In July, the corrugated paper market showed a trend of declining gross profit margin and a narrow drop in the enthusiasm of paper mills to operate. The contradiction between supply and demand in the market remained prominent. However, the cost and the actions of large-scale paper mills also brought certain uncertainties to the price.
The gross profit margin declined slightly, and there was a game of cost and price
From the perspective of gross profit margin data, as of July 29th, the gross profit margin of corrugated paper decreased by 1.33 percentage points month-on-month, and the decline expanded by 0.43 percentage points compared with the previous period. Behind this change lies the dual effect of cost and price.
In terms of raw materials, the market price of waste yellow board paper has risen slowly, with the average monthly price remaining unchanged compared to the previous month. This month, the overall supply of waste yellow cardboard has decreased. In the first half of the month, the recycling volume at packaging stations dropped, and in the second half of the month, rainfall affected recycling and trading, gradually reducing the amount of paper arriving at paper mills. According to data from C1 Energy, as of the 29th of this month, the average monthly price of waste yellow board paper in the market was 1,473 yuan per ton, remaining unchanged from the previous month but rising by 2.00% compared to the average price of the same month last year. The price of corn starch has risen by 1.06%, and the comprehensive cost has increased by 0.09%.
In terms of price, the corrugated paper market in July saw mixed fluctuations, mainly consolidating sideways. In the first ten days of the month, the policies of large-scale paper mills fluctuated, the market supply and demand pressure was high, and the trend was volatile and weak. In the middle and late part of the month, the continuous price hikes by large-scale paper mills have driven up the willingness of small and medium-sized paper mills to follow suit, expanding the scope of price increases and causing a slight upward shift in the price burden. However, the improvement in downstream orders is not significant. The expectation for the increase in demand is rather pessimistic, and the purchasing enthusiasm is not high. As of July 29th, the average monthly price of 120g AA-grade corrugated paper in China was 2,511 yuan per ton, a decrease of 33 yuan per ton compared to the previous month's average price, with a month-on-month decline of 1.30%. Compared with the previous month, the average price turned from rising to falling, with a year-on-year decline of 4.01%. The combined increase in comprehensive costs and the decline in the average market price have jointly led to a month-on-month decrease in the gross profit margin of the corrugated paper industry this month.
The market operation declined narrowly, and the contradiction between supply and demand became prominent
The estimated operating load rate of the corrugated paper industry in July is 59.17%, a decrease of 0.97 percentage points compared to 60.14% in the previous month. It has turned from an increase to a decline compared to the previous month, but it has increased by 1.46 percentage points compared to last year. In July, due to the pressure on profits, the number of paper mills shut down for maintenance increased, and the enthusiasm for operation declined slightly.
The improvement on the demand side is limited. Orders from downstream packaging factories remain stable. The expectation for the increase in corrugated paper demand is rather pessimistic, and the purchasing enthusiasm is not high, which makes the contradiction between supply and demand in the market quite obvious.
The resumption of work in the future market may continue to decline, and there is an expectation of a narrow upward trend in prices
Looking ahead, in terms of production, some paper mills in Qinhuangdao, Hebei Province, plan to shut down for maintenance from August 1st to 15th. As a result, production in some areas will decrease, and the production load rate may continue to decline.
In terms of price, although supply and demand pressure still exists, given the strong trend of the raw material waste paper market, the cost center has shifted upward, and large-scale paper mills continue to release price increase plans, which have boosted market confidence and provided a certain bottom support for corrugated paper prices. Therefore, there may be a narrow upward expectation for corrugated paper prices in the first ten days of August.
Overall, the corrugated paper market spent July with a decline in gross profit margin and a drop in production capacity. Although there will be a supply and demand contradiction in the future market, the price may rise slightly driven by cost and large-scale paper mills. The market trend still needs to be closely monitored.
