Leading paper companies jointly raised prices in May to “cry up” wood pulp prices “diving” upstream and downstream or continued stalemate
In May, a number of leading paper companies announced price increases for their paper products. Among them, Sun Paper has increased the price of all coating products by 100 yuan/ton since May 1. Chenming Paper and Bohui Paper will increase the price of their coated paper products by RMB 100/ton from May.
In the context of the recent rapid decline in the price of wood pulp and the recovery of the demand side, in the opinion of many industry insiders, this round of price increases by leading paper companies has a stronger meaning of “calling for an increase”.chocolate box
An industry analyst analyzed to the “Securities Daily” reporter: “The industry’s performance continues to be under pressure, and the price of wood pulp has recently ‘dived’. By playing the game of downstream ‘crying up’, it is also expected that profits will be restored.”
The stalemate game between the upstream and downstream of the papermaking sector
In the first quarter of this year, the paper industry continued to be under pressure since 2022, especially when the terminal demand has not been significantly improved. Downtime for maintenance and paper prices continue to fall.chocolate box
The performance of the 23 listed companies in the domestic A-share papermaking sector in the first quarter was generally dismal, and different from the overall situation of the papermaking sector in 2022 that “increased revenue without increasing profits”. There are not a few companies with double downs.
According to data from Oriental Fortune Choice, among the 23 companies, 15 companies showed a decline in operating income in the first quarter of this year compared with the same period last year; 7 companies experienced performance losses.
However, since the beginning of this year, the raw material supply side, especially for the pulp and paper industry, has undergone significant changes compared with the same period in 2022. Zhuo Chuang Information analyst Chang Junting told the “Securities Daily” reporter that in 2022, due to multiple factors such as continuous supply-side news and pulp and paper linkages, the price of wood pulp will rise and remain high, resulting in a decline in the profitability of paper companies. However, since 2023, pulp prices have declined rapidly. “It is expected that the price decline of wood pulp may deepen in May this year.” Chang Junting said.cake box
In this context, the stalemate game between the upstream and downstream of the industry is also continuing and intensifying. Zhuo Chuang Information analyst Zhang Yan told the “Securities Daily” reporter: “The double offset paper industry has experienced a wide decline in pulp prices and the support of double offset paper due to rigid demand. The industry’s profits have recovered significantly. Therefore, paper companies have a good price. With the mentality of continuing to restore profitability, this is also the main mentality support for this round of price increases by leading paper companies.”
But on the other hand, the pulp market is weak, and the price “diving” is obvious. On the one hand, the market support for paper prices is limited. On the other hand, the enthusiasm of downstream players to stock up has also weakened. “Many downstream operators of cultural paper are holding back and want to wait for the price to drop before stocking up.” Zhang Yan said.
With regard to this round of price increases by paper companies, the industry generally believes that the possibility of its real “landing” is relatively small, and it is mainly a game between upstream and downstream. According to the predictions of many institutions, this state of market stalemate game will still be the main theme in the short term.cake box
In the second half of the year, the industry may achieve profit restoration
So, when will the paper industry get out of the “gloom”? Especially after experiencing the booming consumption during the “May 1st” holiday, has the terminal demand situation recovered and improved? Which paper grades and companies will be the first to usher in performance recovery?
In this regard, Fan Guiwen, general manager of Kumera (China) Co., Ltd., in an interview with a reporter from the Securities Daily, believes that the current situation that seems to be full of fireworks is actually limited to limited regions and industries, and there are still many regions and industries that only It can be said to be “prosperous gradually”. “With the prosperity of the tourism industry and the hotel accommodation industry, the demand for packaging paper products for catering, especially food packaging such as paper cups and paper bowls, will gradually increase.” Fan Guiwen believes that household paper and some types of packaging Paper should be the first to have better market performance.
As for coated paper, one of the types of paper that the top paper companies are “crying up” in this round, some insiders revealed in an interview with reporters: “Cultural paper has been in a relatively small peak season this year, and now with the comprehensive recovery of the domestic exhibition industry , Coated paper orders are also relatively satisfactory, and the profitability level has also improved compared with the previous period.”baklava box
Chenming Paper told the “Securities Daily” reporter: “Although the price of cultural paper recovered in the first quarter, due to the decline in the price of white cardboard, the performance of wood pulp paper companies was still under certain pressure in the first quarter. However, the company It is believed that the fall in upstream raw material prices will help gradually improve the profitability of downstream industries.”
The above-mentioned industry insiders also believe that the industry is currently in a state of bottoming out. With the gradual easing of cost pressures and the gradual recovery of consumer demand, the profitability of paper companies is expected to recover.
Sinolink Securities stated that it is optimistic about the improvement in demand in the second half of 2023, and the recovery of consumption will further support the moderate upward recovery of paper prices, driving the profit per ton into a widening range.
Post time: May-10-2023
