Aug. 21, 2023
A number of domestic packaging paper companies issued price increase letters one after another, announcing price increases for their corrugated, boxboard and other paper products. Among them, leading paper companies such as Nine Dragons Paper and Shanying International have also begun to release news of price increases in the context of several previous cuts in paper prices, which has boosted the industry.
Does this mean that the packaging paper industry market is about to usher in the dawn and move towards an upward channel? During the interview, many companies and institutions believed that, in fact, it is hard to be optimistic at present. The domestic paper industry market as a whole is still in a situation of mixed ups and downs, and the price increase of base paper has not yet formed a scale.
However, on the whole, August is the turning point of the industry's traditional off-peak season, and paper prices may bottom out. Xu Ling, a senior analyst in the corrugated paper market, told the "Securities Daily" reporter that some terminal orders for the Mid-Autumn Festival and National Day double festivals may be released as early as late August, which has certain positive support expectations for demand.
Demand recovery drives paper prices upward
According to statistics from Flush iFinD, since the third quarter, the prices of the packaging paper industry, whether it is corrugated paper, containerboard paper of the waste paper system or white cardboard and white board paper of the pulp and paper system, are still hovering at a low point.
Among them, due to the fact that the top paper companies of white cardboard jointly raised prices twice in July, the white cardboard, which had once fallen into the lowest price in the past five years, was "bottomed" and stabilized to a certain extent.
The staff of the securities department of Chenming Paper told the "Securities Daily" reporter that the two increase actions have been well implemented. The current ex-factory price of the company's white cardboard is the price after the increase on August 1.
Kong Xiangfen, a senior analyst in the white cardboard market, told the "Securities Daily" reporter that the notice issued by large-scale paper companies to increase prices in August is conducive to promoting the improvement of downstream enthusiasm for purchasing goods, and at the same time has played a role in stopping the decline and promoting the rise of market prices.
Different from the "jedi counterattack" of white cardboard, the corrugated and containerboard market has continued to decline since the third quarter, and large-scale paper mills have repeatedly lowered ex-factory prices. "The terminal consumption has not seen a significant change, and the follow-up of new orders by downstream packaging factories is also limited, and base paper is still cautious. At the same time, the price of waste yellow board paper, the main upstream raw material, has declined, and the support from the cost side is also weakening." Xu Ling said.
However, judging from the reasons for the increase given by corrugated and containerboard paper companies this time, the increase in cost has become the main driving force for paper companies to explore this round of growth. Shandong Fengyuan Zhongke Paper Co., Ltd., which was the first to issue a price increase letter on August 4, said that the company's increase this time is because the prices of waste paper and various raw materials continue to rise, and the price of finished paper has fallen below the cost. Some people in the industry told reporters, "The price increase of many paper companies this time is more driven by the cost side. The paper mill hopes to ease the cost pressure through a small increase. Of course, it does not rule out the possibility of testing the market."
Xu Ling said that under the background of the finished paper stocking season, the market price of waste yellow cardboard may fall first and then rise in August. The change in raw material prices has affected the profit level of corrugated and containerboard paper, which is transmitted to the finished paper market. "The price adjustment of large-scale paper companies will have a certain guiding effect on the market, especially the psychological impact."
After all, for the packaging paper industry, August is the turning point of the traditional off-peak season. Whether it is white card, whiteboard, corrugated, or boxboard, there is an expectation that orders will improve. Kong Xiangfen also said that due to the weak demand in the early stage and the low inventory of downstream packaging factories, it is also conducive to the recovery of market procurement progress.
Papermaking profits are expected to recover under the procyclical
The 2023 semi-annual report intensive disclosure period is coming soon, and the unsatisfactory performance of listed companies in the paper industry in the first half of the year is actually clear. Judging from the previously disclosed performance forecasts, 11 of the 23 paper-making listed companies in the A-share market have disclosed performance forecasts, and 8 of them are expected to suffer losses in the first half of the year.
However, the latest research report of Haitong Securities believes that the paper industry is a typical pro-cyclical industry, and its prosperity and macroeconomic trends show a significant positive correlation, and it is expected to usher in stable growth driven by the recovery of overall demand.
Talking about this issue, Kong Xiangfen also told the "Securities Daily" reporter that in the second half of the year, China will step up macro-policy regulation and control, and actively expand domestic demand. "Economic recovery is a process of wave-like development. In the first half of the year, the economic operation showed a recovery trend. In the second half of the year, the potential of domestic demand will continue to be released, and consumption will continue to recover."
From the perspective of the cost side, Haitong Securities believes that the prices of imported wood pulp and wood chips may continue to decline in 2023, coupled with exchange rate changes, the cost of paper companies is expected to gradually fall. From the perspective of paper prices, the recovery of domestic demand may drive up paper prices. White cardboard manufacturers have issued two price increase letters of 200 yuan/ton in July. If cost improvement and paper price increase are realized at the same time, the profitability of the paper industry is expected to be significantly restored.
However, many institutions are still cautious about the recent industry trend. "Although the third quarter has gradually entered the industry's traditional peak season, dealers began to stock up more than one month before the Mid-Autumn Festival, but due to the coincidence of the Mid-Autumn Festival and the National Day this year, the increase in terminal demand is limited, so it is expected that the market will not rebound in the third quarter. "Pan Jingwen, an industry analyst, said that in a short period of time, the paper industry market may continue to be organized within a narrow range.
The above content is compiled and reported by RX packaging for you.
