Top paper companies issue price increase letters again.
Recently, Chenming Paper Industry announced a price increase of 200 yuan/ton for its
Cultural Paper series products. Previously, Chenming Paper Industry raised prices for some cultural paper series products in late October, and this round of price increase is also considered by the industry to be a good response to the implementation of price increases for cultural paper products in the early stage.
Fundamentally, high production costs and a decrease in product inventory are the main factors supporting the sustained price of cultural paper.
According to statistics from Changjiang Light Industry, as of November 10th, the price of imported coniferous pulp was 780 US dollars per ton, which remained unchanged month on month; The price of outer broad-leaved pulp was 630 US dollars per ton, which remained unchanged compared to the previous period; The price of inner needle pulp is 6300 yuan/ton, an increase of 170 yuan/ton compared to the previous period; The price of internal broadleaf pulp is 5600 yuan/ton, an increase of 150 yuan/ton compared to the previous period; The price of chemical pulp was 4770 yuan/ton, which remained unchanged compared to the previous month; The price of dissolved slurry is 7600 yuan/ton, an increase of 200 yuan/ton compared to the previous period. Against the backdrop of high upstream raw material costs, increasing product prices has become a choice for enterprises to ensure profitability.
Although the overall market demand has not shown significant growth in the short term, the decrease in inventory will also provide some support for product prices due to the more rigid demand for cultural paper compared to other types of paper. From the perspective of inventory situation, Zhejiang Securities analysis shows that the paper and paper products industry went through six complete inventory cycles from December 2000 to February 2022, with an average duration of 43 months per cycle, including an average replenishment period of 25 months and an average destocking period of 18 months. According to industry economic data from the National Bureau of Statistics as of July 2023, the active destocking phase has lasted for 17 months, and China's paper industry entered a passive destocking phase in July. Looking at different types of paper, the progress of inventory reduction for cultural paper is leading, followed by cardboard paper, and white cardboard paper is still in storage. As of the end of August 2023, the social inventory of double copper paper and double adhesive paper is at a relatively low level, at 32.8% and 43.2% percentiles respectively since 2018.
Dongxing Securities analysis pointed out that the performance of the papermaking sector in the third quarter saw a month on month recovery, with the net profit of the wood pulp bulk paper sector increasing by 130%, the net profit of the waste paper bulk paper sector increasing by 67%, and the net profit of the special cardboard block increasing by 303%. Wood pulp based bulk paper and
Specialty Paper companies mainly benefited from the decline in pulp prices in the first half of 2023, which led to a decline in pulp costs in the third quarter. Waste paper based bulk paper may benefit from the release of economies of scale under the improvement of demand during the peak season. Looking ahead to the fourth quarter, industry demand is still supported by some peak season effects and overall economic stabilization. After paper companies gradually raised prices in the third quarter, paper prices are expected to increase month on month in the fourth quarter; The early decline in pulp prices is expected to still be reflected in the cost side in the fourth quarter, and the cost pressure on paper companies is limited. Overall, the performance of the paper industry in the fourth quarter is still expected to achieve a month on month improvement.
In addition, the layout adjustments made by top paper companies based on market conditions are also expected to help improve their profitability and development quality.
It is reported that in order to improve the profitability of the enterprise, Chenming Paper Industry is continuously optimizing its sales market layout and actively exploring overseas markets. According to public information, Chenming Paper signed strategic cooperation agreements with Korean paper and Selma paper from Sweden in October this year to deeply develop the Korean and Nordic markets. Industry insiders point out that in the context of continuously expanding domestic supply and relatively stable short-term demand, expanding sales channels and enriching overseas markets may become a new industry trend.
