paper Plc in Khon Kaen for the purpose of making dissolving pulp. Phoenix Pulp, which has the only facility in Thailand for producing dissolving pulp, has an annual output of 96,000 tonnes from a maximum capacity of 240,000 tonnes.
Last year, SCG Paper took in 59.14 billion baht in revenue, up 3% from 2012, while net profit rose by 3% to 3.4 billion baht.
Mr Roongrote said SCG Paper will increase its focus on exports and long-term investment in research this year, especially given the climate of uncertainty in the domestic market.
Specifically, the packaging business will increase overseas production capacity and launch food safety packaging under the Idea brand later this year. For the fibrous business, it will work with a partner, Nippon Paper Industries (NPI), to develop new HVA products.
SCG Paper's fibrous business will continue to cater to the higher-end market through a joint venture with Japan's NPI, which has a 30% stake in the dissolving pulp project.