On November 5th, the Guangdong base of Shanying International Holdings Co., Ltd. took the lead in raising the price of packaging paper in the fourth quarter, increasing the price of its corrugated paper by 50 yuan per ton. This move quickly triggered a chain reaction. Since November, many cardboard factories in Jiangxi, Hunan, Zhejiang, Henan and other places have followed suit one after another, announcing a 3% to 10% increase in cardboard prices. This marks the official start of a new round of price hikes in the packaging paper industry in the fourth quarter. Coinciling with the "Double 11" e-commerce promotion, the resonance between supply and demand has continuously raised the industry's heat in the fourth quarter.
Behind the wave of price hikes lies the continuous improvement of the supply and demand fundamentals of the packaging paper industry. Data shows that as of the end of October, the average market price of AA-grade 120g corrugated paper reached 2,962 yuan per ton in October, rising by 6.51% month-on-month and 12.88% year-on-year. The price of waste yellow board paper, a core raw material, rose simultaneously to 1,725 yuan per ton, increasing by 5.39% month-on-month and 17.55% year-on-year. The strong cost support has laid a solid foundation for the price increase of base paper. The demand side also performed well. The "Double 11" promotion gradually released e-commerce orders. Driven by the mentality of "buying when prices are rising, not when they are falling", downstream packaging enterprises carried out moderate inventory replenishment, further strengthening price support.
It is worth noting that while the packaging paper sector has strengthened against the trend, the overall papermaking industry is still in the "bottoming out" stage of the cycle. National statistics show that in the first three quarters of this year, the operating income of the papermaking and paper products industry decreased by 2.1% year-on-year, and the total profit decreased by 15.6% year-on-year. The performance of listed paper enterprises has shown a significant divergence. Apart from a few enterprises such as Shandong Sun Paper and Mudanjiang Hengfeng Paper whose profitability has improved, the profits of most enterprises have declined or even suffered losses. The packaging paper sector, represented by corrugated paper and boxboard, demonstrated strong resilience from the end of the third quarter to the beginning of the fourth quarter, becoming one of the few sub-sectors in the industry that achieved a simultaneous recovery in both price and gross profit.
From the perspective of industry operation logic, in the third quarter, the packaging paper industry chain presented a pattern where raw material costs and product prices fluctuated. The atmosphere of price hikes boosted the industry's prosperity, increased market trading activity, and gradually eased the contradiction between supply and demand. Entering the traditional peak season of November, it is expected that the average market price of 120g AA-grade corrugated paper in China will rise by 50 to 170 yuan per ton. Analyst Li Huan said that paper enterprises on the supply side have no large-scale shutdown plans for the time being, and the operating rate is expected to increase steadily. However, due to the tight recycling of waste paper, the increase in inventory is limited. Although the demand side has been partially restocked due to the high inventory of raw paper from downstream packaging factories, the release of orders during the "Double 11" shopping festival, coupled with the subsequent demand for stocking up for the Spring Festival, has demonstrated remarkable overall resilience.
The improvement in the profit aspect has given the market more hope. In October, the cost increase of corrugated paper was lower than that of base paper, which promoted the upward recovery of industry profits and simultaneously enhanced the enthusiasm of enterprises to operate. Li Huan predicted that the industry's profits might continue to improve in November, and the operating load rate of paper mills would further increase. If this trend persists, the packaging paper sector is expected to achieve a phased recovery in profits in the fourth quarter.
Many securities firms and industry insiders are optimistic about the industry trend in the fourth quarter. Huafu Securities and other institutions pointed out in their research reports that the papermaking industry is expected to see marginal improvement under the resonance of cost support and peak season demand. With the continuous advancement of the "Double 11" promotion and the approaching Spring Festival, packaging demand will remain strong, and the price of boxboard and corrugated paper is expected to continue to be strong. Xu Ling, an analyst of the packaging paper industry, said that the improvement in the industry's prosperity in the third quarter has led to a easing of the supply and demand contradiction, and the peak demand season in the fourth quarter will further consolidate this trend. Many industry insiders interviewed said that if the profit recovery ability of the packaging paper sector continues to improve in the fourth quarter, it may become an important force driving the entire papermaking industry to bottom out and rebound.
On one hand, there is the peak demand season brought by "Double 11", and on the other hand, there is the continuous wave of price hikes. Coupled with the dual benefits of cost support and profit recovery, the packaging paper industry is now entering a "golden window period" in the fourth quarter. Whether the encounter of this peak season and price hikes can truly ignite the recovery flame of the papermaking industry is worth the continuous attention of the market.
