Japan Paper Makers Plan New Facility Launches

Tokyo, Aug 17, 2007 (Jiji Press) - Major Japanese paper manufacturers are set to beef up their production facilities over the next two years as they look to capitalize on growing demand for printing paper.

Daio Paper Corp. <3880> this month will begin operations at a new facility with an annual output capacity of 290,000 tons in its Mishima mill complex in Ehime Prefecture, while Nippon Paper Group Inc. <3893> is due to start a new 350,000-ton facility in Ishimaki, Miyagi Prefecture.

Next year, Hokuetsu Paper Mills Ltd. <3865> will launch its 350,000-ton plant in Niigata in November and Oji Paper Co. <3861> will start an equal-size facility at Tomioka Mill in Anan City, Tokushima Prefecture, in December.

The series of launches has already raised oversupply concerns in Japan, with one think tank analyst predicting that paper prices will go down by the time Hokuetsu's new facility begins operations.

Daio President Mototaka Igawa has played down oversupply fears, stressing that the company will not increase production all at once and will limit its output to a quantity deemed saleable.

Still, if paper makers do not want to face a glut they appear to have little choice but to increase overseas sales, according to industry analysts.

Ahead of its new facility launch, Hokuetsu this autumn will start selling its printing papers in the United States in cooperation with trading house Mitsubishi Corp. <8058>.

Nippon Paper likewise is poised to expand printing paper sales to the United States, Australia and Asia outside Japan, while Daio aims to start exporting its products to Southeast Asia, China and the United States.

According to the Japan Paper Association, exports of printing papers in January-June grew 10.6 pct from a year earlier to 313,000 tons, backed by a weak yen.