With the arrival of the traditional peak season in the industry and the implementation of the dual strategy of "price increase + shutdown" by many paper mills, the upward trend of paper prices is likely to continue further. Since September, leading paper companies have continued to adjust their prices.
Recently, major paper mills such as Nine Dragons Paper, Shanying International, Lee & Man Paper, and Wuzhou Special Paper have issued price increase letters, announcing that they will raise the prices of some products in early September. It is worth noting that since August, domestic paper mills have generally carried out multiple rounds of price hikes. Industry insiders point out that the supply and demand situation in the papermaking industry is expected to further improve in the second half of the year. This round of price adjustment demonstrates the determination of paper enterprises to proactively control the market rhythm during the peak season demand window period.
01. The industry was under pressure in the first half of the year
Judging from the recent price increase notices issued by paper enterprises, the reason still directly points to the rise in raw material prices.
It is understood that in the first half of this year, China's papermaking industry has shown a structural adjustment trend in terms of capacity expansion, cost optimization and export growth. However, some sub-sectors are still constrained by the imbalance between supply and demand, and the overall industry still faces supply and demand pressure and profit differentiation.
In the first half of this year, among the 23 listed companies in the A-share papermaking industry, only 4 companies achieved positive growth in net profit. Industry insiders analyze that due to the slowdown in the growth rate of domestic fast-moving consumer goods consumption and the cautious willingness of channels to stock up, the price of base paper has continued to bottom out, and the market is currently in a period of deep structural adjustment.
It is understood that the cost pressure in the papermaking industry mainly comes from raw materials and energy, which account for the largest proportion. The trends of the two are highly volatile. Among them, the pulp used in cultural paper is a futures product with strong financial attributes and obvious price fluctuations. The cost of waste paper for packaging paper has risen due to weather factors such as rainfall this year.
While costs are rising, the price of base paper remains persistently low. According to data monitoring by C1 Energy, the average price of base paper in the first half of the year is expected to be 4,218 yuan per ton, a decrease of 1.82% compared with the previous period and 8.06% compared with the same period last year. The industry's operating rate once dropped below 65%. Against this backdrop, paper enterprises are adjusting prices to test the upward trend in an attempt to regain the initiative in the market. At present, with the orderly digestion of channel inventories, a foundation is being laid for the recovery of demand in the second half of the year.
From the fluctuating characteristics of the papermaking industry, it can be found that leading enterprises that have laid out the entire chain of integrated forestry, pulp and paper have strong anti-cyclical capabilities. In the first half of this year, Sun Paper maintained its leading position in the industry with a revenue of 19.113 billion yuan and a net profit of 1.78 billion yuan.
Sun Paper's semi-annual report shows that in the second half of the year, the first and second phases of the "Integrated Forestry, Pulp and Paper Technology Transformation and Supporting Industrial Park Project" in the Nanning Park of the company's Guangxi base will be basically completed. The two parks in Beihai and Nanning will form a higher-level synergy, promoting the in-depth development of the company's "Integrated Forestry, Pulp and Paper" strategy. In addition, we will focus on promoting the pulp forest project at the Lao base, extend to the upstream of the industrial chain, continuously increase the self-sufficiency rate of wood pulp and wood chips of the company, thereby enhancing the company's cost control ability and alleviating the negative impact brought by the price fluctuations of production raw materials such as commercial wood pulp and wood chips.
At present, apart from Sun Paper, Huatai Co., Ltd. and Xianhe Co., Ltd. are also promoting the integrated construction of forestry, pulp and paper this year and improving the industrial chain layout to withstand the impact on performance caused by fluctuations in costs and other aspects.
Business Society believes that as the "Golden September and Silver October" approaches, the downstream market is actively stocking up. Coupled with the continuous release of price increase information by leading paper mills, the overall market is positive and upward. In the future, the market should pay attention to the implementation of price hikes. It is expected that the price of corrugated paper will maintain an upward trend in the short term.
Securities institutions also stated in their research reports that looking ahead to the second half of the year, inventory preparations for the Mid-Autumn Festival, National Day and the e-commerce peak season will be launched in a concentrated manner, and the downstream's willingness to replenish inventories will increase. Meanwhile, the central government is continuously promoting the comprehensive rectification of "involution" competition. It is expected that the supply and demand pattern will improve marginally, and the profit curve of advanced papermaking enterprises is expected to recover.
02. Accelerate the expansion of overseas markets
It is worth noting that in the first half of this year, despite the domestic pressure, the papermaking industry actively explored overseas markets and achieved good results.
Take Bohui Paper Industry as an example. In recent years, the company has been deeply engaged in the international market. In the first half of this year, the company continued to support the rapid growth of its export business with "digital and green transformation".
Bohui Paper Industry stated that export business has become the core engine driving the company's sustainable development. The company has been continuously deepening its market strategic layout along the "Belt and Road Initiative". Relying on the three-dimensional linkage mechanism of "exhibition source expansion + precise visits + on-site factory inspections", it has been constantly expanding the coverage and stickiness of overseas customers. In the first half of the year, it added or deepened business cooperation with dozens of overseas customers.
Through its "2+X" product strategy, the company has launched high-value-added differentiated products such as food-grade coated kraft paper, aseptic liquid-wrapped paper, and zero-plastic cup paper, with white cardboard and cultural paper as the core, to meet the overseas market's demand for "paper instead of plastic" and higher food-grade safety. Bohui Paper Industry pointed out that the significant growth of its export business has effectively offset the downward pressure in the domestic sales market and played a key role in smoothing out the cyclical fluctuations in the domestic market.
It is learned that in the first half of the year, Bohui Paper Industry newly added and successfully maintained multiple international certifications such as FSC and ISEGA. The export sales volume of related certified products increased by 142% year-on-year. International certification has become an important "pass" for the company to enter the core supply chains of leading enterprises in the global food, beverage and daily chemical industries. Thanks to the continuous improvement of the international certification system, the sales of the company's related products in the European and American markets have achieved significant growth, and the regional contribution value has also increased simultaneously.
For Sun Paper, in the first half of this year, the company's revenue from overseas sales increased by 72% year-on-year. The company stated that strengthening the expansion of overseas markets will be the focus of its future work. It will continuously increase the proportion of product exports, win the battle of "doubling overseas expansion" for cultural paper, household paper, specialty paper products, etc., and build a new growth engine driven by both domestic trade and exports.
