The only thing you can make using blue papwrap is the truck from the mechanicals workshop.
If you are a member, sometimes in the Mudpatch there will be a new papwrap every time you log off, but this will usually be one day only.
Since the coming of membership, the blue papwrap became a member-only item. You can't give this to non-members.
This item can sometimes be found in Kelp Key.