UPM has taken further steps to reshape its business portfolio and expand in profitable growth businesses in Asia. The company has announced it will increase its presence in the attractive Asian paper segments and strengthen its position in the label materials value chain by building a new woodfree speciality paper machine at its Changshu mill in China.

“This move is aligned with our strategic target to have more than 50% of our sales from well performing growth businesses in the latter part of the decade. It supports our growth in China and provides an excellent platform to strengthen partnerships with self-adhesive labelstock customers and expand into new end uses in Asia. It also supports the good profitability of our growth businesses,” says Jussi Pesonen, UPM’s president and CEO.

The new machine is an uncoated wood-free speciality machine capable of producing up to 360,000 tons of uncoated wood-free grades and high quality label papers. The machine will start up by the end of 2014. The investment will also include future-oriented infrastructure investments in the Changshu site. The total investment cost is CNY 3,000 million (EUR 390 million). In addition, UPM Changshu is finalizing a 100,000 tons cut-size sheeting line investment which strengthens the Group’s leading position in office paper grades in China.

Both label paper and uncoated wood-free papers have a healthy demand outlook in Asia. The annual growth of UPM’s label paper mix is expected to be 8% in Asia and  4% globally. In uncoated wood-free grades, UPM focuses on high quality office paper, where the Chinese market is expected to grow by 8% annually.

“China and emerging Asia are our natural growth markets where we already have a unique market position, good customer base and excellent distribution networks. Asian label paper customers with multiple end-use areas clearly pose a further opportunity for us,” says Jyrki Ovaska, president of the Paper Business Group. “It is worth noting that for the first time about 70% of the investment will be based on Chinese currency and we aim to maximize the use of Chinese subcontractors.”

Ovaska underlines that Changshu site is very competitive with excellent environmental performance. It accommodates two paper machines, a labelstock factory, power plant and a jetty. The site has been recognized by the Chinese state authorities for its sustainable production and innovative and low-emission technologies. “We are building the expansion with similar sustainability standards, using best available technology,” concludes Ovaska.