Recently, the domestic packaging paper market has been hit by a fierce "cost storm". Since the third quarter of this year, the price of base paper has been on the rise. After entering the fourth quarter, this upward trend not only failed to slow down but also accelerated. Many leading paper enterprises have launched a new round of price hikes one after another. This fluctuation in paper prices has drawn widespread attention. According to a special report by CCTV Finance Channel, the cumulative increase in packaging paper prices has easily exceeded 25%. This figure not only far exceeds market expectations but also indicates that the cardboard box industry chain is facing the most severe cost test in recent years.
From large-scale papermaking groups to terminal carton packaging factories, enterprises throughout the entire industrial chain, both upstream and downstream, are striving to seek countermeasures. They are actively responding to this unprecedented wave of cost pressure by enhancing efficiency and expanding raw material channels. Market analysis generally holds that this round of price fluctuations profoundly reflects the intensification of the contradiction between supply-side structural changes and the strong terminal demand. For the e-commerce, logistics and consumer goods industries that rely on packaging paper for survival, this undoubtedly indicates a "most expensive" peak season challenge in history.
The shortage of upstream raw materials: The supply of waste paper is the biggest driving force
The root cause of the current increase in paper prices directly points to the tight supply and soaring prices of waste paper in the upstream.
In the workshops of many large-scale papermaking enterprises in places like Jining, Shandong Province, products such as kraft paper are being produced at full capacity. However, the enterprise managers generally reflect that the price adjustments have been very frequent and intense recently. Take Sun Paper as an example. Its marketing director, Pan Tianyi, disclosed that compared with the first half of the year, the price of base paper has increased by more than 25%.
The production of base paper mainly relies on recycled pulp, and the sharp decline in the supply of waste paper, which is the main raw material, is the key factor for the increase in costs. In the raw material warehouses of papermaking enterprises, the space that could originally hold tens of thousands of tons of waste paper has become vacant. The reasons for this include not only the regular seasonal fluctuations in recycling but also the longer rainy season this year, which has led to a reduction in the amount of waste paper being recycled.
The fluctuations in raw material prices are even more intense. The person in charge of Taiding New Materials in Dezhou, Shandong Province, pointed out that waste paper experienced two frequent concentrated price hikes in the second half of this year: the first one occurred at the end of July and the beginning of August, with an increase of approximately 280 yuan per ton; The second time is from the beginning of October until now, with an increase of as high as 500 yuan per ton.
Such a significant increase in such a short period of time is rare in recent years. According to statistics, the price of waste paper has risen by an astonishing 30% compared with the first half of the year. The pressure of raw material costs is directly passed on to the production end, resulting in an average increase of over 600 yuan per ton in the factory price of base paper.
Downstream transmission effect: Peak season demand supports full-production operation
Despite the high price of base paper, the demand in the downstream packaging industry has not been significantly suppressed. In the offices of packaging enterprises in Langfang, Hebei Province and other places, price increase letters from upstream are piled up like mountains. Sometimes, they even receive price increase notices continuously within several days, with a single increase usually being 50 yuan per ton.
Facing a 25% to 30% cost increase in the upstream, downstream cardboard and carton manufacturing enterprises have no choice but to follow suit and raise product prices. However, in order to maintain market competitiveness, the price increase in the downstream is generally lower than that in the upstream raw paper.
It is worth noting that the increase in costs has not weakened the strong demand in the market. As the e-commerce and consumption peak seasons such as "Double Twelve" and New Year's Day approach, the order volume continues to increase, causing the cardboard and carton production lines of downstream packaging enterprises to generally operate at full capacity 24 hours a day. It is expected that this high-load production will continue until the end of the year.
Market data shows that as of late November, the average daily price of domestic corrugated paper was 3,213 yuan per ton, up 17.65% year-on-year. The average daily price of boxboard paper was 3,889 yuan per ton, up 6.86% year-on-year. It is widely believed in the industry that under the current supply and demand relationship, due to the relatively stable downstream demand, the profits of the industrial chain are shifting upstream, which means that upstream paper mills have stronger bargaining power and price transmission strength.
Enterprises actively save themselves: improving efficiency and expanding channels
Facing continuous cost pressure, enterprises at all links of the industrial chain have not just sat idly by but have actively taken measures to seek solutions and a longer-term balance between supply and demand.
Downstream cardboard manufacturing enterprises choose to enhance production efficiency to reduce costs. For instance, Langfang Santai Paper Industry has increased its output value by at least double year-on-year and reduced its costs by 2% by introducing a BHS production line with a larger door size and a higher degree of automation.
Upstream raw paper enterprises are focusing on expanding diversified raw material channels to ensure a stable supply and price of waste paper. Sun Paper and other enterprises are laying out and building raw material projects in Guangxi and Shandong in China as well as abroad, aiming to provide long-term guarantees for future production and operation.
Future Outlook
The current sharp increase in packaging paper prices is essentially a cost transmission driven jointly by structural changes on the supply side and seasonal surges on the demand side. The import policy of waste paper has led to an expansion of the domestic supply and demand gap of waste paper. Coupled with the impact of weather and other factors on the recycling system, the price of waste paper, as the main raw material, lacks elasticity and has become the decisive force for the increase in paper prices.
In the short term, paper prices still face upward pressure. Zhuochuang Information's analysis indicates that in November, the overall waste paper market presented a situation where supply was less than demand. The inventories of paper mills were at a low level, and the orders for the peak season continued to be released, jointly supporting the continued rise in the prices of corrugated and boxboard paper in the short term. The prices of the two will maintain a strong positive correlation.
It is expected that the market price of waste paper will rise first and then fall in December, while the corrugated paper market may maintain a stable upward trend. The low inventory of large-scale paper mills may continue to push up prices. However, as the peak season demand for finished paper comes to an end and the inventories of some small and medium-sized paper mills may increase, the market may experience a mixed situation of local fluctuations.
In the long term, the market may witness a turning point. Although the impact of the tight domestic supply of waste paper is difficult to be eliminated quickly in the short term, industry insiders believe that the concentrated release of new production capacity will be the key to changing the future supply and demand relationship. This year, the domestic boxboard and corrugated paper industry has ushered in a new round of capacity release period. Once these new capacities are fully released, the tight supply situation will gradually ease. At that time, new supply and demand relationships may emerge, and prices are expected to fall. Therefore, in the coming year, the core focus of the market will shift from cost-side pressure to the game between the release of new production capacity and the growth rate of downstream demand.
