After setting off another round of price increases in mid-June, recently, many paper manufacturers, including Chenming Paper, APP and so on, once again issued a price increase letter, and since July 1, the price of the company’s paper varieties has increased by 200/ton on the basis of June.

In the face of the industry dilemma of “building the bottom and climbing the slope is difficult to climb” in the first half of the year, the papermaking industry has once again “shouted up”.

“If there is one word to describe the state of the paper industry this year, it is ‘difficult to make a profit.’” Zhuo Chuang Information industry analyst Liu Hui said in an interview with the “Securities Daily” reporter that the cost of pulp and other raw materials is high, paper companies have no choice but to transmit downstream, but encounter weak terminal demand, “the peak season is not strong, the off-season is weaker”, the cost pressure transmission is difficult, resulting in narrowing of the industry’s profits.

In the second half of the year, the traditional peak season of the industry fell, but in the current context, will the paper industry be as predicted by some institutions: demand recovery, cost decline, profit improvement? Can the new round of paper enterprise price increases be on the beat of the industry’s boom.

Paper companies “shout up” is difficult to resist weak demand

Zhuo Chuang information monitoring data show that from the beginning of January to June 24, 2022, the average price of white cardboard in the pulp system was 6248/ton, down 28% year-on-year, the average price of coated paper was 5538/ton, down 16.79% year-on-year, and the average price of double adhesive paper was 6016/ton, down 8.12% year-on-year; The average price of corrugated paper in the waste paper system in the first half of this year was about 3796 / ton, down 2.76% year-on-year, and the average price of containerboard paper was 4865 / ton, a slight increase of 0.9% year-on-year, maintaining a level comparable to the same period last year. The average price of wood pulp household paper in the first half of the year was 7013/ton, up 11.18% year-on-year.

Why do you feel that paper companies are “shouting up” every month, but most of the paper prices are declining? Mr. Shi, the person in charge of a large paper packaging enterprise in Zibo, Shandong Province, told the Securities Daily reporter: “Since the beginning of this year, the cost of raw materials and other high, paper companies have the difficulties of paper companies, but the terminal demand is weak, the recovery process is needed, our packaging enterprises are also extremely difficult, calculated, many rounds of paper companies shouted up in the end did not effectively land.” ”

Liu Hui took the landing of the price increase action of paper enterprises in May and June as an example to explain to reporters the situation of “dilemma” in the paper industry. “Recently, except for household paper, the implementation of the price increase letter for the rest of the finished paper is weak. For example, tissue paper had a shouting increase of 1200/ton in May, and finally implemented a 1000/ton increase in the same month; Corrugated paper, containerboard paper announced an increase of 100-150 / ton, and finally can implement the increase of 50 / ton is very good; It is more difficult for cultural paper to rise, and in May, the price increase of 300/ton was announced, and the actual increase was 50/ton. Liu Hui said.

The reason is still the contradiction and game between supply and demand.

From the perspective of cost, for pulp-based paper such as cultural paper and white cardboard, the continuous high volatility of pulp prices has brought huge cost pressure to paper companies. A light industry industry analyst of a domestic securities company told the “Securities Daily” reporter that in fact, the price of imported wood pulp has continued to rise since December 2021, and in the first quarter of this year, due to the continuous news of the supply side of the international market, the multi-party game pushed up the pulp price, and drove the pulp price period linkage, and the pulp price continued to fluctuate at an overall high level in the second quarter. Zhuo Chuang information monitoring data shows that the price of hardwood pulp in June this year increased by nearly 30% compared with the beginning of January.

“For the waste paper system, including corrugated, containerboard, whiteboard paper, etc., the increase in raw materials is relatively not as strong as that of the pulp system, which is basically flat or slightly increased, but labor costs, energy prices, etc. are also rising.” Liu Hui said.

In order to alleviate or pass on the upstream cost pressure, paper companies can only transmit downstream in the form of price increase letters. However, due to the epidemic and other factors, the terminal demand has shown a weak state, so the call for price reduction of downstream processing and packaging enterprises is also endless.

“The paper industry is basically ‘see the rise and do not see the fall’, only when the price rises will be sent letters, when the price is reduced, it is generally a dark drop.” Liu Hui said that even if paper companies “shout up” month by month, in the end, it is still difficult to resist the weakness of the demand side, resulting in the paper prices of most paper varieties in the first half of the year in a state of decline.